When Guliani ran for mayor of New York in 1993 he mocked that the OTB, a government agency, was “the only bookie joint in New York that loses money.”

The current crisis hitting the Dutch health ministry indicates that its agency is “the only ‘joint’ joint in Netherlands that loses money.”

The governmental marijuana is less potent and more expensive than what can be had on the street.
The number of economic factors at play here is quite interesting.

To be fair the government is not providing the same good as the private dealers. It is technically providing a different good since its product is legal, is sold in a different venue, requires a prescription, and has fixed quality requirements. The government also has a smaller market because it is restricted to provide for medical use only.

Various factors could cause governmental marijuana to be cheaper. Being legal should remove the cost of law enforcement evasion. However, in this case the black market is openly tolerated so it may not have much effect. The government could also be directly subsidizing producers with tax funds. Perhaps because of the bad incentives that might arise that was not the choice made. Instead medical insurance has a part to play in this.

Governmental marijuana is covered by insurance, which causes the third party payer problem to arise. This should tend to raise prices. However since there is a glut it’s not obvious this is an important factor either.

Perhaps, as usual, the government just isn’t providing the product the consumer wants or needs. After all it can always bail itself out with taxpayer money if the consumer fails to cooperate.

I woke up this morning to an apparently normal universe. I saw what looked like the usual fair over at CNN, an article titled “A return to gas lines and rationing?”. Upon reading it I discovered I was in an alternate universe where news articles actually contain sound economic reasoning. I haven’t decided yet if I wish to get back to my own dimension.

Pardon my french. The governmental disinformation campaign on deregulation continues. First there was the California energy crisis and now the northeastern blackout. According to this article in Newsday the final investigative report concludes that deregulation played a role in the Aug 14th blackout. As you can surmise from the article the “deregulation” consisted of non-profit oversight, forced purchases from independent power producers, and forced access to power grids. That doesn’t sound like deregulation to me. Nobody is building transmission capacity precisely because of these regulations.

From the article:

The investigators also blamed the Midwest Independent System Operator, a nonprofit organization charged with overseeing the reliability of the grid in that region, for its lack of awareness that day.

The final report added one new wrinkle to the analysis by conceding that deregulation of the energy business and the resulting increase in long-distance power trading probably played a role in the blackout.

In 1986, America’s investor-owned utilities generated the majority of their own electricity, purchasing just 18 percent from other utilities and independent power producers, the report notes. By 2002, the portion purchased from outside suppliers had grown to 37 percent, the report says, necessitating a dizzying array of power transfers that sometimes span long distances.

Over the same period, the report notes, American electricity demand and generating capacity grew by 26 percent and 22 percent, respectively, while the capacity of transmission wires grew hardly at all.

“t is likely that the increased loads and flows across a transmission grid that has experienced little new investment is causing greater stress upon the hardware, software and human beings that are the critical components of the system,” the report said.

The task force recommended commissioning an independent study of the relationships among industry restructuring, competition and reliability.

I wonder how long it will take the independent study to discover that there is no incentive to build transmission capacity if you cannot capture the profits from doing so? Of course the answer is never, since the purpose of such a study is to place blame on the market. As the saying goes, “De Nile ain’t just a river in Egypt.”

Part of the problem with using U.S. antitrust laws to shake down domestic corporations is that the same strategy can be used by foreign countries to implement trade protectionism and increased taxation against those same companies–as is evidenced by the current European attack on Microsoft.

Judging from this news report at CNN, it appears that the judge in Martha Stewart’s trial is not going to allow her to present a defense.

“Among the limitations: Stewart’s lawyers can’t say she was being prosecuted for proclaiming her innocence in the case or for asserting her First Amendment right to free speech.

The defense also is barred from saying that the securities fraud charge Stewart faces is a novel application of securities laws, and from making statements that would tend to show the government’s motives in investigating or prosecuting Stewart were improper.

The defense also can’t say that the fact Stewart and former broker Peter Bacanovic aren’t facing criminal insider trading charges means the government doesn’t believe they committed such a crime.”

Why bother with a trial. Just throw her in the bog and if she floats then she’s a witch.

South Euclid loses out on tax windfall since the city charter wasn’t updated to tax lottery winnings.

“It’s not a good day for the city,” Mayor Georgine Welo said Monday. “We were all excited until we went to go for the money and learned that we are not entitled to it. We are very saddened by the news.”

So instead of feeling happy about the good fortune of one of their fellow citizens, South Euclid city officials are upset. Funny thing is that I now feel doubly happy for the winner, Rebecca Jemison, who gets to keep another $1.4 million. Hoorah!