Archives: 06/2017

Stadium Boondoggles Spread to the Minor Leagues

In Prince William County, Virginia, just south of Washington, the board of supervisors is about to decide whether to issue $35 million in bonds to build a new baseball stadium for the Potomac Nationals, a Class A affiliate of the Washington Nationals. The board just rejected a proposal to let the taxpayers vote on the issue.

Art Silber, the retired banker who put up $300,000 to buy the team in 1990, estimates that it’s now worth $15 to $25 million. But

“Right now, we have the worst ballpark in the league and one that probably ranks in the bottom 10 of organized baseball’s 160,” he said. “At the new ballpark, the visibility will be extraordinary. Naming rights alone will pay for a lot of the stadium.”

He can only imagine what the team will be worth.

Seems like an excellent profit opportunity for a business worth tens of millions of dollars. But he has a better plan: If the county doesn’t pony up, he will sell the team, and new owners will move it.

The county found a consulting firm to produce, as it has done for many governments, an optimistic economic analysis: It suggests that a new stadium would generate 288 jobs, $175 million in economic impact, and $4.9 million in tax revenue over a 30-year lease. Similar studies have proven wildly optimistic in the past. In 2008 the Washington Post reported that Washington Nationals attendance had fallen far short of what a 2005 study predicted. As Dennis Coates and Brad Humphreys wrote in a 2004 Cato study criticizing the proposed Nationals stadium subsidy, “The wonder is that anyone finds such figures credible.”

Academic studies have consistently found few if any economic benefits of subsidies for stadiums, arenas, convention centers, and the like.     

Several Cato studies over the years have looked at the absurd economic claims of stadium advocates. In “Sports Pork: The Costly Relationship between Major League Sports and Government,” Raymond Keating finds:

The lone beneficiaries of sports subsidies are team owners and players. The existence of what economists call the “substitution effect” (in terms of the stadium game, leisure dollars will be spent one way or another whether a stadium exists or not), the dubiousness of the Keynesian multiplier, the offsetting impact of a negative multiplier, the inefficiency of government, and the negatives of higher taxes all argue against government sports subsidies. Indeed, the results of studies on changes in the economy resulting from the presence of stadiums, arenas, and sports teams show no positive economic impact from professional sports – or a possible negative effect.

In Regulation magazine (.pdf), Dennis Coates and Brad Humphreys found that the economic literature on stadium subsidies comes to consistent conclusions:

The evidence suggests that attracting a professional sports franchise to a city and building that franchise a new stadium or arena will have no effect on the growth rate of real per capita income and may reduce the level of real per capita income in that city.

And in “Caught Stealing: Debunking the Economic Case for D.C. Baseball,” Coates and Humphreys looked specifically at the economics of the new baseball stadium in Washington, D.C., and found similar results:

Our conclusion, and that of nearly all academic economists studying this issue, is that professional sports generally have little, if any, positive effect on a city’s economy. The net economic impact of professional sports in Washington, D.C., and the 36 other cities that hosted professional sports teams over nearly 30 years, was a reduction in real per capita income over the entire metropolitan area.

Does Preventive Care Reduce Health Costs?

One anecdote does not constitute evidence; and I cannot vouch for the accuracy of the story below.  But the information in the email, reprinted with the sender’s permission, is nevertheless suggestive:

Dear Professor:

I wasn’t sure to whom I should write, so please pass this along to an economics colleague who specializes in health care costs.

My husband, a man with a BMI of over 40 (a lifelong—since babyhood—“issue”), is currently working as a limousine driver for a commercial carrier regulated by FMCSA [the Federal Motor Carrier Safety Administration]. In October FMCSA’s Medical Review Board developed new regulations for drivers’ medical evaluations which occur every two years. They are that anyone with a BMI of 40 or more or a BMI of 33–39 with 3 of 11 risk factors (of which 2 are being male and over age 42) be referred for screening for obstructive sleep apnea regardless of whether they show any symptoms of it other than sleepiness while driving. (As my husband pointed out to one of the approved medical examiners at his exam a couple of years back, anyone who answers the question, “Have you ever driven while tired?” with a ‘No’ is lying—there isn’t anyone over the age of 18 who hasn’t driven late at night, in the wee hours of the morning, on a long road trip or to and from work/study after a long day or pulling an all-nighter without feeling tired; since he gets to sleep during the March–October busy season for 1–4 hours at a time, yes, he is tired.)

The salient statistics and facts: According to one organization, 53.2% of FMCSA’s approximately 4 million drivers have a BMI which will fit into the damned-near instant referral for screening. Here in Rhode Island screening costs between $190-$500 we have discovered over the last 2 years. The Medical Review Board’s recommendations note that a negative result is meaningless (essentially), so theoretically, around 2 million people will be referred for a $200 test every 2 years. That’s a “preventive health care” cost of $200 million per year!

Isn’t the point of “preventive health care” to save money? … [T]his “prevention” is penalizing a sizeable (no pun intended) minority … and wasting a lot of health care dollars on testing and treatments which do nothing to make anyone healthier.

For more systematic evidence on whether preventive care is cost-effective, see here.

Unintended Impacts of “Quality Control” on School Quality in Louisiana

My colleagues from the School Choice Demonstration Project and I just released the official third year reports on the Louisiana Scholarship Program (LSP). In addition to the experimental study on student test scores, my coauthors and I released a descriptive analysis of the types of private schools that chose to participate in the voucher program.

Positive Test Score Trend

The main report indicates that the LSP had negative impacts on student math test scores for the first two years of the program. Nonetheless, the program did not have any statistically significant impacts on student achievement by the end of year three. These results can be found in Figure 1 (from the report) below:

Source: Mills & Wolf (2017). “How Has the Louisiana Scholarship Program Affected Students? A Comprehensive Summary of Effects After Three Years.” School Choice Demonstration Project, Department of Education Reform, University of Arkansas.

This upward trend is not unusual. The recent meta-analysis of 19 experimental voucher studies shows that private school choice programs are better at shaping test scores after a few years. This is likely because children need to adjust to their new educational settings and private institutions must respond to the environmental shift in the market for schooling.

No Sanctuary for Criminals Act: An Anti-Federalist “Immigration” Bill

The U.S. House of Representatives will vote this week on the “No Sanctuary for Criminals Act” (H.R. 3003). The bill’s primary purpose is to threaten and punish cities and states that fail to do the bidding of federal immigration agents. It would also make it more difficult to hold state and local officers accountable for violations of the Constitution committed pursuant to federal commands.  

H.R. 3003 would impose mandates on states

The heart of the No Sanctuary for Criminals Act would prohibit any policies that restrict state or local law enforcement officials from “assisting or cooperating with Federal law enforcement entities, officials, or other personnel regarding the enforcement of” immigration laws (pp. 2-3). It would also ban restrictions on collecting people’s immigration status, reporting them to the federal government, or complying with requests for that information from the federal government.

These provisions purport to remove the authority of state or local police departments or state or local legislatures to determine how their law enforcement resources are used. This violates a basic principle of federalism, which many conservatives have long championed, that the federal government should leave states to experiment with their own policies. I wonder whether Republican members of Congress would still support this legislation if they could imagine Democrats applying this same principle to federal gun laws in the future.

H.R. 3003 would attempt to compel compliance with federal grants

Supreme Court precedent suggests that Congress cannot actually enforce such a ban on state or local policies. Perhaps with this in mind, the bill attempts to enforce “compliance” with its possibly unconstitutional mandates by imposing monetary penalties. It would strip any non-compliant state or locality of any “grant administered by the Department of Justice or the Department of Homeland Security that is substantially related to law enforcement, terrorism, national security, immigration, or naturalization” (pp. 3-4).

The Supreme Court has held that there are limits to this type of federal coercion of states, but it’s still unclear where exactly those limits are. My colleague Trevor Burrus has written about the constitutional issues here with regard to a similar proposal a few years ago. As he wrote then:

The absolute monetary size of the grant certainly has something to do with coercion, but other factors can be taken into account… Therefore, it is legitimate to look not just to the size of the grants, but to the type of grants used to induce states into not passing [“sanctuary” laws]. Highway funding is one thing, but national security, law enforcement, and FEMA grants are entirely different.

Regardless of its constitutionality, however, the important issue here is that this type of heavy-handed approach to federal-state relations is at odds with federalist principles and many years of conservative and Republican rhetoric. Federalism is an important safeguard for liberty, and in its exuberance to obtain a certain policy result, Congress should not lose sight of this principle.

Preferably for Reasons of Good Policy rather than Political Revenge, Trump and Republicans Should End Subsidies for the OECD

If I was Captain Ahab in a Herman Melville novel, my Moby Dick would be the Organization for Economic Cooperation and Development. I have spent more than 15 years fighting that Paris-based bureaucracy. Even to the point that the OECD threatened to throw me in a Mexican jail.

So when I had a chance earlier today to comment on the OECD’s statist agenda, I could barely contain myself

Notwithstanding the glitch at the beginning (the perils of a producer talking in my ear), I greatly enjoyed the opportunity to castigate the OECD.

Kate’s Law: A Waste of Federal Resources

The House of Representatives will vote on a bill this week titled “Kate’s Law” (H.R. 3004). While it is nominally an “immigration” bill, its principal aim relates to criminal justice—namely, an increase in the maximum sentences for immigrants who reenter the country illegally after a deportation. The bill is a waste of federal resources. It would likely balloon America’s population of nonviolent prisoners, while not protecting Americans against serious criminals.

Kate’s Law Would Not Have Helped Kate

The bill’s namesake is Kate Steinle, a 32-year-old medical sales rep killed in San Francisco in 2015. Her killer was Juan Francisco Lopez-Sanchez, who was in the country without status after five removals. Proponents of this bill—providing lengthier prison sentences for people who reenter the country after a removal—believe that this would have somehow helped Kate Steinle. This assertion cannot withstand a moment’s contact with the facts of the case, which I have previously laid out in detail here.

After his last three apprehensions, the government prosecuted Lopez-Sanchez for felony illegal reentry. He served 15 years in federal prison in three five-year increments. None of the facts of this case would have changed if he had served those 15 years consecutively. Indeed, because Lopez-Sanchez never actually made it across the border without being caught since 1997, the only reason that he ended up in San Francisco is because the Bureau of Prisons inexplicably decided to ignore a request for transfer from Immigration and Customs Enforcement (ICE). Instead, it shipped him to the city based on a 20-year-old marijuana charge—an offense that no longer even exists in the city. Thus, deterrence against reentry has no relevance whatsoever to this case.

The Provisions of Kate’s Law

This legislation introduced by House Judiciary Committee Chairman Bob Goodlatte (R-VA) should not be confused with other bills of the same name introduced in the House and the Senate by Rep. Steve King (R-IA) and Sen. Ted Cruz (R-TX), respectively. The entire purpose of the prior iterations of “Kate’s Law” was to create mandatory minimum sentences for crossing the border illegally after a removal. Indeed, the alternate title for the bills was the “Establishing Mandatory Minimums for Illegal Reentry Act.” This new Kate’s Law, however, mercifully contains no mandatory minimum sentences—a sign that criminal justice reformers’ criticisms of them (including Cato’s) have started to penetrate the mainstream.

But the purpose of the law in the broader sense remains: trying to lock up more immigrants for longer periods. Most of the actual text comes from section 3705 of the Senate comprehensive immigration reform bill (S. 744) passed in June 2013, but the Kate’s Law authors have added several odious provisions. The heart of the bill would create a new 10-year maximum sentence for any person removed or denied entry more than two times who reenters. The current maximum for regular reentry is just 2 years. It would increase the maximum sentences for people who reenter after being convicted of various criminal offenses—including for immigration offenses—to up to 25 years.

Kate’s Law deletes two important provisions from the S. 744 language that would have protected from prosecution non-felon juveniles (p. 772-73) and humanitarian groups that provide immigrants caught in deserts or mountains food, water, or transportation to safety, which are sometimes the target of the “aiding and abetting” statutes (p. 774). Kate’s Law would also prohibit challenging the legality or validity of a prior removal order, which is a common defense in these cases. If the earlier removal was not valid, as in at least one case where a U.S. citizen was deported, it should not be the basis of prosecution.

Supreme Court Returns Sanity to Debate Over Travel Ban

In what can only be seen as a big win for the Trump administration, the unanimous Supreme Court both took up the travel-ban cases and allowed most of the relevant executive order to go into effect. There may be lower-court litigation in coming months over the meaning of the “bona fide relationship” to an American person or entity that exempts someone from the travel restriction. Given that the second executive order on this subject, unlike the first, specifically exempted greencard holders, students, family members, those with established business ties, and others, is there even anybody who benefits from this carve-out who wasn’t already exempt from the travel ban?

At the end of the day, and regardless of the policy merits of the executive order—which doesn’t seem well-crafted to address security concerns, but I, like the judiciary, lack access to classified information—the Supreme Court doesn’t seem likely to be swayed by the idiosyncratic atmospherics (campaign speeches, tweets, and all) and will instead focus on a close textual reading of the laws at issue. It seems that all the justices want to return to the “presumption of regularity” that applies to presidential decisions on national security. As Justice Thomas, joined by Justices Alito and Gorsuch, wrote in partial concurrence, the decision to stay the lower courts’ rulings—to allow most of the travel ban to go into effect—is an implicit recognition that the government is likely to succeed on the merits.

Of course, the case might not get to the merits at all, because of standing and mootness concerns that would throw out the lawsuits altogether—or because the travel ban will expire before any final ruling. We shall see soon enough, because the Court has scheduled expedited argument for when it returns from its summer recess the first week of October.

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