Is the most expenisve public school in the country Pareto Efficent?

This August in a Yahoo News Article, Los Angeles unveiled the most expensive public school in the nation with a price tag of 578 million dollars. The school will house 4,200 students, so that is $137,619.05 dollars per student! The school called the Robert F. Kennedy Community School is built on the same land as the former Ambassador Hotel, where the Robert F. Kennedy was assassinated in 1968. This is the state's third of these "Taj Mahal Schools" which boast price tags of over $100 million dollars. Not everyone is celebrating these schools though. "The buildings are nice but they are a big waste of tax payers money and run by the same people who have given the city a 50 percent dropout rate." says Ben Austin who holds a seat on the California Board of Education. Parents are not fooled either. So while these schools may have all the latest amenities, they are not guaranteeing higher success rates for students, but the arguement for some is that students learn better in more pleasant surroundings. Even so, allocating all of the money to these schools and leaving out other public schools in the Los Angeles area does still indeed make this a Pareto Efficient outcome. The question that determines Pareto efficieny is, is it possible to make someone better off without making anyone else worse off? If the answer is no, the system is efficient. If one group received all of the production of an economy, while a second person received absolutely nothing, most people would agree that this is not fair, but is it Pareto efficient? Well, is it possible to make the second group better off without making the first person worse off? No. The first group will suffer, even if only a little bit, from loss of the extra goods because the state only has a limited amount of resources. It may be true that the loss to the first group is smaller than the gain to the second group, but the fact remains that, to make the second group better off, you must do it at the expense of the first group.

Stigler and Proposition 19

California’s Proposition 19, if passed in the November election, will ‘legalize, tax, and regulate’ the production, sale, and use of recreational marijuana in the state. Regulation will vary between municipalities, but, in general, growers will be able to set up legal businesses, and restrictions on growing for personal recreational use will be lessened. Opponents of the bill can be divided into several groups with different motivations. The law enforcement and prison industry favor the status quo where they receive large amounts of federal funding for the ‘War on Drugs.’ Non-profit ‘public interest’ groups argue that legalization will have negative effects on society. Marijuana’s competitors, the wine, beer, and liquor industries have opposed the proposition and contributed significantly to the campaign against it, because, if passed, it will increase competition for their products.

Two additional groups that oppose Proposition 19 are already in the marijuana business. These are the large (illegal) commercial producers and the legal medical marijuana dispensaries. While this may seem counterintuitive to many people that marijuana producers support prohibition, this is in line with Stigler’s theory that, if possible, industries will seek government regulation that limits entry into their industry, decreasing competition and allowing them to keep prices high. It is difficult for criminal marijuana producers to make a public interest argument, or lobby the government or the public successfully. However the medical marijuana producers have publicly come out in opposition of the bill with the ‘public interest’ argument that the way the bill is currently written will decrease access to medical marijuana for patients who really need it. This article from The Huffington Post argues that the bill will have no affect on the availability of medical marijuana to the sick and elderly, and shows that the language of the bill contains special provisions to prevent it. Some of the more prominent figures opposing Proposition 19, such as Mary Rathburn and Dennis Peron, are same people who wrote and supported Proposition 215 that legalized medical marijuana. They are also the owners of some of the largest medical marijuana dispensaries in the state.

Loudoun School Board Votes for Obesity (ok, maybe not directly)

At home for fall break, I encountered many high school friends. I was shocked when one of my friends informed me that her little brother (now attending our old high school) was required to pay $200 dollars for parking, $86 per AP test, and $100 per sport season. I looked it up online to confirm and found a Loudoun Times Mirror article on the topic. Immediately, all I could think about were resulting externalities. When I graduated from Heritage High School in 2007, parking permits cost $25 per school year and sports and AP exams were funded by the school. This past year there was a $15 million budget cut for the Loudoun School system and that is what has lead to these new fees. Externalities of the 700 percent increase in the parking fee:

• Positive: Encourages carpooling, riding the bus, or walking to school, leading to reduced pollution and traffic
• Negative: Inconveniences parents who have to drive their children as a result

The $86 per AP test also has its externalities:

• Positive: may encourage more students to take AP classes more seriously and better prepare for the exam
• Negative: could act as a barrier for students that cannot financially afford to pay for the exam

The $100 fee per sport played:

• Positive: can’t think of significant ones (maybe you can!?)
• Negative: discourages many students from trying out for the team if they know they won’t be getting significant amounts of playing time.
• Negative: it will become more difficult to get student to try out for the less glamorous JV and freshman teams.
• Negative: reduced participation in after school sports could contribute to drug, alcohol, and obesity problems.

Of the three fees, I am most skeptical with the sports pay-to-play fee. While the parking fee and the AP exam fee truly charge the individuals that are benefiting from parking and taking AP exams, I don’t think the pay-to-play fee does. Like I mentioned above, not all athletes on a team participate equally and arguably should be charged the same fee. Furthermore, playing time is based on a pure comparative measure (if your friend is a better athlete than you are, then he/she gets more playing time), so it is more difficult for the individual to decide his/her fate (unlike the parking permit where you are guaranteed a parking spot). For this reason I think the negative externalities of the pay-to-play fee are much more discouraging and I am interested to see if its costs will eventually outweigh its benefits leading to a reversal of the fee.

Voter Turnout for Primaries Shows Troublesome Trend

According to this article from September 14^th in the New York Times, for the first time since the 1930’s, Republican turnout for primary elections in 2010 has outpaced that of Democrats, with just over 10% of Republicans participating compared to about 8% of Democrats. To some this might sound like an obvious warning to Democrats of potential losses in the upcoming midterm elections, but the article suggests that there is more to these figures than meets the eye.

While it is unclear whether higher levels of Republican primary participation spell doom for the Democrats in November, a closer look at the data shows reasons for leaders of both parties to be concerned — the number of nonvoters continues to outpace voters. In a primary season where the narrative tends to be about partisanship and anger, the statistics through the end of the summer suggest that voter participation remained relatively consistent with the last couple off-year election cycles.

Precisely why fewer voters are voting in primaries is open to debate, but many believe it is because fewer Americans are choosing to identify with a specific party – both Democrats and Republicans are currently seeing fewer and fewer Americans self-identify into their party. With most states holding closed primaries, meaning one must be a registered Republican or Democrat to participate, a lack of party affiliation instantly disqualifies a voter from primary participation.

How might sagging rates of participation be remedied? One state is attempting to take action to reverse the trend of non-participation: simply by giving their voters the option of voting in advance by mail, Colorado’s rate of primary participation more than doubled in 2010 compared to 2006. Colorado follows the same closed-primary system as most other states, yet has managed to significantly boost participation rates just by reducing the opportunity cost to their voters of casting a vote in a primary election.

Were more states to follow Colorado’s example and attempt to make primary voting as quick and easy as possible for their voters, it might be possible to reverse the current trend; it is clear that most voters today need the process to be expedited to consider it worthwhile to participate in primaries.

Deregulation of the Taxi Industry in Ireland

When I lived in Dublin, Ireland last summer, I noticed the large number of taxis for the European capital of only 1 million people. I commented about this to my Irish co-worker who explained to me the recent deregulation of the taxi industry in Ireland. Before deregulation, a shortage of taxis existed in Dublin and getting home from a pub on the weekend often involved waiting for over an hour in a taxi queue. I never had to wait more than a minute to catch a taxi, even in the residential area where I lived in Dublin.

This article from an economist at the University in Dublin written in 2004 describes the history and results of deregulation. Regulation of the taxi industry began in 1978 (due to pressure from incumbent license holders) and made taxi licenses scarce and expensive. The Irish economy boomed in the 1990s and the number of taxi licenses remained at nearly the same level. The average taxi license cost I£80,000 in 1997 and after deregulation in 2000 only cost I£5,000. The number of licensed taxis rose from 2,722 in 2000 to 8,609 in 2002. Taxi drivers protested the deregulation, claiming that their income would decrease, the quality of taxi service would decline, and open entry would encourage criminals and rapists to become cabbies. While the individual income of taxi drivers did decline, the consumer gained from the decreased waiting time. No other signs of decreased quality in taxi service have been observed.

With the meltdown of the Irish economy recently, taxi drivers do have a genuine grievance about their loss of income. Tourism is down and less people can afford to take taxis. Additionally, many illegal immigrants work as taxi drivers. Does Ireland need that many taxi drivers? The joke in Dublin is that anyone with a car is a cabbie. Should entry into the market be made slightly more difficult or is the (nearly) free market the best for Ireland?