"Consumer Protection"

[Mikerotch]

I've contended for quite sometime that all government rules and regulations tend to have the opposite effect of what they are originally purported to do. This is a classic case of said theory.

Wed May 9, 6:05 AM ET

MERRILL, Wis. - 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.


Center City BP owner Raj Bhandari has been offering senior citizens a 2 cent per gallon price break and discount cards that let sports boosters pay 3 cents less per gallon.

But the state
Department of Agriculture, Trade and Consumer Protection 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. The state could penalize him for each discounted gallon he sold, with the fine determined by a judge.

Bhandari, who bought the station a year ago, said he worries customers will think he stopped the discounts because he wants to make more money. About 10 percent of his customers had used the discount cards.

Dale Van Camp said he bought a $50 card to support the local youth hockey program. It would have saved him about $100 per year on gas, he said.
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I find it interesting that Wisconsin harasses for "undercharging" whereas here in Georgia our leviathan prosecutes for "overcharging". When will it end?

Mikerotch, Guilty Of A Hate Crime, Guess Who.

[Gradyman]

What Happen To Free Enterprise... :scratch:

[toecheese]

It is interesting legisation that came about trying to stop anti-competitive practices.

The fear was that a large gas station chain could sell gas below cost to force out mom and pop stations, reducing competition. So, a minimum profit was ensured that no one could do it.

As Mike says- the opposite happened- the law has been used *against* mom and pop stations.

I hate government, but why isn't energy regulated?

5 years ago, gas stations were getting gas for a buck and selling it for $1.09 (using the profit above). I assume they were making money and were happy.

Now, if the wholesale cost of the gas has trebled- they're paying $3 a gallon, but making 27 cents.

Same gas station, same fixed costs- but they're making triple the profit?

The gas station owner should be able to sell the gas for $3.09 and make the same money he did at $1 a gallon.

[Mikerotch]

As Mike says- the opposite happened- the law has been used *against* mom and pop stations.

The part I should have emphasized is that it is the Department of Agriculture, Trade and CONSUMER PROTECTION Division that is doing this. How, even in government speak, can mandating higher prices ever be in the best interest of the consumer ?

I hate government, but why isn't energy regulated?

This IS energy regulation. Toe, with all due respect, that is one of the more
nonsensical statements I've seen. It's akin to saying I hate all forms of tomatoes, please pass the ketchup. Hopefully that was misspoken.

One of the principles that made this nation the economic powerhouse it is (was) is the concept of the free market. Any type of regulation on pricing is damaging to the institution that enabled the production of the wealth we enjoy. It's high time the intelligent people of this country, what few there are, realize that government is incapable of improving on the free market mechanism. There is no possible way to force people or markets to do something other than what they want, except by exacting a cost that by definition exceeds any possible benefit.

Mikerotch, Still Touting The Free Market.

[toecheese]

Nope, I mean regulated as in how rates are set. Like your gas bill, or your electricity bill. That legislation was for anti-competitiveness. A 'minimum profit percentage' is the wrong way to approach it, as it destroys competition. I don't think there is any competition in gas stations anymore- no one is distinguishing themselves.

How, even in government speak, can mandating higher prices ever be in the best interest of the consumer ?


As I mentioned, it was to prevent markets from getting squeezed to only having a single supplier, which would have monopolized a market. Other states have approached it differently- with a 'must be withing x cents of the prevailing rate', which at least prevents the compounding profit issue earlier- but is still abused by big stations against little ones.

Should petroleum be regulated like electricity and gas? I'm an Exxon stockholder and have seen my investment soar- but it is obscene profits- Exxon makes more money than the entire country of Saudi Arabia.

I just want some true competition in gas stations- or take it away and give the gas station 'contract' to a single firm with negotiated rates.

If my statement was "one of the more nonsensical statements (you've) seen. ", I suggest you get out of the cave a little more and get someone to put into cave drawings recent politicians' statements. ;-)

and I like both tomatoes and ketchup

[riplipper]

Free market does not really exist any longer....In very few busineses/markets are we really free from some sort of govt protection...most of it is good, ie low cost Chinese imports being taxed so they cannot totally decimate the US ecomomy.....and the list goes on and on with foreign competive products....Not to mention all of the anti trust rules and regs in our country...again most of it is very good and benificial...

However I will agree that this Wisconsin gas ordeal is the most amazing evidence of govt overstepping thier bounds that I have ever heard of....

[Mikerotch]

again most of it is very good and benificial...

B. S. The only benefit is to the "protected" entity who otherwise can not compete. ( Please see filling stations who can no longer offer additional discounts to consumers ) It drives up the cost and down the quality 100 % of the time. The privileged few benefit while the consumer is forced to pay higher prices and receive lower value. There is no possible way that there is a net benefit realized from government interfering with the market. Ever.

Mikerotch, Knows The Costs, Seen And Unseen, Exceed The Value

[riplipper]

In theory you are completely right my friend.....but I and most people I know have become comfortable with our standard of living.....the day we start letting truly free "global" competition take place in america, you, will have to adjust to a very new and strange standard of living....
I dont know what your salary is....but "True" free trade would most likely cut it in half....OK for you maybe, but not for me.......and you may say the cost of goods would drop......I guarantee not in equity to your salary drop...

Then....whats really scary as our export trade plummets the govt will step in with more taxes to help pick it up......

[jackpine savage]

Mikerotch-where in the Constitution does it say that the economy of the US has to be a "free market" economy, let alone be free of any government regulation. I can see how the law in Wisconsin is indeed made to protect the consumer. The continual ris in gasoline prices alongside the astronomical profits of the oil companies shows that the market does not have the interest of the consumer in mind. The government pisses me off quite often, however unchecked capitalism where an industry like the oil industry has us by our balls scares me even more.

[Mikerotch]

Sorry I'm late with responses, but here we go:
I dont know what your salary is....but "True" free trade would most likely cut it in half....OK for you maybe, but not for me.......and you may say the cost of goods would drop......I guarantee not in equity to your salary drop...

There is no basis in economics for such an assumption. Free trade, by default, allows a better allocation of resources resulting in wealth creation, not the opposite. I will say; however, that specific trades or industries that are enjoying monopolistic or semi monopolistic privileges bestowed on them by government may see a downturn.

Mikerotch-where in the Constitution does it say that the economy of the US has to be a "free market" economy,

It does not specifically say we are to have a "free market" economy. One can; however, make a pretty compelling case that we are meant to be a "free" people and as such one can reasonably assume freedom extends to the economic arena. When one group of people (politicians in this case) begin to impose their will on another (us) via the endless rules and regulations we now enjoy (poor choice of words), our freedoms are diminished, as well as our ability to create wealth.

Mikerotch, Still Peddling The Idea Of Freedom

[jackpine savage]

how about when one group of people, lets call them industrialists, try to monopolize the market so as to limit the choice a consumer has while at the same time forcing the prices up in a way that goes against the "free" market.

[Mikerotch]

how about when one group of people, lets call them industrialists, try to monopolize the market so as to limit the choice a consumer has while at the same time forcing the prices up in a way that goes against the "free" market.

Fair question. Most businesses in their heart of hearts, desire a monopoly. I will submit for your consideration; however, that monopolies or "semi" monopolies only exist when some other force, i.e. government, distorts the playing field via rule, regulation, taxes, licenses, etc., or in some cases, brute force. A true "free market" which by the way, I would agree we don't have for the most part, never allows a monopoly to exist for more than a very short period of time. In large part, we miss seeing today what free markets can do because there is so much government involvement in everything, that we only get glimpses. The one thing I remind people is that free markets will never solve all of mankind's problems, but freedom will do a much better job than mandates and taxation.

Mikerotch, My $ .02

[Mikerotch]

Jackpine, here's a short piece that is a very good example of how government power is used to limit competition. In this case, the service that is artificially made more expensive is the practice of law. A good job is done of pointing out the actual effects of such licensure, as opposed to what one would normally think on the surface. That , to me, is key to becoming an advocate of free market economics; the ability to account for the unseen.

Licensure: A Lawyer Protection Racket


by Jacob G. Hornberger



One of the most popularly held beliefs in American society is that state licensing of attorneys is necessary to ensure that they are competent. But you’d have a hard time convincing people accused of crimes in Virginia of that. In an editorial entitled “A System Still in Crisis,” the Washington Post describes in excruciating detail how so many criminal defendants in Virginia have been and are being inadequately represented by attorneys.

“Between April and September the state court of appeals dismissed at least 165 criminal appeals not because they lacked merit but because people appealing convictions missed key filing deadlines. Attorneys committed most of these errors, not clients representing themselves, and the bulk of those errors were committed by court-appointed lawyers or public defenders named to represent defendants who could not afford to hire lawyers on their own. Such numbers are shocking, but also depressingly typical, as we reported earlier. In 2003, the Virginia Court of Appeals threw out more than 10 percent of its criminal docket because of calendar errors committed overwhelmingly by attorneys.”

Unfortunately, most people believe that the solution is simply to discipline those state licensed attorneys more harshly. Failing to think outside the box, they fail to ask the critical question, Does occupational licensure of attorneys ensure competent attorneys and if not, why do we need it?

As the criminal-justice crisis in Virginia perfectly reflects, occupational licensure does not ensure competence or, for that matter, ethics. Instead, it seduces the public into believing that because a lawyer is licensed by the state, he must be competent and ethical.

So what is the purpose and effect of occupational licensure? It’s very simple – licensure operates as a protection racket for attorneys, protecting them from unbridled competition. By limiting the supply of attorneys through a rigorous and expensive system involving getting into and attending law schools and then passing an extremely difficult, state-administered bar exam, lawyers are able to keep the number of practitioners artificially low, thereby enabling them to charge higher prices to the public. In fact, as J. Gordon Hylton, professor of law at Marquette University, pointed out at a law conference at the University of Virginia School of Law, the reason Virginia imposed bar exams in the first place as a prerequisite to practicing law was to impede blacks from becoming attorneys, especially since the number of black attorneys was increasing during Reconstruction, when there were no state-imposed impediments to practicing law.

By repealing occupational licensure laws, we would still have, of course, incompetent and unethical attorneys, but at least consumers would be much more wary about the particular attorney they retained. Local and state bar associations could help consumers choose among a broad array of legal services by publishing lists of recommended attorneys and services. Prices for legal assistance would be likely to plummet, so that consumers would have more-reasonably priced legal services.

Of course, repeal of occupational licensure would entail overcoming vehement resistance from the bar, including all those incompetent attorneys whom the Commonwealth of Virginia has licensed to practice law.

December 9, 2004

[Steel Shootin']

Damn, mikerotch, you're lighting this political forum up. When will the bi-polar meds kick in! :)

[Mikerotch]

Slow day, had to take the opportunity to educate some of the guys on the merits of liberty and free markets. The meds should kick in soon and I'll go merrily off to sleep .

Mikerotch, Still Wound Up