Structured Analysis at the WH Privacy Board

The White House’s Privacy and Civil Liberties Oversight Board recently came out with its annual report, which details its organization, operations, and recent work.

I was pleased to see that it has adopted a structured approach to analyzing privacy and related issues (see pages 24-25). Its approach is quite similar to the one adopted in the Framework document created by the Department of Homeland Security’s Data Privacy and Integrity Advisory Committee. (Well, I’ll put a finer point on it: the Privacy Board report acknowledges and thanks me and the committee. It’s very nice to be singled out, of course, but the Framework document was the product of many minds, eyes, and hands from the DHS Privacy Committee.)

This doesn’t mean the White House Privacy Board has gotten everything right, of course. I have no doubt that they could have done better. But it is very important progress to see a group like this committing to an organized, structured thought process. Doing so facilitates the discussions that lead to improved, better understood, and more widely agreeable outcomes.

(Some) Developing Countries Don’t Like the “Trade” Bit in “World Trade Organization”

The Doha round of world trade talks stagger on, with the latest “deadline” for completion of a deal set at end-2007 (i.e., before the US presidential campaign season gets underway in earnest). Last week the chair of the agriculture negotiations released a paper designed to inject movement back in to the agriculture negotiations that are proving the key stumbling block to reaching a deal on the other important areas of world trade. (On why agriculture is such a big deal, considering its relatively small share in world goods trade, see here). In any event, the chairman’s paper has been roundly criticized, which means it has been a success.

Part of the skirmish, and this is true of the trade talks more broadly, is the explicit commitment to give developing countries “special and differential (S&D) treatment” in the negotiations. In other words, poorer countries have to lower their trade barriers less than do developed countries. In the wake of the disastrous meeting in Cancun in September 2003, when developing countries flexed their muscle, these sorts of concessions were deemed necessary to get the Doha round back on track.

Unfortunately, the S&D provisions have been used frequently as an excuse for developing countries to do almost nothing to lower their trade barriers. It is not quite that clear-cut, of course. Many developing countries have an interest in exporting to other developing countries, and so want to see trade barriers come down across the board. But generally, developing countries feel that this round is about developed countries lowering their barriers to developing country goods and services, while the poorer nations continue to protect their “sensitive” goods markets from competition.

Mercantalism is to some extent the basis of the World Trade Organization: it presupposes that countries will only open their markets in return for increased access for their exports, from which the benefits of trade flow. That’s economic nonsense, of course, but in the absence of political will for unilateral trade liberalization (see more about that here), the negotiated multilateral route is the best one towards freeing markets and giving consumers access to cheaper and more goods and services.

The new development focus of the WTO, however, is proving to be an obstacle in itself to reaching a deal. South Africa, for example, on behalf of a group of other developing countries, read a statement in a meeting earlier this week of the negotiating group on market access (for industrial–or manufactured–goods) that, according to an article today:

“accused rich countries of subverting the talks known as the Doha round by seeking to advance their commercial interests instead of the original “development” goal of lifting millions of people worldwide out of poverty through free trade.” (emphasis added)

Seeking to advance their commercial interests? Those shameless knaves!

The World Trade Organization is just that – a trade organization. It is not a development institution. It is true that freer markets and trade lead to economic growth, but the Doha round of trade talks is a commercial negotiation, not a donors’ conference.

Naming it the ‘Doha Development Agenda’ may have been politically necessary, but it has proven to be a big mistake.

Wisconsin Gas Station’s Prices Are Too Low!

At least, as Dan noted below, that’s the verdict of state regulators, who recently threatened to sue a BP station owner unless he discontinues giving a 2 cent per gallon discount to senior citizens and a 3 cent per gallon discount to boosters of local youth sports programs.

According to Wisconsin regulators, the discounts represent “unfair competition” against other gas stations, and that — get this — imperils consumers. A 1939 Badger State law requires retailers to sell motor fuels at no less than a 9.2 percent markup over the wholesale price.

Wisconsin is not the only state with such a law — a dozen others (Alabama, Colorado, Florida, Louisiana, Maryland, Massachusetts, Missouri, New Jersey, North Carolina, South Carolina, Tennessee, and Utah) have similar provisions to protect gas station owners from the horrors of price competition.

You would think that, amidst the Sturm and Drang of the past few years’ high fuel prices, the public would force lawmakers to throw out this welfare for gas station owners. Alas, no.

Hat tip: Tim Rowland

Ban on Travel to Cuba Makes a Martyr out of Michael Moore

I normally don’t have the time of day for Michael Moore, the far-left filmmaker, but count me on his side in his current run-in with the U.S. Treasury Department.

Moore is under investigation for allegedly violating the U.S. government’s virtual ban on travel to Cuba. In February, Moore traveled to the socialist workers’ paradise with a group of Americans seeking medical care. The trip formed a segment of Moore’s new film “Sicko” that takes a critical look at America’s health care system.

According to an Associated Press story this morning:

The Treasury Department’s Office of Foreign Assets Control notified Moore in a letter dated May 2 that it was conducting a civil investigation for possible violations of the U.S. trade embargo restricting travel to Cuba. A copy of the letter was obtained Tuesday by the AP.

This office has no record that a specific license was issued authorizing you to engage in travel-related transactions involving Cuba,” Dale Thompson, OFAC chief of general investigations and field operations, wrote in the letter to Moore.

According to U.S. law, Moore could be fined thousands of dollars for violating our decades-old ban on travel to, trade with, and investment in Cuba.

As we have long argued at Cato [check out our research on the subject], the economic embargo against Cuba violates the freedom of Americans while giving the Castro government a handy excuse for the economic failures of its communist system.

By bringing this action against Moore, the U.S. government will turn him into a sympathetic martyr while providing millions of dollars of publicity for his latest piece of propaganda.

All Your Money Is Belong to Us (not)

The Ed Sector’s Sara Mead made a passing comment recently that, “yes, vouchers or tax expenditures in the form of tax credits are public funding.” The problem with this statement is not just that it’s wrong in general, or even that it has repeatedly been found to be wrong with specific regard to education tax credit programs, but that its wrongness has been a matter of court record for long enough that anyone working in education policy can reasonably be expected to be aware of it.

The most notable relevant case is Kotterman v. Killian, in which opponents of Arizona’s education tax credit program challenged it on the grounds that public money was being used to pay for religious instruction. Writing for the majority, Arizona Supreme Court Chief Justice Thomas A. Zlaket observed that

According to Black’s Law Dictionary, “public money” is “[r]evenue received from federal, state, and local governments from taxes, fees, fines, etc.” …. As respondents note, however, no money ever enters the state’s control as a result of this tax credit. Nothing is deposited in the state treasury or other accounts under the management or possession of governmental agencies or public officials. Thus, under any common understanding of the words, we are not here dealing with “public money.”

There’s much more. The AZ Supreme Court utterly gutted the plaintiff’s arguments on this matter. In their decision, the justices also cited numerous precedents from other states reaching the same conclusion, and subsequent rulings from Illinois regarding that state’s education tax credit program have further cemented this view.

When I see obviously counterfactual, readily falsified claims such as Mead’s, by people who should know better, I’m always deeply puzzled as to how and why they occur. Somebody throw me a bone here.

Medicare Pays $869 for an Air Mattress. (Yawn.)

The Justice Department’s Medicare Fraud Strike Force (cue theme music) has announced the arrest of 38 people who allegedly defrauded Medicare by charging outrageous amounts for items that were never delivered … like an $869 air mattress … and … I’m sorry, I nodded off. 

This is nothing new.  In Medicare Meets Mephistopheles, David Hyman quotes former Medicare administrator Bruce Vladeck:

“There are plenty of $400 toilet seats in the Medicare program…”

Nor is the amount of money involved impressive.  In all, these people allegedly defrauded Medicare for $142 million, or 0.038 percent of annual Medicare outlays.  HHS Secretary Michael Leavitt estimates that further anti-fraud efforts could save as much as $2.5 billion, or 0.67 percent of Medicare outlays … I’m sorry, I nodded off again.  Here’s some more from David Hyman:

In fact, no one knows how common fraud and abuse are, but 72 percent of the American public believes that Medicare would have no financial problems if fraud and abuse were eliminated. This perception is utterly uninformed by any connection with reality…

Fraud is bad, mmm-kay?  But while Medicare’s anti-fraud laws occasionally nab some real bad guys, according to Hyman they probably inflict as much damage as they prevent:

The vast sums of money spent by Medicare create the demand for [anti-fraud] laws to restrain the avarice of providers. Provider avarice triggers a search for ways around those laws, which, in turn, results in the broadening of those laws. As the laws are broadened, they discourage organizational innovation and market entry and catch more innocent providers. This, in turn, triggers a backlash against the law and widespread violation thereof. Plus, lawyers get rich off each step.

We’re barking up the wrong tree, here.  If you’re looking for real and substantial fraud in Medicare, look no further than the politicians who have promised Medicare benefits well in excess of the program’s ability to pay, or who pooh-pooh the program’s future funding shortfalls.  Again, Medicare Meets Mephistopheles:

The legal system imposes harsh penalties on pyramid scheme organizers, because defrauding hundreds or thousands of people is much worse than defrauding a handful of people. Indeed, if anyone other than the United States government were running the Medicare program, those responsible would already be serving long prison terms for fraud.

Now that’s an anti-fraud operation to get excited about.

Seeking to Maintain Price Cartel, Wisconsin Threatents Penalties Against Civic-Minded Gas Station Owner

State governments often collude with businesses to undermine competition and create unearned profits. Wisconsin’s mandatory 9.2 percent gasoline mark-up is a good example. Service stations get a government-enforced cartel, politicians doubtlessly get campaign contributions, and consumers are victimized. Yahoo.com reports on government price-fixing:

A service station that offered discounted gas to senior citizens and people supporting youth sports has been ordered by the state to raise its prices. …the state Department of Agriculture…says those deals violate Wisconsin’s Unfair Sales Act, which requires stations to sell gas for about 9.2 percent more than the wholesale price. Bhandari said he received a letter from the state auditor last month saying the state would sue him if he did not raise his prices.

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