Marketplace - American Public Media

The latest episode of Diary of an Internet Phenom involves a Boston-based company, Kickstarter, and a new invention the whole family can enjoy.

WobbleWorks, a Boston-area toy company that needed funding, went onto Kickstarter at the beginning of this week with a total goal of raising $30,000. As of last evening, people had pledged $900,000 and counting. What could be that compelling? How about a two foot, plastic Eiffel Tower drawn with what's called "3Doodler," a new pen that's a 3D printer.

Imagine a magic marker with an electric cord. Press the button and out comes, not ink, but a thin stream of melted plastic that solidifies. Ever see people build little models with toothpicks? It's like that, but no toothpicks, instead you doodle it free-hand in plastic.

"The same way that you use a pen, you can use a 3Doodler, except that when you lift the 3Doodler off the paper, the pen keeps spilling out ink, so you can write in the air," says Max Bogue, co-founder of the company that invented the 3Doodler.

The 3Doodler uses biodegradable plastic as ink, which instantly cools and hardens as you draw. That may sound neat, but Bogue thinks the real advantage of the 3Doodler is its simplicity.

"There is no software, there is nothing to learn, all you have to do is just draw with it," says Bogue.

Payday lenders are often blamed for taking advantage of the little guy. But that's something that Justin Davis, a payday lender in Kansas City, Missouri, takes issue with.

"For me and my business, I try to treat my customers right," says Davis. "As long as people do the math, then they are not doing something stupid."

A recent study from Pew reports that the average payday loan borrower ends up indebted for five months*, paying $520 in finance charges for loans averaging $375.

But Davis, who charges a 17 percent interest rate for a two-week loan, argues that his business can still be a good alternative for those who are trying to avoid even higher overdraft fees on late bills.

"My service is not only competitve with those fees, but in many instances, cheaper," Davis says. "Most banks will charge you a $4-a-day continuous overdraft fee."

*CORRECTION: An earlier version of this story incorrectly referred to the length of time a payday loan borrower remains in debt, according to a Pew study. According to the study, the average borrower is in debt for five months. The text has been corrected.

Sales are suffering as defense budgets are slashed all over the world, but the U.S. is a special case where over $40 billion in defense cuts are set to go into effect next month.

Francis Tusa, editor of Defence Analysis, says that will heavily impact on European defense suppliers.

"If sequestration goes ahead in the way we’re talking about it, they will see a rather heavy hit on turnover," says Tusa.

According to Tusa, that's because U.S. contracts are far more profitable than those in Europe.

The British defense contractor BAE Systems announced a fall in profits today. The company earns 40 percent of its revenue in the U.S. It says it may have to lay off 3,500 workers in its shipbuilding industry if Washington doesn’t stop the cuts.

Other European defense contractors, such as EADS, say as the American military’s budget shrinks, U.S. defense suppliers will vie for new contracts in Europe and elsewhere. In that case, the global defense industry could get a lot more competitive.

Sales are suffering as defense budgets are slashed all over the world, but the U.S. is a special case where over $40 billion in defense cuts are set to go into effect next month.

Francis Tusa, editor of Defence Analysis, says that will heavily impact on European defense suppliers.

"If sequestration goes ahead in the way we’re talking about it, they will see a rather heavy hit on turnover," says Tusa.

According to Tusa, that's because U.S. contracts are far more profitable than those in Europe.

The British defense contractor BAE Systems announced a fall in profits today. The company earns 40 percent of its revenue in the U.S. It says it may have to lay off 3,500 workers in its shipbuilding industry if Washington doesn’t stop the cuts.

Other European defense contractors, such as EADS, say as the American military’s budget shrinks, U.S. defense suppliers will vie for new contracts in Europe and elsewhere. In that case, the global defense industry could get a lot more competitive.

President Obama is trying to pressure Congress to avoid $85 billion in federal budget cuts set to take effect March first. The president gave interviews Wednesday to eight local TV stations in markets with a lot at stake in the fight over the so-called sequester cuts.

One of the president’s interviews was with WJZ-TV in Baltimore. He had this message for Maryland workers who could be forced to take unpaid leaves because of the budget cuts:

“There’s no reason they should be furloughed or layed off," he said. "This is a problem that Congress can solve.”

Almost all of stations the president talked to are in places with defense installations that play a large role in their economies.

Larry Sabato, who teaches political science at the University of Virginia, says the president is trying to bring the cuts, known in Washington as the sequester, home.

“He’s using local economics to show people that the sequester is not simply an odd word," he explains.  "It has real world consequences and could cost some of them their jobs.”

The strategy could succeed, in the short run, says Jack Pitney, who teaches government at Claremont McKenna College. But Pitney has a word of caution for the president.

"In the long run, if the economy suffers as a result of the sequester, he’s the one that’s going to suffer,” Pitney says.

Because voters tend to blame the White House for the state of the economy. 

A final thought, which goes like this. We've just gotta find a new word for "sequester." Because really, it's just not fun to say -- or hear. At least "fiscal cliff" had a certain ring to it, even though we didn't really love that either.

Speaker of the House John Boehner is trying to get some traction for "Obamaquester." Funny, if not entirely accurate.

So over to you. Tweet us @MarketplaceAPM or @KaiRyssdal, or comment below with your suggestion.

DEET, which is the the active ingredient used by brands of insect repellent including Off, 3M and Cutter has been proven to be ineffective in fending off certain kinds of mosquitoes.

The London-based study showed that a certain kind of mosquito found in tropic regions that spreads diseases like yellow fever was not repelled by DEET after it was exposed to it a second time. However, it is not yet known how long it takes for the repellent to become ineffective.

"It's quite a worrying find," says the BBC's Science Correspondent Rebecca Morelle. Morelle says more research will be needed to gauge the effect of the findings on regular bug repellent use.

Scientists say that although DEET has been proven to be less effective in some cases, it should still be used when a person is exposed to insects.

DEET, which is the the active ingredient used by brands of insect repellent including Off, 3M and Cutter has been proven to be ineffective in fending off certain kinds of mosquitoes.

The London-based study showed that a certain kind of mosquito found in tropic regions that spreads diseases like yellow fever was not repelled by DEET after it was exposed to it a second time. However, it is not yet known how long it takes for the repellent to become ineffective.

"It's quite a worrying find," says the BBC's Science Correspondent Rebecca Morelle. Morelle says more research will be needed to gauge the effect of the findings on regular bug repellent use.

Scientists say that although DEET has been proven to be less effective in some cases, it should still be used when a person is exposed to insects.

Updated (7:45am EST): Walmart beat expectations in its latest earnings report, but offered a wary outlook for the first part of this year. Safeway also reported better-than-expected earnings Thursday. The two companies have more in common than one might think. Groceries now make up more than half Walmart’s American sales.

Today’s numbers look back, but the worry is about what’s ahead. There’s been a lot of speculation about how this year’s increase in the payroll tax will impact consumer spending, but other factors will also come into play.

It’s clear some Walmart higher-ups are worried about tightwad consumers. Bloomberg obtained leaked e-mails where a top executive called February sales “a total disaster.” Low-income shoppers are especially sensitive to the payroll tax.

But macroeconomists, true to their name, think about the big picture. They point to other happenings that could offset skimpier paychecks.

“There was a minimum wage increase in 10 states, so that would help balance it out,” says Susan Sterne, president of Economic Analysis Associates.

Plus, there’s hiring happening, which means some people are getting brand new paychecks, putting more money in their pockets.

Grocery industry watchers pay close attention to gas prices, which are currently on the rise. Many large grocery stores now have filling stations on site and offer shoppers gas deals through their loyalty programs, placing gas prices at top of mind as consumers push their carts through the aisles.

“That kind of puts it right in the customer’s face,” says Meg Major, editorial director for the trade magazine Progressive Grocer.

People will still buy groceries. The question is whether seeing higher gas prices will keep shoppers from grabbing something extra or upgrading to a higher-end item. Stores live or die on those impulse buys -- items that aren't not on the grocery list.

“Any form of discretionary purchase with every consumer possible is a victory,” Major says.

And victory for these retailers is riding on much more than the payroll tax increase.

Mark Garrison: Some Walmart higher-ups are definitely worried about tightwad consumers. Bloomberg obtained leaked e-mails where a top exec called February sales quote, “total disaster.” Low-income shoppers are especially sensitive to the payroll tax. But Susan Sterne of Economic Analysis Associates thinks there may be enough going on to offset it.

Susan Sterne: There was a minimum wage increase in ten states, so that would help balance it out.

Plus, there’s hiring happening, which means some people are getting brand new paychecks. Rising gas prices are something Meg Major watches. She’s editorial director for the trade mag Progressive Grocer. Many grocers now have filling stations on their lots.

Meg Major: That kind of puts it right in the customer’s face.

People will still buy groceries. The question is whether seeing higher gas prices will keep shoppers from grabbing something extra. Stores live or die on those impulse buys.

Major: Any form of discretionary purchase with every consumer possible is a victory.

And victory is riding on a lot more than the payroll tax. In New York, I'm Mark Garrison, for Marketplace.

Though Yahoo’s shine has faded in recent years, Yahoo news, sports and entertainment sites are still some of the most popular destinations on the web. 

But it’s been losing ad dollars to competitors. Yahoo’s new homepage, in part, is supposed to address that. Part of Yahoo’s problem is “stickyness” or the time people spend on the site. In that respect, Facebook is eating Yahoo’s lunch, says Brian Wieser, an analyst at Pivitol Research.

“Facebook reaches far more people and probably triple the cumalitive time, when you account for all the time people are on Facebook,” says Wieser.

The more time people spend on the site, the more ads it can serve up,  says Carlos Kirjner an analyst at Sanford Bernstein.

“The more the site owner can learn about your preferences and behaviors, they can put forward better ads and better content,” he says.

Yahoo thinks users will stay on the site longer if the news is “tailored” to them, said CEO Marissa Mayer in an interview on NBC’s Today Show.

“One of the things I like is this very personalized news feed down below, it’s infiniate, so you can keep scrolling forever,” Mayer said.

Mayer scrolled down a list of news headlines that appear in the center of the homepage and looks sort of like Facebook’s newsfeed. In fact, Yahoo teamed up with Facebook to update its hompage. When users log in with their Facebook account, they can see news stories, their friends like.

Carlos Kirjner says Yahoo’s been able forge partnerships in a tech environment that’s become increasingly adversarial. Earlier this year, it partnered with Google, which will start selling advertising for Yahoo. And its search engine is powered by Microsoft’s Bing.

“I think that is one of the advantages that Yahoo has, it is large enough to be an interesting opportunity,” says Kirjner, “but it’s small enough not to be seen as a threat.”  

Alex Brown, a senior at Guilford High School in Connecticut, is taking two AP classes: statistics and chemistry.  

“They’re both really intense,” she says. “I don’t think people understand how much AP classes actually take out of us. It’s going to be really rough.” Then she laughs nervously.

More high school students than ever are taking Advanced Placement courses, the College Board announced. And, they are doing better on the exams. The average score rose to 2.83 from 2.80, out of a maximum of 5.

Yet despite all the hard work, students like Brown may not be able to place out of required college courses or even skip freshman year if they score well on the AP tests. Some prestigious colleges have stopped giving academic credit for AP tests scores.

Brown doesn’t. Columbia doesn’t, and most recently, Dartmouth said it won’t let AP students skip ahead.

“We want a Dartmouth education to take place at Dartmouth,” says school spokesman Justin Anderson.

Translation:  APs aren’t Dartmouth.  Will more schools follow suit?  David Conley, a professor at the University of Oregon and CEO of the Educational Policy Improvement Center, says: No.

“We’ve always seen a certain group of colleges not give much credit to AP. It’s not unusual and not new,” he says. “They’re highly selective and can get away with that.”

Conley says prestigious schools can afford to be picky about what credits to accept. But there are “more general admissions schools where they want students to bring AP credits and they do want to reward them for doing that.” In other words, AP credit is like bait for the best students.

Behind this question of college credit for AP tests is a deep-seated anxiety felt by educators that students aren’t prepared for college.

“Three out of four students who get to college come lacking in foundation and strong skills that a good college education requires,” says Carol Geary Schneider, president of the Association of American Colleges and Universities.

Specifically, she says students lack skills in research, writing, and evidence-based analysis. Schneider says the general problem of college readiness “raises questions about whether the courses students took in high school, that might’ve been labeled AP or dual enrollment, were really providing students the preparation in writing and research that college itself will emphasize. Different institutions are making different judgments about that.”

Ken Bernstein, a retired teacher who writes on education, thinks more schools might join Dartmouth, Brown and Columbia on the AP question. Even though a third of high school students are taking AP tests, he says, “There aren’t that many kids prepared at a college level. Let’s be realistic.”

Trevor Packer, a Vice President at the College Board, the organization that runs the AP tests, points out that AP scores weren’t originally used as a replacement for college credit.

“The original use in 1956…was as a tool for placing students appropriately”, he says. That means determining whether a student should be in French II instead of French I, but not about placing out of French altogether.

Packer says the College Board is revamping the AP exams to make them more rigorous.  But there is no question, he adds, that APs are making students more prepared for college.

“The research does consistently show that students who participate in AP courses in high school and earned a score of 3 or better perform at a higher level than matched peers,” he says.

Even if some top schools aren’t giving college credit, AP tests look good on high school transcripts. So they may not let students get out of freshman year, but they’ll help them get into college in the first place.

Don't look now, but gas prices are on the rise again -- 45 cents in the past month, 33 straight days of increases, according to AAA.

Sure, oil prices are going up too, but how does it work down at the retail level? Why is one station $4-a-gallon and the one down the road $4.05? We called a guy we know who runs a gas station. Oz Elam has a place on Boston Post Road in Pelham, N.Y.

Right now, gas at Elam's station is going for $3.99. Elam said he came up with the number by checking his wholesale numbers and the shipment costs. "Then I'll make a quick ride around the neighborhoods, I check my margins, add a couple pennies. But we think the $4 is the red line that we shouldn't cross...$3.99 is definitely much more effective than $4."

Contrary to popular belief though, Elam said he isn't making money as the price of gas goes up. "Everyone blames the markets; I think it's Wall Street. I know we are not making, I know my wholesaler's not making as much money as the people think." Most of the revenue he makes these days, he said, comes from his convenience store. He said he can make at least a 30 to 40 percent profit margin off the coffee he sells.

Still, he hears the complaints of the high gas prices from customers. "It is ridiculous," he said. "Of course they cannot go to Wall Street or they cannot contact the wholesaler. We are the only person they have contact with; of course they complain to us."

Congress is off this week, and lawmakers are back home in their districts, doing town halls and meeting with constituents. What makes this congressional break a little more newsy than others is that the sequester cuts are due to hit March 1. These cuts are big and broad, and many senators and representatives think they could do great harm to their states.

Virginia Democrat Mark Warner sits on the Senate Budget Committee and he says that the sequester plan is "the most stupid option possible."

The cuts, should they happen, will be across the board without any regard to what programs are more valuable than others. Every budget will be affected equally from the Federal Aviation Administration to the Food and Drug Administration, and cuts to the Defense Department will hit hard in Virginia, which is Sen. Warner's home state.

"Just like families, when the military goes out and buys 10 tanks instead of one tank we get a discount," he explains. "Because each account will get cut equally, some of these contracts will have to be broken and the discount that we recieve will end up costing us more than the savings."

He adds: "When you do this across the board without regard to merit, the American public will have a right to be outraged at all of us."

So why create the sequester when it was doomed from the start? Well, says Warner, it goes way back to the summer of 2011 when Congress was fighting over whether to raise the debt ceiling. "It was set up around the whole debacle around the debt ceiling ...with the expectation that the so-called supercommittee would do its job."

But, he says, that congressional "super" committee forged to come up with a deficit reduction plan didn't do its job, which leaves us where we are now.

"There are a lot of folks in Washington that, quite honestly, I'm not sure want to reach the compromise that we need," says Warner. "We have to do more revenues, we have to reform entitlements, we have to do cutting -- but there seems to be a lot more about who is going to win the political argument of the day or the week versus how do we make sure we get this economy going."

Paying for parking is a lot like sitting in traffic. Iit's a regular part of city living, which means we end up hauling around rolls of quarters, or standing in line at the kiosk to pay. And there's always the risk of getting a ticket when your meter runs out.

But what if there was a way to skip the meter, altogether? Some cities are testing new technology that could make it so.

Portsmouth, N.H., is one of those charming New England towns where the busy central square is lined with bookstores, boutiques and coffee shops -- the kinds of places where you like to lose yourself for a while.

It’s also lined with parking spaces and hungry meters, and the city’s parking enforcement officers write an average 170 tickets a day. The town has parking kiosks that take credit cards, but drivers here have another option aimed at saving them time, money and stress.

For $20, they can buy a wireless device the size of a credit card. It's called an EasyPark. It works kind of like a stopwatch to track how long a car is parked in a space, then charges the driver for only that time.

“For the person using the device, they come, they park, they walk away,” says Tom Cocchiaro, Portsmouth’s head of parking operations. “They don’t have to worry about putting tickets in their windshield or worry about how much time they need to buy.”

Drivers pre-pay for parking online, so the money goes straight into the city’s bank account, leaving fewer coins to collect. Local laws still apply -- if there’s a two-hour limit on a space you still have to move in that time. But taking meters out of the equation means you can let that lunch meeting go longer than you planned without worrying you’ll get a ticket.

Across the country, more cities are testing technology like this alongside traditional parking meters, to see which method prevails. Another way to pay that’s catching on is the free smartphone app; there’s one called ParkMobile that’s available in 32 states.

The company’s V.P. of business development, Laurens Eckelbloom, says pay-by-phone technology suits a lot of Americans’ new habits.

“We don’t have a lot of cash with us, and the increase in popularity of smartphones in the United States... there is a huge change and shift in behavior of people,” Eckelbloom explains.

Washington, D.C., signed on to ParkMobile two years ago and the District now gets more than 40 percent of its parking revenue through the app.

“The beauty of the system is you can remotely extend your transaction,” says Eckelbloom.

In other words, you can add money to your meter without giving up the cozy chair at Starbucks. ParkMobile says it has over a million users and adds more than 50,000 new members each month.

The company banks a 35-cent fee per transaction, and there’s a monthly membership fee for the EasyPark system Portsmouth uses, so there’s big profit potential for the products that win drivers over.

“There’s lots of competition for the best way to charge people for parking,” says Donald Shoup, who teaches urban planning at UCLA. Shoup says high-tech parking payment systems are widespread in Europe, but Americans are just catching on.

“The manufacturers tell me it’s a nightmare selling anything to cities in the United States,” Shoup explains. “They’re so cautious and they seem to be afraid the customers won’t accept it or understand it, but it is changing.”

Shoup says the latest technology is making life easier, even for drivers who don’t have it. Some cities are collecting data from parking apps and wireless devices to find ways to free up more spaces for everyone.

Generally, payday loans are advertised as quick fixes for unexpected expenses -- a couple hundred dollars to hold borrowers over until their next paycheck. But a new report from The Pew Charitable Trusts released Wednesday found the average borrower ends up in debt for five months, paying $520 in finance charges for loans of just $375.

Some borrowers spend years in debt.

Evelyn Hatchett is a retired garbage worker in Houston. In 2006, she fell behind on basic bills, including her electricity and some car repairs. She was tempted by payday loans, thinking they would help her catch up financially.

But sister advised her to steer clear.

“Because she got caught up years ago,” says Hatchett. “But I said, ‘Oh no, they going to loan me this money. I’m going to get it, because it was good at the time.'”

The process seemed simple enough: she’d get $350 and pay back $425 in a couple of weeks. But when she couldn’t repay the loan all at once, she started paying just the finance charges. Then she got a new loan to pay off the old one.

Hatchett estimates she’s borrowed about $2,000 from payday lenders over the years, plus a separate $1,500 she borrowed against her car. By now, she thinks she’s paid back three to four times the original value of her loans.

“I would go to one company and then I’d go to another,” she says. “I had like five loans out at one time because that’s how desperate I needed the money.”

Pew’s study found nearly 40 percent of payday borrowers would have taken out a loan no matter what the terms were.  

Moreover, consumers have complicated relationships with these lenders, according to Nick Bourke, the director of Pew’s Safe Small Dollar Loans Research Project.

“They’re often talking to people behind the counter who do remember their names,” he says. “[Store employees] look [consumers] in the eye and they smile. They’re nice to them and they hand them money when they’re in a difficult situation.”

Like scratching an itch, the loans feel good for just a minute. Borrowers say they’re grateful for the money.

But they also report feeling taken advantage of and nearly three out of four respondents said they want more regulations on payday lenders.

Evelyn Hatchett is one of those consumers who hopes the rules surrounding these loans will change. She’s still paying down her debt -- currently about $700 across two loans.

On Thursday, Walmart releases its fourth quarter earnings. We’ll find out how well the nation’s largest retailer did during the holiday shopping season.

Expectations are those earnings will be slightly better than a year ago. But Walmart’s next quarter isn’t shaping up to be as good.

According to an internal memo quoted by Bloomberg News,  one company executive says sales during the first two weeks of February were the worst he’s seen in his seven years with the retailer.

Walmart is pointing the finger at the 2 percent Social Security payroll tax increase that went into effect Jan. 1st. But is that really what’s driving down profits?

For Kay Jakes, it’s as good of a reason as any.

“A couple of dollars here and there, you know, it does add up,” she says in the parking lot of an Atlanta Walmart.

Jakes’ shopping cart is a bit emptier because her paycheck is a bit smaller, and that means her shopping trips lately have been a bit leaner.

“What you’re buying may be less than, perhaps, what you came in for; so there is some type of effect,” she says.

For the average consumer, the return of the 2 percent Social Security payroll tax eats up about $15 a week or so.

But analyst Patrick McKeever, who follows Walmart for MKM Partners, says the payroll tax increase is just one of several factors that play into retail spending.

“It’s still early to make the call, but it does seem to be having some impact,” he says. “But for lower income consumers, it’s more of a negative than for middle and upper income consumers.”

And guess where a lot of lower income consumers shop?

Still, part of Walmart’s poor start could actually be because the economy is getting better. Charlie O’Shea, a senior analyst at Moody’s, says we could be seeing a reversal of what’s known as the “trade down” effect.

“Someone shops at store A, and now that they’re making less money, they’re shopping at store B,” he says. “And we saw a lot of that during the recession when Walmart picked up a lot of sales.”

O’Shea believes a good number of consumers who traded down to Walmart in recent years are now returning to store A, further threatening the retail giant’s profits.

The cars we drive today are more fuel-efficient than ever, and that would seem to be great news for everyone. But here’s one downside: transportation budgets are heavily powered by the gas tax.

"And right now, the nation relies extremely heavily on gas taxes for transportation funding," according to Jaime Rall, from the National Conference of State Legislatures. She says that better fuel mileage means less money for roads and bridges. "Advancements in fuel efficiency pose some real problems for transportation budgets."

Plus, the gas tax isn’t a percentage but rather a fixed amount -- which, because no politician wants to raise the gas tax, has been stuck at 18 cents a gallon for 20 years.

So what should be done about it? The most sensible may also be a hard sell: billing drivers based on their mileage.

"At least 18 states have pursued pilot projects," says Rall. "And in the past five years, legislatures in at least 11 states have considered more than 20 proposals to establish or study state level fees of this kind."

Another idea, ready for import from Finland, is to base traffic fines on the driver’s salary. Just a few tickets from a few speeding billionaires could help balance any budget in a hurry!

Kai Ryssdal: Time now for a little bit of Freakonomics Radio -- that moment in the broadcast every couple of weeks where we talk to Stephen Dubner, the co-author of the books and the blog of the same name. It is “the hidden side of everything.” Dubner, how you been, man?

Stephen J. Dubner: Great Kai, thank you. Been thinking about you. You drive a lot out there in California, right?

Ryssdal: It’s L.A. baby. Of course we do!

Dubner: What are you paying for gas these days?

Ryssdal: Oh, a lot! It’s over four bucks a gallon.

Dubner: So people generally don’t like that, even though relatively we pay pretty cheap gas. The good news, however, is M.P.G. -- miles per gallon. We are now at a point where we get more miles per gallon of gas than any time in history, about 24 miles on average for the U.S. car fleet. And that number because of federal regulations is going to go up quite a bit in coming years. So great news, right?

Ryssdal: Great, yes. Now what? With you, it’s always good news, bad news, dude. What do you got?

Dubner: Well, let’s go a little deeper. Fuel economy goes up, which means what? It means that the cost of every mile you drive goes down. So people have an incentive to drive more, which can lead to more congestion, more risk of accident, but there’s an even less obvious problem than those. Where do we think the money to build and maintain our roads all comes from?

Here is Jaime Rall from the National Conference of State Legislatures.

Ryssdal: Okay.

Jamie Rall: And right now, the nation relies extremely heavily on gas taxes for transportation funding and advancements in fuel efficiency pose some real problems for transportation budgets.

Ryssdal: If you follow the logic train here, it’s people are using less gas because cars are more efficient, and then there’s less tax revenues being raised to pay for the road. Right?

Dubner: You got it. Revenues are hurting. But it hurts additionally because the gas tax is such a strange tax. Instead of being a percentage of, you know, whatever, two percent, five percent per gallon, it’s a fixed rate. So the federal rate is 18 cents a gallon. States add their own state taxes on -- again, a fixed rate. But because it’s fixed, unlike, let’s say, a sales tax, you don’t raise more tax revenue when the price of gas goes up. So every year, what happens is gas tax revenues lose purchasing power.

Ryssdal: All right, so this is one of those gotta-ask-it questions even though I know the answer. Why not just raise the gas tax?

Dubner: It would seem logical. Many economists have been lobbying that for years. But politically, for whatever reason, the gas tax is one of these things that’s just a no-go zone.

Ryssdal: All right. So find me the Freakonomics way out of this then.

Dubner: Well, let’s go down a wrong path first, shall we? I hate to pick on politicians, but the governor of Virginia, Robert McDonnell, has an idea that seems like a pretty bright idea, but most economists would say it’s not bright at all. What he wants to do is eliminate the state gas tax in Virginia and make up for those funds by raising the sales tax.

Ryssdal: And that’s a bad idea because...

Dubner: Because a tax is most fair when it hits the people who should pay it, but leaves everyone else alone. Right? But what Gov. McDonnell is doing is flipping that logic.

Ryssdal: All right. So hit me with your plan.

Dubner: Well there is a growing movement -- I don’t know how well this would work -- but the idea is this: to tax drivers the way they probably should be taxed, which is per mile driven. So that way, you’d pay the same amount for the roads whether you’re driving, you know, a gas-guzzler, or an electric car that doesn’t use any gas at all. Here’s Jaime Rall again.

Rall: At least 18 states have pursued pilot projects. And in the past five years, legislatures in at least 11 states have considered more than 20 proposals to establish or study state level fees of this kind.

Ryssdal: Yeah, you know what though? This smacks of Big Brother watching me when I drive, dude. Knowing where I’m going. Right?

Dubner: Yeah, people will not like this idea, in many cases.

Ryssdal: They’ll go nuts!

Dubner: On the other hand, let me just say this: we’ve all gotten used to willingly carrying around a GPS device with us at all times, which is what a smartphone does, right? We’re also getting used to the ideas of electronic tolling where we don’t have to stop at the booth. So I wouldn’t be shocked if we were to see some per-mile taxing in the future. If things get really desperate, if you really need to raise money for roads, we could try what they do in other parts of the world, which is this, Kai: traffic fines that are indexed to how much money you actually earn. So, in Finland for instance, if you get a speeding ticket, you’re fined about 20 percent of one month’s take-home pay. So, you know, the speeding fisherman is going to pay a lot less for his ticket than the speeding high tech boss or radio talk show host, for that matter.

Ryssdal: Yeah, ba dum boom. One cautions though, that this is America my friend. Not Finland.

Dubner: That’s true -- not yet, Kai. Check in with me in a couple of weeks. We’ll see if we’re all looking a bit more Finnish around the ears.

Ryssdal: Steven Dubner, Freakonomics.com is the website. We’ll see you in a couple of weeks.

Dubner: Thanks for having me, Kai.

The U.S. Supreme Court will return to the controversial question of campaign finance once again. On Tuesday, the court announced it will take up a case challenging limits on how much individuals can contribute directly to candidates or political parties within an two-year election cycle. Congress put the limits in place in the 1970s in response to the Watergate scandal, as an effort to curb corruption through large political donations. 

A conservative Alabama businessman named Shaun McCutcheon brought the case that the Supreme Court has decided to take up. McCutcheon recently wanted to make contributions to more candidates and more Republican Party committees than is allowed under current limits. He and the Republican National Committee are asking the Supreme Court to consider lifting those limits, on the grounds that they are unconstitutional.

The plaintiffs also argue that in the wake of the court’s ruling in Citizens United three years ago, which removed independent political spending limits on corporations and individuals, more money is now being siphoned away from candidates and political parties and into outside super PACS which are less transparent and harder to hold accountable. They say removing limits on direct contributions to candidates and parties could level the playing field.

That approach amounts to “fighting fire with fire,” says Tara Malloy of the Campaign Legal Center, a proponent of campaign finance restrictions. Malloy has calculated that without limits on direct contributions, a single person could give almost $3.5 million to a party and its candidates, in total.

“I don’t think a single person can give an eye-popping sum like $3.5 million without raising very serious concerns about what type of influence that person will have over the party and the office holders of that party,” she says.

Bert Johnson, a political science Professor at Middlebury College, says one person giving such vast sums of money is a pretty rare hypothetical. What’s really at stake in this case, Johnson says, is the principal of limiting direct campaign contributions in the first place.

When Congress passed limits after Watergate, Johnson says the country was “worried about corruption and the appearance of corruption, and the Supreme Court said our worries are a good enough reason to limit the contributions to candidates and parties.”

But in recent years, the court has been increasing their scrutiny of campaign contribution limits, and Johnson says the McCutcheon case could signal a further change in the high court's views. 

With the Citizens United case three years ago, the court threw out limits on outside, independent spending for political causes. With this case, the court will consider lifting limits on giving directly to candidates and their parties. And that’s something the court has, until now, been reluctant to do.   

The pace of home building slowed in January, falling 8.5 percent from December. Despite the decrease, January was still the third best month for house construction since 2008.

The Daytona 500 is this Sunday, but fewer and fewer of us are taking the time to sit through NASCAR races. NASCAR wants to change that with a new ad campaign it’s unveiling this weekend.

When you go out to eat at a restaurant and pay by credit card, what should you do with your receipts? Leave them on the table or throw them away? Here are six tips to protect yourself from restaurant tip theft.

And finally, the financially troubled U.S. Postal Service is launching a new line of clothing. According to the Washington Post, it'll be called "Rain Heat & Snow". The clothes will be available in department stores and speciality stores starting next year -- just don't ask them to FedEx it to you.

In the world of office supplies, two players exist that sound so similar you might think they're the same company: Office Depot and OfficeMax.

This morning, the companies confirmed that they're merging to better compete in the marketplace.

"Online retail is [looming] over everyone's head, I don't think they want to go down the road of the [bookstores]," says Faith Hope Consolo, chairman of the retail group at Prudential Douglas Elliman.

As many as 600 stores could be closed or sold as a result of the deal, which could dampen real estate values at roadside malls and cost jobs.

Yet, Consolo believes growth in other business areas, such as the food sector, will make up for the consolidation.

"The Whole Foods of the world are constantly seeking more space,” Consolo says. “In the long term this will give good opportunities to other retailers.”