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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“Dopey” Triumphant?

Over at The Quick and the Ed, Sara Mead objects to a post I put up Monday illustrating that a recent college graduate with an average student loan burden who became a public school teacher could afford to make his monthly loan payments, take care of his essentials, and still have a fair amount of money left over on his first-year salary. I wrote the post in response to something Mead’s colleague Kevin Carey seemed to be saying last Saturday on Washington Journal: that student debt is so high many graduates can’t afford to go into teaching. 

So what are Mead’s objections to what I wrote? The first is that my post featured “dopey back-of-the-envelope calculations.” And the second? Well, you’d think she’d go on to explain why my calculations were dopey. But she doesn’t. In fact, dopey or not, while she mainly avoids the question at hand, she also more-or-less concedes that I was right:

I’m also not sure that starting teachers are the best place to focus in thinking about this issue. When my sister started her first teaching job out of college, she made more than I or most of our liberal-artsy friends did in our first jobs.

Ah, to be dopey. Apparently it works like a charm!

The Welfare State Causes “Sickness”

Sweden suffers from the world’s highest reported disability rate. This does not mean people there are actually sick, to be fair, but it does show that the welfare state creates bad incentives. People with weak values learn that they can feed at the public trough instead of doing something productive with their lives. A Wall Street Journal story explains how Swedish policy makers are trying to reverse the damage:

Swedes are among the healthiest people in the world according to the World Health Organization. And yet 13% of working-age Swedes live on some type of disability benefit – the highest proportion on the globe. To explain this, many Swedish policy makers, doctors and economists blame a welfare system that is too lax and does little to verify individual claims. … [G]overnments from Finland to Portugal are trying to cut back and get more people to work. Sweden’s bloated sick bay, which includes roughly 744,000 people on extended leave, has caused soul-searching about whether the system coddles Swedes and encourages them to feel sick. … During the 2002 monthlong World Cup soccer finals, short-term sick leave among Swedish men suspiciously rose by 55%. Earlier this year, police in Sweden’s capital city Stockholm investigated the local chapter of the Hell’s Angels biker gang for suspected benefit fraud, because 70% of the gang were on extended sickness benefits. The same doctor had certified them all as suffering from depression. … In Europe, roughly 20% of the working-age population – or 60 million people – depend on various government benefits as their sole or main income, compared with 13% in the U.S. That’s a major economic handicap. … Assar Lindbeck, one of Sweden’s best-known economists, says the lenient welfare state has changed the country over the past generation. In place of the old Protestant work ethic, it has become acceptable to feel unable to work and to live on benefits, he says. “I would not call it cheating,” Prof. Lindbeck says. “I would call it a drift in attitudes and social norms.”