Here’s a new edition of my “you be the judge” series.
These are posts designed to explore some of the more challenging aspects of a pro-libertarian philosophy.
Today’s example comes from Colorado, which had displayed a libertarian streak on issues ranging from school choice to drug legalization.
But the latter issue is the source of today’s quandary. Should marijuana be legal if it means more tax revenue that will be used by the political elite to expand the burden of government spending?
A draft bill floating around the Capitol late this week suggests that a new ballot question on pot taxes should repeal recreational pot in the state constitution if voters don’t approve 15 percent excise taxes on retail pot and a new 15 percent marijuana sales tax. Those would be in addition to regular state and local sales taxes. …Marijuana activists immediately blasted the proposal as a backhanded effort to repeal the pot vote, in which 55 percent of Coloradans chose to flout federal drug law and declare pot legal in small amounts for adults over 21.
If my math is correct, the politicians want a 30 percent special tax on marijuana, which is on top of the regular taxes that would be imposed.
That would be fine with me – if the proposal specified that the additional tax revenue was offset by a tax cut of equal size.
Indeed, some politicians openly admit that they want the new revenue to expand the budget.
Sen. Larry Crowder, R-Alamosa, said the whole purpose of legalizing recreational marijuana was to raise money for education and other programs. “So if there’s no money, we shouldn’t have marijuana,” Crowder said. …In Washington state, the only other place where voters last year approved recreational pot, the ballot measure set taxes at 75 percent, settling the question. Both states are still waiting to find out whether the federal government plans to sue to block retail sales of the drug, set to begin next year.
Though I didn’t realize that the state of Washington imposes a 75 percent tax on marijuana. How…um…French!
More Money for Government? The Ultimate Buzz Kill
So what’s the bottom line? If I lived in Colorado, would I vote to keep pot legal even if it meant more money from the buffoons in the state capital?
Since drug legalization is about 990 out of 1000 in my list of priorities, I’m tempted to say no.
One of the new Tea Party senators, Ted Cruz, gained a lot of support when he was Solicitor General of Texas and successfully defended his state’s ability to execute a murderer over the objections of the International Court of Justice.
A United Nations-based drug agency urged the United States government on Tuesday to challenge the legalization of marijuana for recreational use in Colorado and Washington, saying the state laws violate international drug treaties. …U.S. Attorney General Eric Holder said last week that he was in the last stages of reviewing the Colorado and Washington state laws. Holder said he was examining policy options and international implications of the issue.
Here’s a news flash for the bureaucrats at this branch of the United Nations in Vienna: American states are sovereign and don’t need to kowtow to a bunch of mandarins who get bloated (and tax free!) salaries in exchange for…well, I’m not sure what they do other than pontificate, gorge themselves at receptions, and enjoy first class travel at our expense while jetting from one conference to another.
If the people of Washington and Colorado want to legalize certain drugs, that’s their right. They haven’t signed any treaties with the United Nations.
By the way, this has nothing to do with whether drugs should be legalized.
But since I’m an abstainer, I confess I don’t really lose any sleep about the issue.
I generally do get agitated, by contrast, when international bureaucracies seek to impose one-size-fits-all policies on the world. Much of my ire is directed at the Paris-based Organization for Economic Cooperation and Development, which seeks to penalize jurisdictions that commit the horrible crime of having attractive tax regimes (or, to be more accurate, having tax regimes that are more attractive than those in places such as France and Germany).
P.S. Have you ever noticed that U.N. offices are in swanky places such as New York City, Geneva, and Vienna? If these bureaucrats really want to help the world, why aren’t their offices in Havana, Lagos, and Chisinau. That would be quite appropriate, after all, since Cuba, Nigeria, and Moldova are all members of the U.N. Human Rights Council.
And I’ve shared some horror stories about “asset forfeiture,” an odious procedure that allows the government to steal private property without any finding of guilt.
Bonnie Jonas-Boggioni, 65, and her husband were driving home to Plano, Texas from Columbus after attending her mother-in-law’s funeral when a pair of black police SUV’s stopped the couple a few miles outside of Memphis. “Knowing I wasn’t speeding, I couldn’t imagine why,” Jonas-Boggioni told the Columbus Dispatch. “They were very serious. They had the body armor and the guns.”
What was the supposed “probable cause” that led the police to make this stop? Ummm…..
On the back of Jonas-Boggioni’s car was a Buckeye leaf decal, similar to the one players’ have on their helmets, and cops mistakenly thought it was marijuana leaf. Yes, really. “What are you doing with a marijuana sticker on your bumper?” one of the cops asked Jonas-Boggioni. After trying to explain that the sticker was not a marijuana leaf and that she and her husband were not trafficking drugs cross-country, the police advised Jonas-Boggioni to remove the sticker as to not cause any more confusion.
As a fan of SEC football, I certainly agree that there’s something wrong with supporting the Ohio State Buckeyes. But bad judgement shouldn’t be against the law, much less a cause for a legal encounter with the government.
Particularly when the cops are showing their lack of knowledge.
Tennessee police apparently aren’t botany experts. If they were, they’d know a marijuana leaf has seven leaflets (see above picture) and a narrow shape as compared to the Buckeye leaf, which is fat and has five leaflets. …As for Jonas-Boggioni, she acknowledged the cop’s wishes, but got back in her car without removing the sticker. “I didn’t take it off,” Jonas-Boggioni told the paper. “This little old lady is no drug dealer.”
But that doesn’t mean other little old ladies aren’t drug dealers.
Click here is you want to read about a grandmother’s encounter with the Drug War.
Now ask yourself why we should be paying higher taxes to support this failed effort.
I was a bit disappointed that I only scored a 94 out of a possible 160, but my excuse is that it was really a test of anarcho-capitalism. And as I explained when sharing this amusing video, I’m only in favor of getting rid of 90 percent of government.
But maybe the simplest test of libertarianism (and also the simplest test of whether you’re a decent human being) is to see whether you’re upset by the following story.
Here are some of the truly disgusting details from the OC Weekly. First we learn about the victims of this government abuse.
…he and his wife purchased the Anaheim building, which has suites for up to 12 offices, in 2003 and that her dental practice was located there. …Over the years, they’ve rented to a variety of tenants, from insurance companies to an immigration service.
This unfortunate couple rented space to a group that seemed to comply with federal and state legal requirements.
…on June 11, 2011, he began renting to a club called ReLeaf Health & Wellness. …Because of the Ogden memo, because medical marijuana was legal under state law, and because his tenants held business permits from the city, he figured he wasn’t doing anything illegal. “I am a law-abiding citizen,” he says. “I didn’t think I was doing anything wrong.”
But the city of Anaheim and the jackboots at the Drug Enforcement Administration targeted the tenant, and then decided to try and steal the property of the landlord!
…On Dec. 2, 2011, an undercover officer posing as a patient with a legitimate doctor’s recommendation for cannabis—something required of all entrants to the collective—”purchased 4.2 net grams of marijuana for $37.” The investigation ended there, but the single sale…was enough evidence for the DEA to argue that the otherwise-harmless computer engineer and dentist should lose their retirement-investment property. …The lawyer for the engineer and dentist who may be in the process of losing their nest egg is Matthew Pappas. …”The only evidence in this case is a $37 purchase of medical marijuana and an anonymous comment on a website that anybody could have written,” Pappas says. “For this, they want to take a $1.5 million building.”
You may be thinking that you missed something, that certainly the federal government wouldn’t steal an entire building simply because a tenant may have broken a silly drug law. Especially when it’s very ambiguous whether a crime actually took place.
But you didn’t miss a thing. This is pure, unadulterated, evil government.
And if you’re not already feeling some libertarian blood flowing through your veins, here are some additional examples of government thuggery.
Almost nothing, I imagine, but they do agree on one thing. It’s time to rethink the War on Drugs.
We can also add John Stossel to the list. Here’s some of what he wrote in his recent Townhall column. Let’s start with his powerful – and pragmatic – argument that the Drug War encourages criminal behavior.
The media (including Fox News) run frightening stories about Mexican cocaine cartels and marijuana gangs. Few of my colleagues stop to think that this is a consequence of the war, that decriminalization would end the violence. There are no wine “cartels” or beer “gangs.” No one “smuggles” liquor. Liquor dealers are called “businesses,” not gangs, and they “ship” products instead of “smuggling” them. They settle disputes with lawyers rather than guns. Everything can be abused, but that doesn’t mean government can stop it. Government runs amok when it tries to protect us from ourselves. Drug-related crime occurs because the drugs are available only through the artificially expensive black market. Drug users steal not because drugs drive them to steal. Our government says heroin and nicotine are similarly addictive, but no one robs convenience stores to get Marlboros.
Citing the work of a scholar at the Manhattan Institute, John also comments on the Drug War’s destructive impact on the black community.
John McWhorter, a senior fellow at the Manhattan Institute, indicts the drug war for “destroying black America.” McWhorter, by the way, is black. McWhorter sees prohibition as the saboteur of black families. “Enduring prison time is seen as a badge of strength. It’s regarded (with some justification) as an unjust punishment for selling people something they want. The ex-con is a hero rather than someone who went the wrong way.” He enumerates the positive results from ending prohibition. “No more gang wars over turf, no more kids shooting each other. … Men get jobs, as they did in the old days, even in the worst ghettos, because they have to.”
I don’t reckon that the Drug War does as much damage to African-Americans as the crummy government-run school system, but it’s probably not too far behind.
Stossel closes by looking at first principles.
“Once the principle is admitted that it is the duty of the government to protect the individual against his own foolishness,” economist Ludwig von Mises wrote, “why not prevent him from reading bad books and bad plays … ? The mischief done by bad ideologies is more pernicious … than that done by narcotic drugs.” If we adults own our own bodies, we ought to get to control what we put in them. It’s legitimate for government to protect me from reckless drivers and drunken airline pilots — but not to protect me from myself.
This is right on the mark. The War on Drugs is misguided because it creates crime. It’s misguided because it hurts the black community. And it’s misguided since government shouldn’t be in charge of micro-managing our lives.
I’ve already confessed to man-crushes on Chris Christie, Marco Rubio, Rand Paul, Ron Johnson, and (or course) the Gipper, but it’s time for me to cross partisan and racial boundaries and announce my man-crush on Cory Booker.
From the Huffington Post, here’s what the Newark Mayor had to say about the failed War on Drugs.
Newark, N.J. Mayor Cory Booker took to Reddit Sunday to criticize the war on drugs, saying it was ineffective and “represents big overgrown government at its worst.” “The so-called War on Drugs has not succeeded in making significant reductions in drug use, drug arrests or violence,” the Democrat wrote during the Reddit “ask me anything” chat. “We are pouring huge amounts of our public resources into this current effort that are bleeding our public treasury and unnecessarily undermining human potential.” Booker then called drug arrests a “game.” “My police in Newark are involved in an almost ridiculous game of arresting the same people over and over again and when you talk to these men they have little belief that there is help or hope for them to break out of this cycle,” he wrote.
At the risk of stating the obvious, this doesn’t mean that anyone should use drugs. I’ve led a very boring life, for instance, and have never tried any illegal drugs.
Oh, and by the way, the Drug War has totally failed in stopping illegal drug use. Though it has enriched organized crime, so big government isn’t the only beneficiary.
P.S. As you can see from this post, there actually are political jokes about money laundering laws. I haven’t run across any about the Drug War, but I’ll be sure to post them if they show up in my inbox.
I hope you’re a libertarian already. But if you’re not, I hope you’ll be one after you finish reading this post.
And if you’re not a libertarian after reading this post, I suggest you emigrate to Zimbabwe, or some other place where government has unchecked and arbitrary power to steal. You’ll feel right at home.
This post is about the disgusting practice of “asset forfeiture,” which is basically a scheme that allows government to steal people’s property and money.
Russ Caswell, 68, is bewildered: “What country are we in?” He and his wife, Pat, are ensnared in a Kafkaesque nightmare unfolding in Orwellian language. This town’s police department is conniving with the federal government to circumvent Massachusetts law — which is less permissive than federal law — to seize his livelihood and retirement asset. In the lawsuit titled United States of America v. 434 Main Street, Tewksbury, Massachusetts, the government is suing an inanimate object, the motel Caswell’s father built in 1955. The U.S. Department of Justice intends to seize it, sell it for perhaps $1.5 million and give up to 80 percent of that to the Tewksbury Police Department, whose budget is just $5.5 million. The Caswells have not been charged with, let alone convicted of, a crime.
Is Will’s language over the top? Hardly, as you can see from this excerpt. The government is trying to steal the hotel because a tiny percentage of guests engaged in victimless crimes.
Since 1994, about 30 motel customers have been arrested on drug-dealing charges. Even if those police figures are accurate — the police have a substantial monetary incentive to exaggerate — these 30 episodes involved less than 5/100ths of 1 percent of the 125,000 rooms Caswell has rented over those more than 6,700 days. Yet this is the government’s excuse for impoverishing the Caswells by seizing this property, which is their only significant source of income and all of their retirement security. The government says the rooms were used to “facilitate” a crime. It does not say the Caswells knew or even that they were supposed to know what was going on in all their rooms all the time. Civil forfeiture law treats citizens worse than criminals, requiring them to prove their innocence — to prove they did everything possible to prevent those rare crimes from occurring in a few of those rooms. What counts as possible remains vague.
Amazing. You’re guilty until you prove yourself innocent, even though you’ve done nothing wrong.
The government officials should be the ones arrested and thrown in jail.
When the Brown County, Wis., Drug Task Force arrested her son Joel last February, Beverly Greer started piecing together his bail. She used part of her disability payment and her tax return. Joel Greer’s wife also chipped in, as did his brother and two sisters. On Feb. 29, a judge set Greer’s bail at $7,500, and his mother called the Brown County jail to see where and how she could get him out. “The police specifically told us to bring cash,” Greer says. “Not a cashier’s check or a credit card. They said cash.” So Greer and her family visited a series of ATMs, and on March 1, she brought the money to the jail, thinking she’d be taking Joel Greer home. But she left without her money, or her son. Instead jail officials called in the same Drug Task Force that arrested Greer. A drug-sniffing dog inspected the Greers’ cash, and about a half-hour later, Beverly Greer said, a police officer told her the dog had alerted to the presence of narcotics on the bills — and that the police department would be confiscating the bail money.
You probably can figure out the rest of the story. Radley’s column has a lot of additional details, but here are a couple of passages to whet your appetite.
The Greers had been subjected to civil asset forfeiture, a policy that lets police confiscate money and property even if they can only loosely connect them to drug activity. The cash, or revenue from the property seized, often goes back to the coffers of the police department that confiscated it. It’s a policy critics say is often abused, but experts told The HuffPost that the way the law is applied to bail money in Brown County is exceptionally unfair. It took four months for Beverly Greer to get her family’s money back, and then only after attorney Andy Williams agreed to take their case. “The family produced the ATM receipts proving that had recently withdrawn the money,” Williams says. “Beverly Greer had documentation for her disability check and her tax return. Even then, the police tried to keep their money.” …Civil asset forfeiture is based on the premise that a piece of property — a car, a pile of cash, a house — can be guilty of a crime. Laws vary from state to state, but generally, law enforcement officials can seize property if they can show any connection between the property and illegal activity. It is then up to the owner of the property to prove in court that he owns it or earned it legitimately. It doesn’t require a property owner to actually be convicted of a crime. In fact, most people who lose property to civil asset forfeiture are never charged.
It’s probably worth noting that this is another example of government stealing when the underlying offense was a victimless crime. I reckon this must be a turbo-charged version of Mitchell’s Law.
P.S. Just in case you’re pro-Drug War, here are some examples of government thuggery that don’t involve persecution of victimless crimes. This post shows how the IRS can run amok, engaging in brutal persecution. And here’s a story of the government targeting a low-level person for inexplicable reasons.
Both these stories should turn you into a raving libertarian. In which case, welcome to the club!
Even though I’m a dull and straight-laced guy, that doesn’t mean I want the government to pester, harass, and persecute people for engaging in victimless crimes that I find distasteful.
Fortunately, it appears that more and more people are coming to the same conclusion – and many of them aren’t libertarians. For instance, I recently cited Mona Charen’s wise comments about the issue.
Even more remarkable are the statements from one of America’s leading evangelicals, Pat Robertson.
Religious broadcaster Pat Robertson says marijuana should be legalized and treated like alcohol because the government’s war on drugs has failed. The outspoken evangelical Christian and host of “The 700 Club” on the Virginia Beach-based Christian Broadcasting Network he founded said the war on drugs is costing taxpayers billions of dollars. He said people should not be sent to prison for marijuana possession. The 81-year-old first became a self-proclaimed “hero of the hippie culture” in 2010 when he called for ending mandatory prison sentences for marijuana possession convictions. “I just think it’s shocking how many of these young people wind up in prison and they get turned into hardcore criminals because they had a possession of a very small amount of a controlled substance,” Robertson said on his show March 1. “The whole thing is crazy. We’ve said, ‘Well, we’re conservatives, we’re tough on crime.’ That’s baloney.” …Robertson said he “absolutely” supports ballot measures in Colorado and Washington state that would allow people older than 21 to possess a small amount of marijuana and allow for commercial pot sales. Both measures, if passed by voters, would place the states at odds with federal law, which bans marijuana use of all kinds. While he supports the measures, Robertson said he would not campaign for them and was “not encouraging people to use narcotics in any way, shape or form.” “I’m not a crusader,” he said. “I’ve never used marijuana and I don’t intend to, but it’s just one of those things that I think: this war on drugs just hasn’t succeeded.”
Wow, not only for legalization, but “absolutely” supports ballot initiatives in Colorado and Washington. Kudos to Rev. Robertson for recognizing the human cost of the Drug War. As the old saying goes, not everything immoral should be illegal.
I’m currently in the British Virgin Islands to speak at a conference. As you can see from this photo (taken from my satellite office), I’m having to endure hardship conditions.
As you can probably guess, I’m speaking about tax competition. But I write about that issue so much that there’s no need for me to reiterate my remarks.
Instead, I want to focus on the speech given this morning by Sir Richard Branson, founder and head of the Virgin business empire.
Why does Branson get higher billing than me?!?
Sir Richard is a tax resident of BVI (which is a smart step since there’s no income tax here and the top tax rate in the U.K. is 50 percent), and most of his speech focused on business and development advice for his adopted home.
But he also spent several minutes talking about the damaging and destructive impact of the War on Drugs. And I’m proud to say that he cited data from a Cato Institute report on the successful decriminalization policy in Portugal.
I suspect Branson isn’t willing to give up his day job running the Virgin Group, but we’re happy to have him as a volunteer publicist for our studies and the cause of liberty.
Incidentally, he’s not the only one who has commented on this development. The Economist also has noted the positive impact of Portugal’s pro-liberty policy.
Last year, I came up with a saying that “Bad Government Policy Begets More Bad Government Policy” and labeled it “Mitchell’s Law” during a bout of narcissism.
The latest example of this process involves the Foreign Account Tax Compliance Act, a piece of legislation that was imposed in 2010 because politicians assumed they could collect lots of tax revenue every single year by getting money from so-called tax havens.
This FATCA law basically imposes a huge regulatory burden on all companies that have international transactions involving the United States, and all foreign financial institutions that want to invest in the United States. It is such a disaster that even the New York Times has taken notice, recently reporting that:
…the Foreign Account Tax Compliance Act, or Fatca, as it is known, is now causing alarm among businesses outside the United States that fear they will have to spend billions of dollars a year to meet the greatly increased reporting burdens, starting in 2013. American expatriates also say the new filing demands are daunting and overblown. …The law demands that virtually every financial firm outside the United States and any foreign company in which Americans are beneficial owners must register with the Internal Revenue Service, check existing accounts in search of Americans and annually declare their compliance. Noncompliance would be punished with a withholding charge of up to 30 percent on any income and capital payments the company gets from the United States. …The I.R.S., under pressure from angry and confused financial officials abroad, has extended the deadline for registration until June 30, 2013, and is struggling to provide more detailed guidance by the end of this year. But beginning in 2012, many American expatriates — already the only developed-nation citizens subject to double taxation from their home government — must furnish the I.R.S. with detailed personal information on their overseas assets. …He said his sense was that Fatca required companies “to prove your innocence.” …Then there is a question of reciprocity: Would the United States accept the same demands for information from the tax authorities in other countries — say Russia or China?
It’s worth noting at this point that FATCA only exists because of bad tax law. If the United States had a simple and fair flat tax, there would be no double taxation of income that is saved and invested. As such, the IRS wouldn’t have any reason to care whether Americans had bank accounts and/or investments in places such as London, Hong Kong, and Panama.
But as is so often the case with politicians, they choose not to fix bad policy and instead decide to impose one bad policy on top of another. Hence, the crowd in Washington enacting FATCA and sending the IRS on a jihad.
By the way, the New York Times was late to the party. Many other news outlets already have noticed that the United States is about to suffer a big self-inflicted economic wound.
Indeed, what’s remarkable about Obama’s FATCA policy is that the world is now united. But it’s not united for something big and noble, such as peace, commerce, prosperity, or human rights. Instead, it’s united in opposition to intrusive, misguided, and foolish American tax law.
Let’s look at some examples.
o From the United Kingdom, a Financial Times column warns that, “This summer, the senior management of one of Asia’s largest financial groups is quietly mulling a potentially explosive question: could it organise some of its subsidiaries so that they could stop handling all US Treasury bonds? …what is worrying this particular Asian financial group is…a new law called the Foreign Account Tax Compliance Act…the new rules leave some financial officials fuming in places such as Australia, Canada, Germany, Hong Kong and Singapore. Little wonder. Never mind the fact that implementing these measures is likely to be costly. …Hence the fact that some non-US asset managers and banking groups are debating whether they could simply ignore Fatca by creating subsidiaries that never touch US assets at all. “This is complete madness for the US – America needs global investors to buy its bonds,” fumes one bank manager. “But not holding US assets might turn out to be the easiest thing for us to do.”
o From India, the Economic Times reports that, “FATCA, or the Foreign Account Tax Compliance Act, will require overseas banks to report U.S. clients to the Internal Revenue Service, but its loose definition of who is a U.S. citizen will create a huge administrative burden and could push non-residents to slash their U.S. exposure, some bankers say. …Bankers say the scheme will be extremely costly to implement, and some say that as the legislation stands, any bank with a client judged to be a U.S. citizen will be also obliged to supply documentation on all other clients. “FATCA will cost 10 times to the banks than it will generate for the IRS. It is going to be extremely complicated,” said Yves Mirabaud, managing partner at Mirabaud & Cie and Swiss Bankers Association board member.”
o Discussing the impact in Canada, Reuters notes, “The new regulation has drawn criticism from the world’s banks and business people about its reach and costs. ..”Hundreds of millions of dollars spent on developing compliance processes to target Canadian citizens would not be a useful exercise, and they are, for the most part, people who actually have no tax liabilities because they do not earn income in the United States,” [Canadian Finance Minister] Flaherty said.”
o A Taiwan news outlet said, “Taiwan’s domestic banks will reportedly reduce holdings of American bonds worth an estimated NT$100 billion (US$3.33 billion) due to the U.S. government’s recent decision to impose 30% tax on foreign-investment income in U.S. securities as bonds. Taiwan’s eight government-linked banks reportedly hold U.S. financial products worth over US$2 billion… On April 8, 2011, the U.S. government issued a notice advising foreign financial institutions to meet certain obligations under the Foreign Account Tax Compliance Act (FATCA), under which foreign financial institutions are subject to complex reporting rules related to their U.S. accounts.”
o From the Persian Gulf, the Bahrain Daily News noted, “A US law…has drawn the criticism of the world’s banks and business people, who dismiss it as imperialist and “the neutron bomb of the global financial system.” The unusually broad regulation, known as FATCA, or the Foreign Account Tax Compliance Act, makes the world’s financial institutions something of an extension of the tax-collecting Internal Revenue Service – something no other country does for its tax regime. …Even the European Commission has objected, and experts say other countries may create their own FATCA-style regimes for US banks or withdraw from US capital markets. In a barrage of letters to the Treasury, IRS and Congress, opponents from Australia to Switzerland to Hong Kong assail FATCA’s application to a broad swath of institutions and entities.”
o A story from Singapore finds, “For many years, thousands of foreign investors have put their money into American shares or other investments. Now, however, a somewhat obscure law called the Foreign Account Tax Compliance Act (FATCA) may make investments in the United States for everyone, from billionaires to the man on the street, here in Singapore far less attractive. …some banks or investment managers may advise customers not to invest in the US. … “private bankers are publicly advising their clients to clear their portfolios of all US securities”. A fund manager here told me his company is also advising clients to avoid US investments, and other companies may similarly start telling large clients as well as smaller ones the same story. Investors could then see recommendations not to invest in the US, and they may put their money elsewhere. …As consulting firm PwC said, “some institutions could decide that complying with the due diligence and verification provisions may not be cost effective” so they may stop making investments in the US. Banks or other asset managers may similarly decide it is easier not to offer US investments than to try and comply with the FATCA.”
o From Switzerland, a story “about the backlash from United States expats and the financial sector to the Foreign Account Tax Compliance Act (FATCA)” reports that, “Growing numbers of American expatriates are renouncing their US citizenship over a controversial new tax law and ever more burdensome fiscal and reporting obligations. …banks and business people who are supposed to enforce it on behalf of the US tax man are worried about its costly administrative burden… it’s just too expensive. The consequence will be that they cut out US clients and stop investing in the US. …Three or four years ago no one talked about renouncing nationality – now it’s an open discussion. That’s a major shift in mentality.
o Writing about the reaction from Europe, one columnist noted, “FATCA encourages foreign financial institutions to limit their exposure to U.S. assets. In a joint letter to the Treasury and the IRS, the European Banking Federation and the Institute of International Bankers, which together represent most of the non-U.S. banks and securities firms that would be affected by FATCA, warned that “many [foreign financial institutions], particularly smaller ones or those with minimal U.S. investments or U.S. customers, will opt out of U.S. securities rather than enter into a direct contractual agreement with a foreign tax authority (the IRS) that imposes substantial new obligations and the significant reputational, regulatory, and financial risks of potentially failing those obligations.” A widespread divestment of U.S. securities by institutions seeking to avoid the burdens of FATCA could have real and harmful effects on the U.S. economy.”
These press excerpts help demonstrate the costs of FATCA, but what about the benefits? After all, maybe the law will lead to lots of good results that offset the high regulatory costs and lost investment for the American economy.
Well, the only “benefit” anybody had identified is that FATCA will transfer more money from the productive sector of the economy to the government. Indeed, Obama argued during the 2008 campaign that cracking down on “tax havens” with proposals such as FATCA would give politicians lots of additional money to spend.
But when the legislation was approved in 2010, the Joint Committee on Taxation estimated that the new law would raise only $8.7 billion over 10 years, not the $100 billion that Obama claimed could be collected every single year. This video has some of the damning details.
One final point demands attention.
While it appears that the rest of the world is against FATCA, that’s not completely true. Some international bureaucrats in Paris, funded by American tax dollars, actually want the rest of the world to adopt the same Orwellian system. Here’s a blurb from the New York Times story.
Jeffrey Owens, a tax expert at the Organization for Economic Cooperation and Development, said catching tax evaders was “a concern that many member countries share.” If countries could agree to new global reporting standards for exchanging information, he said, then “maybe there’s a way forward.”
In other words, the pinhead bureaucrats at the OECD think FATCA’s such a swell idea that they want to create a global network of tax police. So not only would America erode the sovereignty of other nations because of our bad tax law, but those other nations would be able to impose their bad tax law on income earned in America!
And just in case you think that’s just irresponsible demagoguery, it’s already beginning to happen. Check out this IRS regulation, proposed by the Obama Administration, that would require American banks to put foreign law above American law.
While I’m usually a pessimist about public policy, there are a handful of issues where I think there’s positive momentum. School choice is one example and another is putting an end to the misguided war on drugs.
I’m somewhat optimistic on the drug war because more and more people, including conservatives, are realizing that government intervention isn’t working and is actually making things worse.
For example, here are some excerpts from a Mona Charen column, in which she praises Ron Paul for his leadership position on the issue.
Friedman was for legalization of all drugs, not just marijuana. It’s a position embraced by only one candidate for president, Ron Paul. …Paul deserves full credit for endorsing drug legalization. Friedman would approve. Governments in the United States, federal and state, spend an estimated $41.3 billion annually to prevent people from ingesting substances we deem harmful, though many unsafe ingestibles — you know the list — remain legal. Half of all federal prisoners are serving sentences for drug offenses, along with 20 percent of state prisoners. In 2009, there were 1.7 million drug arrests in the U.S. Half of those were for marijuana. As David Boaz and Timothy Lynch of the Cato Institute noted, “Addicts commit crimes to pay for a habit that would be easily affordable if it were legal. Police sources have estimated that as much as half the property crime in some major cities is committed by drug users.” Drug money, such as booze money during Prohibition, has corrupted countless police, Drug Enforcement Administration agents, border patrol agents, prosecutors and judges. Drug crime has blighted many neighborhoods. America’s appetite for drugs has encouraged lawlessness and violence in many neighboring countries, most recently in Mexico, where its drug violence is spilling north. Because illegal drugs are unregulated, their purity is unknowable — accounting for thousands of overdose deaths and injuries. Since we maintain drug prohibition to protect people from their own foolish decisions, those overdose deaths must weigh in the balance, too. Drug prohibition, Milton Friedman pointed out, keeps the price of drugs artificially inflated and amounts to a favor by the government to the drug lords. …Harvard economics professor Jeffrey Miron estimates that if drugs were legal and taxed, the U.S. and state treasuries would receive $46.7 billion in added revenue, while saving $41.3 billion in expenditures.
And I suppose I should say that I don’t want the government to collect an additional $46.7 billion of revenue, but that’s a separate fiscal policy issue.
Ms. Charen continues with some very sensible cost-benefit analysis of legalization.
What is the downside to legalization? Friedman acknowledged the possibility that legalization might result in some increase in drug addiction. There was, after all, an uptick in alcoholism after Prohibition was repealed. But not all victims are created equal. The child, Friedman notes, who is killed in a drive-by shoot-out between drug gangs is a total victim. The adult who decides to take drugs is not. Let’s stipulate that some unknown number of Americans will become addicts after legalization, who otherwise would not have. We must ask whether the terrible price we are now paying — in police costs, international drug control efforts, border security, foregone tax revenue, overdose deaths, corruption and violence — is worth it.
This utilitarian argument is important. Libertarians traditionally rely on the moral argument that people should be free from government coercion so long as they’re not hindering the rights of others, and I certainly agree with that sentiment. But we could probably make more progress on this issue by also explaining that the costs of the drug war far outweigh any benefits.
And I suspect it also would help if we explained that legalization does not necessarily mean approval.
Ending the war on drugs does not mean endorsing drug use, any more than ending prohibition meant one had to be in favor of alcohol consumption.
Heck, you can be like me and be personally opposed to drug use and favor legalization. You can also favor private-sector sanctions against drug use and favor legalization.
When all is said and done, there are lots of reasons to favor legalization. Prohibition didn’t work in the 1920s and it isn’t working today. Too bad Ron Paul and Gary Johnson are the only candidates on the right side of this issue.
As a grumpy libertarian, I routinely get agitated about taxes, spending, and regulation. As far as I’m concerned, much of government is a racket that uses coercion to reward interest groups with unearned wealth.
But there are degrees of evil. So if you asked me to pick the most reprehensible thing that government does, “asset forfeiture” might be in second place (hurting poor people to benefit rich people is at the top of my list).
Asset forfeiture occurs when government seizes property that is associated with a crime. That sounds reasonable – and it is reasonable if someone is convicted of, say, bank robbery and the government confiscates the stolen cash and any loot purchased with that money.
But it is not reasonable (or moral, or just, or appropriate) when government seizes assets without a conviction. And it is downright disgusting when the government steals (and I use that word deliberately) the assets of innocent parties.
New York businessman James Lieto was an innocent bystander in a fraud investigation last year. Federal agents seized $392,000 of his cash anyway. An armored-car firm hired by Mr. Lieto to carry money for his check-cashing company got ensnared in the FBI probe. Agents seized about $19 million—including Mr. Lieto’s money—from vaults belonging to the armored-car firm’s parent company. He is one among thousands of Americans in recent decades who have had a jarring introduction to the federal system of asset seizure. Some 400 federal statutes—a near-doubling, by one count, since the 1990s—empower the government to take assets from convicted criminals as well as people never charged with a crime. …The forfeiture system has opponents across the political spectrum, including representatives of groups such as the American Civil Liberties Union on the left and the Heritage Foundation on the right. They argue it represents a widening threat to innocent people. “We are paying assistant U.S. attorneys to carry out the theft of property from often the most defenseless citizens,” given that people sometimes have limited resources to fight a seizure after their assets are taken, says David Smith, a former Justice Department forfeiture official and now a forfeiture lawyer in Alexandria, Va.
What’s really amazing is that government officials want to expand this reprehensible practice. The use of “civil forfeiture” is particularly worrisome, as illustrated by this passage.
Top federal officials are also pushing for greater use of civil-forfeiture proceedings, in which assets can be taken without criminal charges being filed against the owner. In a civil forfeiture, the asset itself—not the owner of the asset—is technically the defendant. In such a case, the government must show by a preponderance of evidence that the property was connected to illegal activity. In a criminal forfeiture, the government must first win a conviction against an individual, where the burden of proof is higher.
Here’s a really disgusting example.
Raul Stio, a New Jersey businessman, is caught up in the civil-forfeiture world. Last October, the Internal Revenue Service, suspicious of Mr. Stio’s bank deposits, seized more than $157,000 from his account. Mr. Stio hasn’t been charged with a crime. In a court filing in his pending civil case, the Justice Department alleges that Mr. Stio’s deposits were structured to illegally avoid an anti-money-laundering rule that requires a cash transaction of more than $10,000 to be reported to federal authorities. Mr. Stio made 21 deposits over a four-month period, each $10,000 or less, the filing said. Steven L. Kessler, Mr. Stio’s attorney, says there was no attempt to evade the law and that the deposits merely reflected the amount of cash his client’s businesses, a security firm and bar, had produced. Mr. Stio was saving to buy a house, he says.
I have no idea whether Mr. Stio is a good guy or a crook. But I know that the government shouldn’t be allowed to grab his money without convicting him of a crime. Especially for a supposed offense against absurdly foolish and ill-conceivedanti-money laundering laws.
Our Founding Fathers gave us a presumption of innocence and no bureaucrat or politician should be allowed to cancel our constitutional rights.
Asset forfeiture should apply to people like Bernie Madoff. He’s been convicted of operating a Ponzi scheme, so by all means grab every penny he accumulated. But government should follow a simple rule: Convict first, seize second.
And here’s one final section from the story, highlighting how bureaucracies “earn” a profit by abusing forfeiture laws.
Part of the debate over seizures involves a potential conflict of interest: Under a 1984 federal law, state and local law-enforcement agencies that work with Uncle Sam on seizures get to keep up to 80% of the proceeds. Last year, under this “equitable-sharing” program, the federal government paid out more than $500 million, up about 75% from a decade ago. The payments give authorities an “improper profit incentive” to seize assets, says Scott Bullock of the Institute for Justice, a libertarian public-interest law firm in Arlington, Va. It’s a particular concern amid current state and local government budget problems, he contends. …Seeming abuses occasionally emerge. In 2008, federal Judge Joseph Bataillon ordered the return of $20,000 taken from a man during a traffic stop in Douglas County, Neb. Judge Battaillon quoted from a recording of the seizure, in which a sheriff’s deputy complained about the man’s attitude and suggested “we take his money and, um, count it as a drug seizure.” The judge’s order said the case produced “overwhelming evidence” that the funds were clean.
The good folks at Reason TV have just released a video about no-knock raids. This isn’t a typical policy video, but that may make it even more persuasive.
Sometimes it is a pain in the neck to be allied with conservatives. Just like liberals, conservatives sometimes are guilty of imposing their preferences on society, regardless of clear and unambiguous language in the Constitution.
The most recent example is a case originating in Kentucky. Every Supreme Court Justice, with the exception of Ruth Bader Ginsburg, voted to ignore the 4th Amendment and allow unlawful entry into the dwelling of a private citizen. Michael Walsh of National Review explains in the New York Post.
A series of recent court rulings, including one this week from the US Supreme Court, appear to erode one of our bedrock defenses against the arbitrary, abusive power of the state. At risk: the Fourth Amendment guarantee to all American citizens of the right to be “secure in their persons, houses, papers, and effects, against unreasonable searches and seizures.” On Monday, in Kentucky v. King, the high court upheld the conviction of a man arrested after cops — who were tailing a suspected drug dealer into an apartment building — smelled marijuana smoke and banged on his door. When they heard noises coming from the apartment “consistent with the destruction of evidence,” they broke in and found drugs. But they had the wrong guy. The drug courier was in another apartment. Hollis King may have been breaking the law, but he was minding his own business, on his own premises, and only became a suspect after the police had made their mistake. But Justice Sam Alito, writing for the 8-1 majority, said, in effect, So what? …What planet is Alito living on? The whole point of the Bill of Rights is to restrict authority. The Founders, who suffered under the British system of “general warrants” and “writs of assistance” — i.e., fishing expeditions — wished to ensure that no American home could be searched without probable cause and a duly issued warrant specifying exactly what police are looking for. The case has been remanded to Kentucky, to sort out whether the circumstances were truly “exigent.” But Alito’s interpretation is an open invitation to abuse — as Justice Ruth Bader Ginsburg emphatically warned in her dissent: “The court today arms the police with a way routinely to dishonor the Fourth Amendment’s warrant requirement in drug cases. In lieu of presenting their evidence to a neutral magistrate, police officers may now knock, listen, then break the door down — never mind that they had ample time to obtain a warrant. I dissent from the court’s reduction of the Fourth Amendment’s force.”
We have another great video from Reason TV, which mocks Secretary of State Hillary Clinton for stating that drug legalization is a bad idea because “there is just too much money in it.”
The video explains that government-imposed prohibition is what makes the drug market so lucrative, just as alcohol prohibition lined the pockets of people like Al Capone in the 1920s.
The title of this post doesn’t quite roll off the tongue like “It was the best of times, it was the worst of times.” But what can you expect when you compare politicians to the opening line of Charles Dickens’ A Tale of Two Cities.
That’s what came to my mind, though, when I noticed two stories next to each other on the Washington Post website. The first story was about a new lawmaker, infused with the spirit of the Tea Party, seeking to shrink the size and scope of Washington. The other story was about a career politician trying to expand the power of the federal government.
Let’s start with the good news. Here’s an excerpt from the Washington Post report about Senator Rand Paul’s bold plan to reduce the burden of government spending, including an attack on one of Washington’s sacred cows – subsidies for Israel.
The freshman Kentucky lawmaker unveiled his budget proposal this week that would make significant cuts in education, housing and energy while reducing money for wars in Afghanistan and Iraq by $16 billion. Paul’s plan also would cut some $20 billion in overseas aid, and he said he wants to eliminate the $3 billion the United States provides to Israel annually in foreign military assistance. “The overwhelming majority of Americans agree with Senator Paul – our current fiscal crisis makes it impossible to continue the spending policies of the past,” Paul spokesman Gary Howard said in a statement responding to the criticism. “We simply cannot afford to give money away, even to our allies, with so much debt mounting on a daily basis.” The latest economic forecast puts the deficit at a record $1.5 trillion. Paul explained his position in an interview with CNN on Wednesday, saying he respects Israel as a Democratic nation but feared funding an arms race in the Mideast.
Now, for the business-as-usual story, we have a story about the latest antics of Senator Charles Schumer, who has discovered a new “crisis” that requires action by Washington. Here’s a blurb from the Washington post.
U.S. Sen. Charles Schumer of New York says he wants the federal government to ban new designer drugs known as bath salts that pack as much punch as cocaine or methamphetamines. The small, inexpensive packets of powder are meant to be snorted for a hallucination-inducing high, but they are often marketed with a wink on the Internet or in convenience stores as bathing salts. The Democratic senator is announcing a bill Sunday that would add those chemicals to the list of federally controlled substances. …Schumer says the bath salts “contain ingredients that are nothing more than legally sanctioned narcotics.”
I confess total ignorance about “narcotic” bath salts, but even in the unlikely case that they should be banned, that is a decision for state governments. Last time I checked, the enumerated powers of Congress did not include authority to tell us what we can put in our baths or up our noses.
Nullification occurs when jurors refuse to find a defendant guilty because the underlying law is unjust (visit the Fully Informed Jury Association if you want more details). And if I ever wind up on a jury and the government was trying to throw someone in jail for a victimless crime, I certainly hope I would do the right thing and refuse to declare the person guilty.
The good people of western Montana certainly have the right attitude about victimless crimes. A jury pool in Missoula County basically told a court that they would not be willing to convict a defendant for possessing a tiny amount of marijuana.
Wouldn’t it be wonderful if this happened all over the country and politicians were forced to stop the war on drugs? That would be a Christmas present for the entire nation.
A funny thing happened on the way to a trial in Missoula County District Court last week. Jurors – well, potential jurors – staged a revolt. They took the law into their own hands, as it were, and made it clear they weren’t about to convict anybody for having a couple of buds of marijuana. Never mind that the defendant in question also faced a felony charge of criminal distribution of dangerous drugs. The tiny amount of marijuana police found while searching Touray Cornell’s home on April 23 became a huge issue for some members of the jury panel. No, they said, one after the other. No way would they convict somebody for having a 16th of an ounce. In fact, one juror wondered why the county was wasting time and money prosecuting the case at all, said a flummoxed Deputy Missoula County Attorney Andrew Paul. …“Public opinion, as revealed by the reaction of a substantial portion of the members of the jury called to try the charges on Dec. 16, 2010, is not supportive of the state’s marijuana law and appeared to prevent any conviction from being obtained simply because an unbiased jury did not appear available under any circumstances,” according to the plea memorandum filed by his attorney.
Okay, perhaps the title of the post is not quite as memorable as Charlton Heston’s famous line from Planet of the Apes, but it certainly captures my sentiments after reading an article in Slate that calls for the elimination of the $100 bill. The author, Timothy Noah, says that large bills are only for “criminals and sociopaths.” Here’s the crux of his argument.
…why does the U.S. continue to print C-notes…? Technological change has reduced much further the plausible need of any law-abiding American to carry a C-note in his wallet or to stash a pile of C-notes in his mattress.
Noah’s argument is unconvincing for several reasons. First, he is underestimating the degree to which “law-abiding” Americans use “Benjamins.” And with higher inflation almost certainly around the corner, one can safely expect that $100 bills will become even more common in the future. Second, his entire argument rests on the statist assumption that government should restrict honest people because this will somehow make life more difficult for criminals. Yet he debunks his own anti-money laundering argument by noting that the government already has stopped printing larger bills, such as the $500 note. Has that stopped the drug trade? Hello? Anyone? Bueller?
I actually think the moral arguments against anti-money laundering laws are even more powerful. As Americans, we should have a presumption of innocence in our daily lives. What business is it of government whether we want to carry $20 bills or $100 bills? And think about the implications of these laws. What if the government said we need to ban cars, or put government-monitored homing devices in all vehicles, because bank robbers occasionally use automobiles as getaway vehicles? In this case, there is a theoretical benefit to the policy, just like there is a somewhat plausible case for anti-money laundering laws, but presumably we would reject such a policy as too intrusive.
Anti-money laundering laws are a classic case of Mitchell’s Law, which is the notion that bad policy begets more bad policy (this insight has been around forever, but I’m quite envious of Art Laffer for the Laffer Curve, so I’m trying to give myself a small measure of notoriety by being the lead proponent of the concept). The government passes drug laws that create huge profits for criminals. But rather than fight criminals (or, as libertarians would argue, get rid of victimless crimes), the government imposes policies that make life more difficult and costly for everyone else.
But regardless of what people think about drug laws, let’s at least use common sense and tell the crowd in Washington that it’s our choice whether we use $100 bills.
The former governor of New Mexico explains why prohibition is a foolish idea. I couldn’t say it better myself.
I’m a bit of a stick-in-the-mud. I’ve never used drugs. I am very strict with my kids on the issue. But I’m not dumb enough to think that giving massive power to the government is a solution to anything – especially the non-problem of people wanting to do potentially dumb things to their own bodies. It didn’t work for booze in the 1920s, and it doesn’t work for drugs today.
David Ignatius has a thoroughly boring and utterly predictable establishment left-wing column in the Washington post, but it is a perfect illustration of my maxim that “Bad government policy begets bad government policy.” In this case, Ignatius wants to expand gun control in the United States in response to the foolhardy drug war in Mexico. Neither effort will succeed, at least if either society wants even a smidgen of individual liberty, but statists never seen to worry about such niceties. If one of their policies leads to a mess, that’s just an excuse for more bad policy.
Mexico is reeling from a drug-cartel insurgency that is armed mainly with weapons acquired in the United States… Naming a new ATF chief to lead the fight against illegal weapons would be a small symbolic step. But it would signal to Mexicans and Arizonans alike that the administration is mobilizing to deal with these problems — and is willing to take some political heat in the process. …”The absence of a chief has hamstrung ATF’s ability to aggressively target gun trafficking rings or corrupt firearms dealers and has demoralized its agents,” Paul Helmke, president of the Brady Campaign to Prevent Gun Violence, wrote in a June 10 letter to Obama. …The prevailing political wisdom in America, to which the Obama administration evidently subscribes, is that it’s folly to challenge the gun lobby. When Mexico’s President Felipe Calderón addressed a joint session of Congress in May, he all but pleaded with lawmakers to help stop the flow of assault weapons. His call to action produced little more than a shrug of the shoulders in Washington.
By the way, several of you have been ribbing me for calling this phenomenon Mitchell’s Law when great economists like Mises have written about this pattern. But I’m not saying that I invented the concept. I’m just trying to popularize it, much as I gave the name “Rahn Curve” to the theory about a growth-maximizing level of government. In effect, I’m trying to mimic Art Laffer. Art will freely tell anyone he meets that the concept behind the Laffer Curve existed for centuries. But he turned in into a curve and brought it to the attention of the world.
There are some things I don’t like about this video (the implication that maybe some of the money we’re wasting in the War on Drugs should instead be wasted on other programs), and I also wonder how important it is to scale back the welfare state before making drugs legal, but the core message is completely sound. The War on Drugs is a failure.
This isn’t really a debate, as much as a skeptical-but-friendly interview with Jacob Sullum of Reason. As you might expect, I want drugs legalized because I don’t like crime, corruption, and violence – all of which are exacerbated by prohibition.
The Associated Press has a thorough story looking at the utter failure in the War on Drugs. In part, this is a predictable result of government incompetence, akin to the War on Poverty. And just as the so-called War on Poverty has negative side effects such as increased dependency, the War on Drugs has negative said effects including lots of wasteful government spending. I’m personally very anti-drug, and if I ever catch any of my kids doing drugs, they’ll be sorry, but that doesn’t mean the government should be involved. Let’s look at some of the key excerpts from the article, beginning with a look at the overall cost and an admission that all the added spending hasn’t generated any positive results:
After 40 years, the United States’ war on drugs has cost $1 trillion and hundreds of thousands of lives, and for what? Drug use is rampant and violence even more brutal and widespread. Even U.S. drug czar Gil Kerlikowske concedes the strategy hasn’t worked. “In the grand scheme, it has not been successful,” Kerlikowske told The Associated Press. …President Richard M. Nixon seized on a new war he thought he could win. “This nation faces a major crisis in terms of the increasing use of drugs, particularly among our young people,” Nixon said as he signed the Comprehensive Drug Abuse Prevention and Control Act. The following year, he said: “Public enemy No. 1 in the United States is drug abuse. In order to fight and defeat this enemy, it is necessary to wage a new, all-out offensive.” His first drug-fighting budget was $100 million. Now it’s $15.1 billion, 31 times Nixon’s amount even when adjusted for inflation.
Experts who have looked at the issue say criminalization is bad policy, costing lives, expanding government, and misallocating law enforcement resources:
Using Freedom of Information Act requests, archival records, federal budgets and dozens of interviews with leaders and analysts, the AP tracked where that money went, and found that the United States repeatedly increased budgets for programs that did little to stop the flow of drugs. …Studies show that jail time tends to increase drug abuse. …Harvard University economist Jeffrey Miron says the only sure thing taxpayers get for more spending on police and soldiers is more homicides. “Current policy is not having an effect of reducing drug use,” Miron said, “but it’s costing the public a fortune.” …The dealers who are caught have overwhelmed justice systems in the United States and elsewhere. U.S. prosecutors declined to file charges in 7,482 drug cases last year, most because they simply didn’t have the time. That’s about one out of every four drug cases. ……A full 10 percent of Mexico’s economy is built on drug proceeds — $25 billion smuggled in from the United States every year, of which 25 cents of each $100 smuggled is seized at the border. \
The good news is that there is growing interest in a free-market/libertarian approach:
A decade ago, no politician who wanted to keep his job would breathe a word about legalization, but a consensus is growing across the country that at least marijuana will someday be regulated and sold like tobacco and alcohol. California voters decide in November whether to legalize marijuana, and South Dakota will vote this fall on whether to allow medical uses of marijuana, already permitted in California and 13 other states.
Unfortunately, Obama seems to have little interest in a more rational policy, even though he admits drug use when he was young. As usual, politicians get to live their lives using one set of rules while imposing a different set of rules on everyone else:
Obama is requesting a record $15.5 billion for the drug war for 2011, about two thirds of it for law enforcement at the front lines of the battle: police, military and border patrol agents struggling to seize drugs and arrest traffickers and users. …Until 100 years ago, drugs were simply a commodity. …In 1904, an Episcopal bishop returning from a mission in the Far East argued for banning opium after observing “the natives’ moral degeneration.” In 1914, The New York Times reported that cocaine caused blacks to commit “violent crimes,” and that it made them resistant to police bullets. …a young Barack Obama was one of those young users, a teenager smoking pot and trying “a little blow when you could afford it,” as he wrote in “Dreams From My Father.” When asked during his campaign if he had inhaled the pot, he replied: “That was the point.” So why persist with costly programs that don’t work?
There’s going to be a referendum on marijuana prohibition this November in the (not so) Golden State. The good news is that it is ahead in the polls. But the bad news is that this is not a reflection of libertarian sentiment. Instead, voters are sympathetic to the notion that pot could be a new source of tax revenue (which presumably means a smaller risk of other tax increases). The AP reports:
When California voters head to the polls in November, they will decide whether the state will make history again – this time by legalizing the recreational use of marijuana for adults. The state was the first to legalize medicinal marijuana use, with voters passing it in 1996. Since then, 14 states have followed California’s lead, even though marijuana remains illegal under federal law. “This is a watershed moment in the decades-long struggle to end failed marijuana prohibition in this country,” said Stephen Gutwillig, California director for the Drug Policy Alliance. “We really can’t overstate the significance of Californians being the first to have the opportunity to end this public policy disaster.” …The California secretary of state’s office certified the initiative for the general election ballot Wednesday after it was determined that supporters had gathered enough valid signatures. The initiative would allow those 21 years and older to possess up to one ounce of marijuana, enough to roll dozens of marijuana cigarettes. Residents also could grow their own crop of the plant in gardens measuring up to 25 square feet. The proposal would ban users from ingesting marijuana in public or smoking it while minors are present. It also would make it illegal to possess the drug on school grounds or drive while under its influence. Local governments would decide whether to permit and tax marijuana sales. Proponents of the measure say legalizing marijuana could save the state $200 million a year by reducing public safety costs. At the same time, it could generate tax revenue for local governments. A Field Poll taken in April found a slim majority of California voters supported legalizing and taxing marijuana to help bridge the state budget deficit.
There’s a principled Fourth Amendment argument against anti-money laundering laws. In this video, however, I mostly focus on the cost-benefit issue, explaining that the fight against crime will be more effective if law enforcement is not forced to look for a needle in a haystack.
I’m not sure whether this is a good thing or bad thing, but it surely says something that international drug dealers and money launderers prefer the euro over the dollar. The good news, so to speak, is that this is not a referendum on Bernanke’s easy-money policy. Instead, it seems the drug lords prefer larger denominations, and the U.S. no longer circulates bills larger than $100. The Guardian reports:
International drug cartels have abandoned the US dollar for high denomination euros to launder millions in illegal profits, Europol has revealed. The gangs no longer use $100 bills because €500 notes – the largest denomination of euro – take up less room when transporting large amounts of cash across the world. …Rob Wainwright, director of Europol, said last week police forces across continental Europe were tracking the movements of smuggled and laundered euros and had traced much of it back to large drug gangs. …The scale of the smuggling operation was revealed in figures from the Colombian National Directorate. Only $300,000 worth of euros were declared as entering Colombia between January and June 2007, but over $551m in euros left the country. Once in Europe, the notes can be exchanged for dollars.
The war against drugs certainly has been good for government, with bigger budgets, more bureaucracy, and new powers.
But does it have any positive impact, even from the perspective of people (like me) who think drug use has a net negative impact on both users and society?
The answer, almost surely, is no. A recent article from The Economist finds that marijuana use is very low in Portugal, even though most drugs – including heroin and cocaine – were decriminalized in 2001.
So if the Drug War has lots of bad consequences and no good consequences, isn’t it time to stop? After all, if you’re in a hole, doesn’t it make sense to stop digging?
Bush was a big spender. Obama is a big spender. Bush supported bailouts. Obama supports bailouts. Bush created a new healthcare entitlement. Obama is trying to create a new healthcare entitlement. But President Obama may not be a lost cause. According to the Associated Press, the Administration is reversing the old policy of persecuting people who use or provide medical marijuana in states where it is legal. This is a victory for federalism and common sense. People should be free to make dumb decisions with their own lives, and prohibition is both futile and expensive. And there certainly is no reason for the federal government to be involved:
Federal drug agents won’t pursue pot-smoking patients or their sanctioned suppliers in states that allow medical marijuana, under new legal guidelines to be issued Monday by the Obama administration. Two Justice Department officials described the new policy to The Associated Press, saying prosecutors will be told it is not a good use of their time to arrest people who use or provide medical marijuana in strict compliance with state law. …The new policy is a significant departure from the Bush administration, which insisted it would continue to enforce federal anti-pot laws regardless of state codes. …A three-page memo spelling out the policy is expected to be sent Monday to federal prosecutors in the 14 states, and also to top officials at the FBI and Drug Enforcement Administration. The memo, the officials said, emphasizes that prosecutors have wide discretion in choosing which cases to pursue, and says it is not a good use of federal manpower to prosecute those who are without a doubt in compliance with state law.
A grandmother in Indiana has been arrested for purchasing cold medicine. We can all sleep more safely now that this hardened criminal has been taught a lesson. The Terre Haute News reports:
When Sally Harpold bought cold medicine for her family back in March, she never dreamed that four months later she would end up in handcuffs. Now, Harpold is trying to clear her name of criminal charges, and she is speaking out in hopes that a law will change so others won’t endure the same embarrassment she still is facing. …Harpold is a grandmother of triplets who bought one box of Zyrtec-D cold medicine for her husband at a Rockville pharmacy. Less than seven days later, she bought a box of Mucinex-D cold medicine for her adult daughter at a Clinton pharmacy, thereby purchasing 3.6 grams total of pseudoephedrine in a week’s time. Those two purchases put her in violation of Indiana law 35-48-4-14.7, which restricts the sale of ephedrine and pseudoephedrine, or PSE, products to no more than 3.0 grams within any seven-day period. When the police came knocking at the door of Harpold’s Parke County residence on July 30, she was arrested on a Vermillion County warrant for a class-C misdemeanor, which carries a sentence of up to 60 days in jail and up to a $500 fine.
The Drug War doesn’t work, and it is the ultimate example of 
Paul. …Paul deserves full credit for endorsing drug legalization. Friedman would approve. Governments in the United States, federal and state, spend an estimated $41.3 billion annually to prevent people from ingesting substances we deem harmful, though many unsafe ingestibles — you know the list — remain legal. Half of all federal prisoners are serving sentences for drug offenses, along with 20 percent of state prisoners. In 2009, there were 1.7 million drug arrests in the U.S. Half of those were for marijuana. As David Boaz and Timothy Lynch of the Cato Institute noted, “Addicts commit crimes to pay for a habit that would be easily affordable if it were legal. Police sources have estimated that as much as half the property crime in some major cities is committed by drug users.” Drug money, such as booze money during Prohibition, has corrupted countless police, Drug Enforcement Administration agents, border patrol agents, prosecutors and judges. Drug crime has blighted many neighborhoods. America’s appetite for drugs has encouraged lawlessness and violence in many neighboring countries, most recently in Mexico, where its drug violence is spilling north. Because illegal drugs are unregulated, their purity is unknowable — accounting for thousands of overdose deaths and injuries. Since we maintain drug prohibition to protect people from their own foolish decisions, those overdose deaths must weigh in the balance, too. Drug prohibition, Milton Friedman pointed out, keeps the price of drugs artificially inflated and amounts to a favor by the government to the drug lords. …Harvard economics professor Jeffrey Miron estimates that if drugs were legal and taxed, the U.S. and state treasuries would receive $46.7 billion in added revenue, while saving $41.3 billion in expenditures.
