Legal and Taxable Marijuana a boon for Black Market Drug Trade in Colorado

Posted by PITHOCRATES - April 21st, 2014

Week in Review

This past Easter we saw a pot celebration in Denver.  Gathering in a central Denver park to smoke marijuana in public.  Even though doing so is still against the law.  Despite Colorado having decriminalized recreational marijuana.  Not exactly the image Colorado may have wanted.  But they may not mind a little pot tourism.  Especially to buy from their licensed pot shops.  Where pot smokers will pay a hefty tax on their legal marijuana purchases.  Eliminating the illegal drug trade.  And burying the treasury in new tax revenue (see Will Home Grown Marijuana Go the Way of Moonshine? by Caitlin Dickson posted 2/1/2014 on The Daily Beast).

I’d been in the Mile High City a total of 20 minutes before my local friend shattered the image I’d built in my head of a post-Jan. 1 Denver. She is a pot smoker. Why was she not one of the thousands of people I’d seen on TV, waiting in lines that poured out the doors of Denver’s retail marijuana shops? If not on New Year’s Day (that’s not really her style), then at least once in the weeks following the stores’ legal opening?

“I just get my weed from my friend Dave,” she said. “Most of my friends do…”

Maintaining a home grow is as expensive, if not more expensive, as setting one up. Dave says his monthly electricity bill jumps to roughly $600 in the summer, when he has to turn up the air conditioning to keep his plants from wilting, on top of the high cost of constantly running one high-voltage light for every six of his 36 plants (12 more than his red card permits). But the money Dave has put into building his basement greenhouse is nothing compared to the green his plants brings in. The 26-year-old—who now runs the grow by himself—says he makes between $40,000 and $60,000 per year selling his weed. It’s more than enough to live on for only about five to 10 hours worth of work per week.

To clarify, Dave’s livelihood is not legal…

Dave’s risk has yielded extremely lucrative rewards, and doesn’t show signs of slowing down, as his clientele of peers would unsurprisingly prefer to pay $20 to $30 for an eighth of an ounce than the $60 to $80 retail stores are charging. In fact, the dispensaries’ high prices (Colorado charges a 10 percent excess tax on all retail marijuana sales, on top of which Denver tacks a special 3.5 percent pot tax in addition to the general city and state retail taxes of 7.5 percent) are enough to motivate any thrifty green thumb try their hand at growing.

So decriminalizing marijuana does not get rid of the drug black market.  In fact, it has made the black market more lucrative.  As taxes raise the price of legally sold pot it makes black market pot much more attractive to recreational users.  In fact, the higher the taxes the better it will be for the black market drug dealers.  Just like cigarette smuggling into cities with high cigarette taxes is a very lucrative black market business.  As high taxes are a black marketeer’s best friend.

So decriminalizing marijuana won’t be everything they thought it would be.  For the higher cost of legal pot may attract another black marketeer.  From south of the border.  Mexico.  So Colorado may get some more tax revenue.  But they’re going to have to spend a lot of it on battling the same things they were battling when marijuana was still illegal.  With one other problem.  A state full of recreational pot smokers smoking a lot of pot.  And these recreational pot smokers will cause a lot of brain damage that will cost Colorado dearly in health care costs in the years to come.

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Colorado’s Marijuana Tax Revenue likely to fall over time like New York’s Cigarette Tax Revenue

Posted by PITHOCRATES - March 22nd, 2014

Week in Review

States with huge budget deficits are watching Colorado and their marijuana sales tax.  As they consider following Colorado.  The proponents of marijuana decriminalization point to Colorado and say, “See?  Make it legal and tax it.  And everybody wins.  People can smoke until they get lung cancer.  And the state can rack up tax revenue to pay for, of course, schools.  It’s always schools, you see, because if you oppose tax revenue for schools you hate children.  And taxing sin is good, too.  Because we shouldn’t be doing those nasty things anyway.  So sin taxes work.  Just look at how well those cigarette taxes are working (see As taxes on cigarettes go up, so does smuggling, study finds posted 3/22/2014 on FoxNews Politics).

More than half of the cigarettes for sale in New York are smuggled into the state illegally – the highest percentage in the country, according to a recent report from the Tax Foundation.

According to the non-partisan research group, increased excise taxes on cigarettes to discourage smoking have, in fact, created lucrative incentives for black market trafficking between states…

According to the U.S. Department of Justice’s Bureau of Alcohol, Tobacco, Firearms, and Explosives, even though authorities have taken steps to reduce cigarette smuggling, nearly $5 billion in revenue in 2010 was lost because of smuggling.

Well, as it turns out, sin taxes don’t work as well as they thought they would.  They increase crime.  Because smuggling cigarettes is less risky than smuggling class one narcotics.  For cigarettes aren’t illegal.  So criminals can turn from something more risky, like smuggling class one narcotics, to something less risky.  Smuggling legal cigarettes.  Tax revenue from Colorado’s marijuana tax will probably decline over time.  As a black market comes to Colorado to sell tax-free marijuana.  Just like a black market sells lower-taxed cigarettes in higher taxed cities.

So you have additional crime on the one hand.  A black market drug-dealer network much like what exists today.  But one that can operate in less fear as the penalty for getting caught is a lot less than what it used to be.  Making it easier for our kids to smoke marijuana.  Either by buying it from a better supplied illegal drug dealer.  Or stealing some from their parent’s stash.  Or someone else’s stash.  For there will be a lot of stashes to steal from.

So the crime element is bad.  But as the black market takes off tax revenue will fall from legal sales.  Just like it has for cigarettes.  Leaving an over-spending state still short of tax revenue.  But now with a marijuana black market that they must police.  And a state full of potheads that will likely NOT help the state produce the best and brightest for the high-tech jobs in their economy.  The higher-paying kind of jobs that pay more income taxes.  Because once you have your weed and some cool tunes what do you need a high-stressed job for?  Which will probably make the experiment in Colorado not go as they thought it would.  Something other states should consider before following Colorado down this road.

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Byzantine Empire, Bosporus, Silk Road, Dutch East India Company, English East India Company, Tea Act and Opium Wars

Posted by PITHOCRATES - March 11th, 2014

History 101

(Originally published May 15th, 2012)

To encourage Risk Takers to Travel Halfway around the World Mercantile States granted Monopoly Charters

The modern world began because Europeans had a penchant for silk and spices.  Something they enjoyed during Roman times.  When the Romans ruled the world.  And the Mediterranean Sea was nothing more than a Roman lake.  But when the empire stopped conquering new lands and sending the spoils of war home they had to turn to other means to pay for the cost of empire.  Taxes.  To pay for the Roman government and their public spending.  And the Roman legions.  This excessive government spending led to the fall of the western half of the empire.  But the eastern half lived on for another 1,000 years or so.  Why?  Because the capital of the Byzantine Empire was Constantinople.  On the Bosporus.  Trade crossroads of the world.

This city was so rich everybody wanted to conquer it.  So they could have all those riches.  For everything that came along the Silk Road from China crossed into Europe at the Bosporus.  Soon Muslims fought Christians in the Holy lands.  Then more Christians came.  The Crusaders.  Those who didn’t die went back to Europe with some of those Chinese luxuries.  Spices.  Silk.  Porcelain.  Etc.  Sparking a renewed interest in these finer things in Europe.  Especially the spices.  For European cooking was horribly bland at the time.  The Ottoman Turks eventually took Constantinople.  Renamed it Istanbul.  And controlled that lucrative trade.  Making those much sought after Asian goods rather expensive in Europe.  Which they had no choice but to pay.  Because if you wanted those luxuries you had to go through Istanbul.  Until the Portuguese sailed around Africa and found a direct route to those cherished goods, that is.

It was the Commercial Revolution.  A new age of international trade.  A trade even more profitable than what the Ottoman Turks controlled.  Because big ocean-going vessels can carry more cargo than anything coming over land on the Silk Road.  And these new European maritime powers wanted that wealth.  And the power it would provide.  To encourage risk takers to get into those wooden ships and travel halfway around the world they granted monopoly charters.  The Dutch East India Company (VOC) was one of the largest.  And one of the wealthiest.  But this was not your typical company.  The VOC established overseas colonies.  It waged war.  Established treaties.  Even coined its own money.  Because of this thousands of VOC ships stuffed full of valuable cargoes sailed to Antwerp and Amsterdam, making the Dutch very wealthy.  And powerful.

The Tea Act allowed the Company to Ship their Tea Directly to America and exempted them from any Duties

Of course the Dutch weren’t the only ones doing this.  They had competition.  Portugal.  Spain.  France.  And England.  Who would bump into each other numerous times fighting for control of this trade.  And those colonies.  The English and the Dutch would fight 4 wars.  Which is how Dutch-founded Manhattan became part of the British Empire and, subsequently, one of America’s greatest cities.  The English East India Company gave the VOC a run for its money.  Parliament even passed legislation to give the English a monopoly on all trade with their American colonies.  The Navigation Acts.  Which stated that all trade to and from America had to be on English ships.  And all trade had to go through an English port.  Where the ships were unloaded and the cargoes inspected.  And taxed.  Then they could reload their cargoes and continue on their journey.  All tenets of mercantilism.  This kept the lower-priced Dutch goods out of America.  And prevented the Americans from selling to the Dutch directly for higher prices.  So it shut down the Dutch from all American trade (except for a prosperous black market). And brought in some lucrative tax revenue for England.  While extending shipping times and increasing prices for the Americans.  Which they were not happy about in the least.

The English East India Company (the Company) was similar in structure to the VOC.  And soon made the Indian subcontinent a wholly owned subsidiary of the Company.  But it wasn’t cheap.  Waging war was costly.  As was managing those conquered territories (something the Romans had also learned).  Then a famine in Bengal in 1770 claimed about one-third of the local population.  Making laborers more scarce.  And more expensive.  All at a time when the sales of their imported goods were falling in Europe.  There were warehouses full of unsold Chinese tea that they couldn’t sell.  Making for a bad time for the Company.

Higher costs and lower sales spelled trouble.  And that’s what the Company had a lot of.  Trouble.  So the Company turned to Parliament for help.  And Parliament helped.  By allowing the Company to ship their tea directly to America without having to unload it in a British port.  Or pay a duty on that tea.  Which would greatly reduce their costs.  And allow them to sell it in America cheaper than they did before.  So Parliament passed the Tea Act in 1773.  Making life better for all involved.  But the Tea Act left in place another tax in the previous Townshend Acts.  Which was a bigger problem than getting cheaper tea (which they could get on the black market from the Dutch).  These taxes on the British subjects in America were unconstitutional.  Because there were no Americans sitting in Parliament.  This was taxation without representation.  A much bigger issue than cheap tea.  So they threw that first ‘cheap’ tea into Boston Harbor.  The Boston Tea Party being a major step towards war with the mother country.  And American independence.

Britain became the Lone Superpower after Abandoning their Protectionist Mercantile Policies and Adopting Free Trade

The American Revolutionary War was not the only headache the British got from their mercantile policies.  Part of those policies required maintaining a positive balance of trade.  So there was always a net inflow of bullion into the mother country.  That’s why raw materials shipped into Britain from America.  And finished goods shipped out to America.  Finished goods are more valuable than raw materials.  So the Americans had to make up for this balance of trade in bullion.  Resulting in a net inflow of bullion into the mother country.  Very simple.  As long as you can manufacture higher valued goods that other people want to buy.

And this is the problem they ran into with the Chinese.  For though the British wanted those Chinese spices, silk and porcelain the Chinese didn’t want anything the British manufactured.  Which meant Britain had to pay for those luxuries with bullion.  Including all that Chinese tea they craved.  Which resulted in a net outflow of bullion to the Chinese.  The British fixed this problem by finding the one thing that the Chinese people wanted.  Indian opium.  Grown in Bengal.  Of course, this turned a lot of Chinese into opium addicts.  The addiction problem was so bad that the Chinese banned opium.  But the British were able to smuggle it in.  They sold so much of it that they used the proceeds to buy their tea.  Thus reversing the bullion flow.

Not the finest hour in the British Empire.  The Chinese and the British would go on to fight a couple of wars over this opium trade.  The Opium Wars.  Which the British did all right in.  Even gaining Hong Kong in the bargain.  They didn’t build any long-lasting love with the Chinese people.  But Hong Kong turned out pretty nice under the British.  Especially after they abandoned their protectionist mercantile policies and adopted free trade.  Which made the British the lone superpower for about a century as they modernized the world by leading the way in the Industrial Revolution.  And the Chinese in Hong Kong were very happy indeed to be there when the communists took over the mainland.  And caused a famine or two.  For they lived comfortably.  In a state founded on mercantilism.  That achieved its greatest prosperity during the free trade of capitalism that followed Britain’s mercantile ways.

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Venezuela’s Socialism has given it one of the World’s highest Murder Rates

Posted by PITHOCRATES - January 11th, 2014

Week in Review

President Obama is launching a war against income disparity.  Because under his 5 years or so as president the rich got richer while the median family income fell.  This income gap is the source of all our woes.  Or so he says.  And it can lead to other bad things.  Like violence between the classes.  Which is why he’ll say we need to raise the taxes on the rich.  To help everyone else who has suffered under the Obama economic policies.  So everyone has everything they could ever need or want.  And be happy.  Where people will live together in peace and bliss.  Like in socialists countries.  Where they put people before profits (see Former Miss Venezuela Monica Spear slain resisting robbery by Jorge Rueda, The Associated Press, posted 1/7/2014 on The Star).

Assailants shot and killed a popular soap-opera actress and former Miss Venezuela and her Irish ex-husband in the presence of their 5-year-old daughter when they resisted a robbery, authorities said Tuesday.

Monica Spear, 29, and Henry Thomas Berry, 39, were slain late Monday night on a roadside near Puerto Cabello, Venezuela’s main port, after their car broke down, the prosecutor’s office said in a statement…

Venezuela has one of the world’s highest murder rates and violent crime is so rampant that Venezuelans tend to stay home after dark…

According to the non-profit Venezuelan Observatory of Violence, the oil-rich South American country’s murder rate was 79 per 100,000 inhabitants last year.

Hugo Chávez was an extreme anti-capitalist.  And he turned Venezuela into a socialist paradise.  Putting people before profits.  But like all other planned economies it just led to shortages of everything.  And because the state couldn’t provide like a free market could a profitable black market developed.  Where what limited goods there were ended up selling at higher prices.  Leading to great income disparity.  As people with money could buy what they needed from the black markets while the poorer people could not.  And went without.

Deprivation and corruption led to ever greater income disparity.  As criminals and those in government lived well.  While the people suffered abject poverty.  Leading to a society that became so lawless that the people hid in their homes after dark.  This is what you get with socialism.  Well, that.  And an oppressive police state.  To keep those suffering abject poverty from rising up against the government.  So those in government can continue to live the good life.  While they continue to ‘fight for the people’.  Who never seem to escape from their abject poverty.

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Venezuela’s Socialist Policies cause Runaway Inflation and High Prices

Posted by PITHOCRATES - November 24th, 2013

Week in Review

Socialists who attack capitalism say they are the champion of the poor.  And yet the poorest of the poor are in socialist countries.  Where some live without indoor plumbing or electric power.  While the poor in capitalist countries can suffer from obesity.  And most if not all have indoor plumbing and electric power.  As well as refrigerators, microwaves and televisions.

Venezuela is an anti-capitalist, socialist country.  So you would think it’s a poor person’s paradise there.  But because of runaway inflation only the rich do well in this socialist paradise.  While the poor can barely afford to live (see Venezuela jails 100 ‘bourgeois’ businessmen in crackdown by Andrew Cawthorne and Deisy Buitrago, Reuters, posted 11/14/2013 on Yahoo! News).

Venezuela’s socialist government has arrested more than 100 “bourgeois” businessmen in a crackdown on alleged price-gouging at hundreds of shops and companies since the weekend, President Nicolas Maduro said on Thursday.

“They are barbaric, these capitalist parasites!” Maduro thundered in the latest of his lengthy daily speeches. “We have more than 100 of the bourgeoisie behind bars at the moment.”

The successor to the late Hugo Chavez also said his government was preparing a law to limit Venezuelan businesses’ profits to between 15 percent and 30 percent.

Officials say unscrupulous companies have been hiking prices of electronics and other goods more than 1,000 percent. Critics say failed socialist economic policies and restricted access to foreign currency are behind Venezuela’s runaway inflation.

So what’s to blame for these high prices?  Capitalism?  Or socialism?  Well, if you blame a devalued currency and a scarcity of basic goods, you have to blame socialism.

Venezuela’s official inflation, 54 percent annually, is the highest in the Americas…

Given Venezuelans’ anxiety over inflation, and scarcities of basic goods from toilet paper to milk, Maduro was risking a backlash at the December 8 nationwide municipal elections…

Critics say the moves do not tackle the roots of Venezuela’s economic malaise, like an overvalued bolivar that forces many importers to buy black-market dollars and then pass those costs on to consumers.

The government has ordered local telecom companies to block various websites showing the bolivar at 10 times the official rate of 6.3 to the greenback on the illegal market.

The socialist economy of Venezuela can’t provide the basic necessities.  So they have to import a lot of goods.  But before you buy a country’s exports you have to exchange your currency first.  And when you’ve devalued your currency by printing money to pay for a welfare state you don’t get a lot of foreign currency in exchange.  Because your money is worthless.  And no one outside the country wants it.  For what are they going to spend it on?  It’s not like Venezuela has a booming export market to shop at.  So when you can’t exchange bolivars for US dollars you have to get US dollars some other way.  On the black market.  So you have a currency that has some purchasing power to pay for those US exports.

So inflation, scarcity and the cost of black market US dollars adds a lot of costs to businesses.  Which they have to recover somehow.  And the only way they can is through higher prices.  Which hurt the poor the most.  For they’re not getting big pay raises to keep pace with rising prices.  In fact, Venezuelans don’t even want to hold on to their own currency.  Because it’s losing purchasing power at such a great rate that the longer they hold on to it the less it will buy.  Which is why they want those imports.  Because you can’t inflate manufactured goods.  So they hold their value.  Unlike a savings account full of bolivars.

It’s not the bourgeois capitalist parasites making life miserable for the poor.  It’s Venezuela’s socialist policies.  Just as similar policies caused people to flee Cuba on rickety boats to get to America.  And East Germans risked their lives to climb over the Berlin Wall.  If you put two societies close together, one socialist and one capitalist, the flow of people between the two will be from the socialist state to the capitalist state.  Which is why socialist states are often police states.  So they can prevent their people from escaping their socialist paradise.

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North Korea Manufactures and Sells Meth to Chinese addicts to bring Hard Currency into the Country

Posted by PITHOCRATES - August 25th, 2013

Week in Review

Keynesian economists, and those on the left, think there is nothing wrong with printing money.  Because they don’t understand money.  What it truly is.  So what is money?  It’s a temporary storage of wealth.  It is not wealth.  Doctors make a lot of money because they have learned great skills.  Skills few people have.  And doctors are willing to exchange these skills for money.  The wealth is a doctor’s skills.  The money temporarily holds this wealth until the doctor finds something to trade that money for.  From someone else that has wealth.  Who created something of value the doctor is willing to trade for.

All money did was make this trading of valuable things easier.  So we could trade with anyone even if they don’t want anything we can make or do.  A doctor doesn’t have to find someone who wants their gallbladder removed who has a television set if the doctor wants a television set.  The doctor can just go to a store and buy one.  Because of money.  Making the exchange of goods and services far easier than in a barter system.

Those who think money is wealth and that we should just print it and hand it out to the people are missing one very important point.  If you did this no one would have to work.  Those on the left would applaud that.  But if no one worked there would be no valuable things to trade.  And if there are no valuable things to trade then your money is worthless.  For if there is nothing to buy what good is having money?

North Korea has a lot of money.  But their money is worthless.  Because they just print it.  While their economy contains no valuable things to trade.  Not a big problem in a closed economy.  And you make your people slaves.  But it’s a problem if you want to trade with the outside world for the luxury items the lucky few in the ruling elite enjoy.  For if you have no valuable things in your economy then you must trade for valuable things with hard currency.  Money that isn’t worthless paper.  So North Korea came up with a way to get hard currency (see How North Korea got itself hooked on meth by Max Fisher published 8/21/2013 on The Washington Post).

A new study published in the journal North Korea Review says that parts of North Korea are experiencing a crystal meth “epidemic,” with an “upsurge” of recreational meth use and accompanying addiction in the country’s northern provinces…

So how do people in North Korea, a country where markets are so tightly regulated that even video CDs can be considered dangerous contraband and where social controls are often beyond Orwellian, manage to get hold of meth..?

The problem actually goes back to the 1990s, when North Korea experienced a famine so devastating that virtually the entire world believed the country would collapse at any moment. But it didn’t, in part because Pyongyang finally decided to open up the world’s most closed economy just a small crack, by allowing a degree of black market trade across North Korea’s border with China. The idea was that the black market would bring in food, which it did, preventing North Korea’s implosion.

The black market trade into China has remained that little bit open ever since, either because Pyongyang authorities can’t close it now or because they see some trade as beneficial, probably both. Some provinces along the border have seen their economies liberalize a tiny, tiny bit — most notably North Hamgyung, which is named in the North Korea Review report as particularly blighted by meth addiction.

In the years after the border with China opened that little crack, two other things have happened that led to the current meth crisis. First, medicine ran out and the once-not-terrible health system collapsed — more on this later. Second, North Korea started manufacturing meth in big state-run labs. The country badly needs hard currency and has almost no legitimate international trade. But it was able to exploit the black market trade across the Chinese border by sending state-made meth into China and bringing back the money of Chinese addicts.

This is where things started to spin out of control for North Korea. The state-run meth factories and the cross-border black market trade started to mingle. And some of that meth ended up migrating back across the border and into North Korea, through the black market trade that brings in Chinese rice and DVDs and the like.

This is where the collapse of the North Korean health system becomes relevant. As Isaac Stone Fish reported in a great 2011 Newsweek story, many regular North Koreans started using meth to treat health problems. Real medicine is extremely scarce in the country. But meth is much more common, which means that the prices of medical drugs are artificially inflated, while the price of meth is artificially low. In a culture without much health education and lots of emphasis on traditional remedies, people were ready to believe that meth would do the trick for their medical problems, and many got addicted.

Poor Chinese.  First the British got them addicted to opium.  Then North Korea got them addicted to meth.  It appears the Chinese people are nothing but pawns in the game of international trade.

Back in the days of mercantile Britain trade was all about who collected the most hard currency.  Basically gold and silver in those days.  The British loved Chinese tea.  And were filling ships full of the stuff to bring it back to Britain.  The problem was that the Chinese didn’t want anything the British were selling.  So Chinese goods were flowing to Britain.  But no British goods were flowing to China.  And without having exports to offset imports Britain was forced to trade the only thing they had that China wanted.  Their hard currency.  Their silver.  So Chinese goods flowed out of china.  And Britain’s hard currency flowed out of Britain.  So China was accumulating piles of hard currency while Britain saw their piles diminish.  Which was the exact opposite mercantile Britain wanted.  So they did something about it.  Thanks to India.

India was part of the British Empire.  And she grew opium poppies.  Something some Chinese did want.  So the British used this opium demand to stop the flow of hard currency out of the empire.  And traded Indian opium for Chinese tea.  This solved the trade deficit problem.  But it created a lot of addicts in China.  The addiction problem got so bad that it spawned two wars.  The Opium Wars.  Which did not end well for China.  And things did not get better in the century or so that followed.  And now here is North Korea.  Turning Chinese into addicts to get hard currency out of China (and into North Korea).  Just like the British did.  Of course, North Korea is nothing like the mighty British Empire.  So one would believe that China is allowing this addiction problem to happen.  As it is probably a smaller price to pay than the refugee problem should North Korea collapse.  And they may like that North Korean buffer between them and South Korea.  Japan.  And the United States.

North Korea is everything the left would like to have in the United States.  Tightly regulated markets.  National health care.  No rich people accumulating private property.  Where they frown on profits.  The even put people before profits.  Just like liberals want to do.  There’s no talk radio.  No Rush Limbaugh.  No Fox News.  No free trade.  No low-cost imports to undermine union manufacturing.  No obesity.  Because there is no junk food.  And no 32 ounce sugary beverages.  And a government that can do what is right for the people without having to worry about a Tea Party challenger in the next primary election.  North Korea is liberal nirvana.  Yet life there is horrible and wretched.  Because it’s everything liberals want.  But nothing the people want.

Liberals want to keep expanding government.  To have more government intervention into the free market.  But where does it end?  How far do they want to take things towards North Korea before they say they have enough?  And why anyone should worry about this is because as horrible and wretched life is in North Korea, those in the ruling elite have it pretty darn good.  Because the people in charge of these regimes never suffer like the people outside of the ruling elite.  So the farther they move towards North Korea the less they have to worry about an election taking away their comfy life.  This is why we should worry about a government growing larger.  For throughout world history life like that in North Korea has been the norm.  While life like that in the United States has been the exception.  And the United States has only been around for 225 years (counting from the ratification of the U.S. Constitution).  A crazy new fad the entitled ruling elite (i.e., liberals) would like to do away with.  So they can rule like they did in the good old days.  Much like they do today in North Korea.  Where the supreme ruler, Kim Jong-un, has an obesity problem.  One of the few in North Korea that isn’t gripped with a gnawing hunger every minute of every day.  This is life in a country where the ruling elite hates capitalism.  And puts people before profits.  This liberal nirvana.  Those in power live well.  While everyone else suffers.

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Decriminalize Marijuana and the Kids will Smoke more and Eventually Vote Democrat

Posted by PITHOCRATES - July 28th, 2013

Week in Review

Teenagers typically vote Democrat.  In part because of the liberal bias in our public schools.  And in our colleges.  As well as in the mainstream media.  In Hollywood.  In television.  And the music industry.  These things do a lot to shape the way our kids think.  But there is another reason why our kids become Democrat voters.  Because it is the left that is handing out free birth control.  While their parents say ‘no’ the left says ‘go ahead.  Have fun.’  And then there is the push by the left to decriminalize marijuana.  Something else these kids’ parents say ‘no’ to.  While the left says ‘go ahead.  Have fun.’  Even if it may be harmful to them.  For what’s a few burnt brain cells in exchange for the youth vote (see Pot’s march toward mainstream by Alicia A. Caldwell And Nancy Benac, The Associated Press, posted 7/27/2013 on The Vancouver Sun)?

It is a moment in the U.S. that is rife with contradictions: People are looking more kindly on marijuana even as science reveals more about the drug’s potential dangers, particularly for young people…

Exploration of the potential medical benefit is limited by high U.S. government hurdles to research. Washington policy-makers seem reluctant to deal with any of it.

So we know it’s bad for the children.  But we really don’t know how bad.  For it is the only medicine (medical marijuana) ever allowed without proving the drug through clinical trials.  To make sure the drug works.  And it doesn’t cause irrevocable harm.  No pharmaceutical is allowed this luxury when bringing a new drug to market.  And we know how dangerous cigarettes and alcohol are.  But not marijuana.  No.  That drug we just accept on faith that it will cure us.  Besides just giving us a great high.

Opponents of pot are particularly worried that legalization will result in increased use by young people.

“There’s no real win on this from a political perspective,” says Sabet. “Do you want to be the president that stops a popular cause, especially a cause that’s popular within your own party? Or do you want to be the president that enables youth drug use that will have ramifications down the road?”

If anyone legalizes it will be the left.  Who are always attacking the right for hating children whenever they say we can’t afford to spend any more money.  But smoking pot harms kids.  And the left is okay with that.

“Having a regulated system is the only way to ensure that we’re not ceding control of this popular substance to the criminal market and to black marketeers,” says Aaron Smith, executive director of the National Cannabis Industry Association, a trade group for legal pot businesses in the U.S. See Change Research, which analyzes the marijuana business, has estimated the national U.S. market for medical marijuana alone at $1.7 billion for 2011 and has projected it could reach $8.9 billion in five years. Overall, marijuana users spend tens of billions of dollars a year on pot, experts believe…

In Washington state, the Liquor Control Board is drawing up rules covering everything from how plants will be grown to how many stores will be allowed. It expects to issue licences for growers and processors in December, and impose 25 per cent taxes three times over – when pot is grown, processed and sold to consumers…

Marijuana advocates in Washington state…have projected the legal pot market could bring the state a half-billion a year in revenue…

Decriminalizing marijuana will make it easier for kids to smoke it.  Because it’s easier to get things that are only illegal for people under a legal age.  As opposed to being completely illegal.  Kids aren’t legally allowed to smoke cigarettes but they do.  In fact, it is fair to say kids smoke more cigarettes than marijuana.  Because cigarettes aren’t completely illegal.  They’re only illegal for kids.

So cities suffering under the crushing costs of their public sectors are looking at a windfall of tax revenue by decriminalizing marijuana.  And don’t seem to have a problem of people spending more of their money on getting high instead of saving for their retirement.  Paying for their kids’ education.  Or putting food on the table.  It was the same thing when cities scrambled to legalize gambling.  Because they wanted the tax revenue.  Despite people gambling away money that they should have spent on their family.  No doubt these cities would be disappointed if more kids didn’t start smoking marijuana.  So that when they grew into adults they would already have a healthy drug habit the city could tax.  To help pay for the crushing costs of their public sectors.

Of course, the states and cities will never see those rosy projections of tax revenue.  Because when they “impose 25 per cent taxes three times over” they will raise the price of legal marijuana so much that it will benefit, not hurt, the black market for marijuana.  Even if the black market price is below the official taxed price.  Why?  Because people smuggling cigarettes from a low-tax state to a high-tax state don’t do the time drug dealers do when caught.  Encouraging more people to sell a legal substance illegally.  To cheat the state out of that tax revenue.  And pot smokers, especially the kids, will turn to the black market for their pot.  Where it will be even more readily available when the growing, transporting and selling of marijuana is no longer illegal.  Like cigarettes.  Which kids have no problem buying.

California steps back California’s experience with medical marijuana offers a window into pitfalls that can come with wider availability of pot.

Dispensaries for medical marijuana have proliferated in the state, and regulation has been lax, prompting a number of cities in the state to ban dispensaries…

In May, the California Supreme Court ruled that cities and counties can ban medical marijuana dispensaries.

A few weeks later, Los Angeles voters approved a ballot measure that limits the number of pot shops in the city to 135, down from an estimated high of about 1,000. By contrast, whitepages. com lists 112 Starbucks in the city…

In 2010, California voters opted against legalizing marijuana for recreational use, drawing the line at medical use.

But Jeffrey Dunn, a Southern California lawyer who has represented cities in pot cases, says that in reality the state’s dispensaries have been operating so loosely that already “it’s really all-access.”

“What we’ve learned is, it is very difficult if not impossible to regulate these facilities,” he said.

The people may have voted for marijuana in California.  But the people didn’t like living in a Cheech and Chong movie surrounded by stoners.  And seeing a pot shop every time they turned around.  Which is the last thing a parent wants.  To have it so much easier for their kids to smoke pot.  Or eat it.

A Denver-area hospital, for example, saw children getting sick after eating treats and other foods made with marijuana in the two years after a 2009 federal policy change led to a surge in medical marijuana use, according to a study in JAMA Pediatrics in May. In the preceding four years, the hospital had no such cases.

The Colorado Education Department reported a sharp rise in drugrelated suspensions and expulsions after medical marijuana took off.

“What we’re doing is not working,” says Dr. Christian Thurstone, a psychiatrist whose Denver youth substance abuse treatment centre has seen referrals for marijuana double since September. In addition, he sees young people becoming increasingly reluctant to be treated, arguing that it can’t be bad for them if it’s legal.

You decriminalize marijuana and, of course, kids will see that as an admission from the state that smoking pot can’t be bad for you.  So more kids use the drug.  Ending up in the hospital.  Getting suspended or expelled from school.  Or in drug rehab for a pot addiction.  But the left is okay with this.  Because, after all, it is the right that hates kids.  Whereas the left is the cool uncle that will let their niece and/or nephew smoke a joint.  Which is why the kids love the left.  They are always helping them do things their parents won’t let them do.

Legalization foes Opponents counter with a 2012 study finding that regular use of marijuana during teen years can lead to a long-term drop in IQ, and another study indicating marijuana use can induce and exacerbate psychotic illness in susceptible people. They question the notion that regulating pot will bring in big money, saying revenue estimates are grossly exaggerated…

They warn that baby boomers who draw on their own innocuous experiences with pot are overlooking the much higher potency of today’s marijuana.

In 2009, concentrations of THC, the psychoactive ingredient in pot, averaged close to 10 per cent in marijuana, compared with about four per cent in the 1980s, according to the National Institute on Drug Abuse.

So the left will sacrifice our children for money.  So they can pay for those costly public sectors breaking their budgets.  They won’t take on the public sector unions.  But they will sacrifice our kids.  Because kids don’t pay taxes.  Or vote.  Yet.  But when they do they hope they will remember their cool uncle when in the voting booth.

The baby boomers, who filled the theaters watching Cheech and Chong movies, look back to their days of pot smoking with nostalgia.  Thinking they turned out all right.  And so will the younger generation.  As they anxiously wait for the decriminalization of marijuana so they can buy more.  And smoke more.  Loving the high potency of the new stuff.  Not at all like the stuff they grew up smoking.  Which still fried their brains.  Providing a head start to what dementia will do to them as they reach their golden years.

Kids will on average start smoking at an earlier age.  More of them will smoke because if it’s legal it can’t be bad for you.  And they will be smoking a more potent marijuana than their parents smoked.  Accelerating the damage pot smoking will do to them compared to what it did to their parents.  But the left is okay with that.  Because it is the right that hates the children.  Not the cool uncle.  At least that’s how the youth vote will see it.  Which is all that matters to the left.

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Used Cars put a Crimp in Venezuela’s Inflationary Policies

Posted by PITHOCRATES - January 27th, 2013

Week in Review

The American Left attacks capitalism for being unfair and evil because it puts profits before people.  Whereas socialism puts people before profits.  Where people give according to ability and take according to need.  Fair, yes?  In the way it makes people want to link arms and sing Kumbaya.  Because everyone has everything they need.  Thanks to that redistribution of wealth.  And exactly how does that work?  Something like this.

An unemployed man with 8 children will get more from the government than a single woman with no children working 12-hour days 6 days a week.  She will have a lot of income the state can tax.  So she has a lot of ability.  While he will get a lot of state benefits.  Because he has a lot of need.  A smart person will look at this and quickly come to the understanding that working hard sucks.  While being a lay-about means you live comfortably on state benefits.  Paid for by people like that woman working 12-hour days 6 days a week.  So in true socialism it’s a contest to show as little ability and as much need as possible.

Sometimes there aren’t enough people to tax.  So to keep the people happy the state spends money it doesn’t have.  By printing more and more money.  Which is what Hugo Chavez did in Venezuela.  Actions which the American Left applaud.  As they applaud Hugo Chavez for putting people before profits.  For unabashedly embracing socialism.  And condemning capitalism.  So Venezuela should be a socialist utopia.  So is it?  Let’s take a look (see Venezuela Ready to Crack Down on Clunker Car Inflation Refuge by Corina Pons & Nathan Crooks posted 1/24/2013 on Bloomberg).

Automobiles purchased in Venezuela, South America’s largest oil exporter, typically gain in value the moment they are driven off the dealership lot. Facing 20.1 percent inflation and capital controls introduced in 2003 that limit the amount of bolivars citizens may take out of the country, Venezuelans invest in durable goods…

Venezuela’s consumer prices last month rose 3.5 percent, the fastest pace in 32 months, the central bank said Jan. 11. Venezuela has the third-highest inflation rate worldwide.

Chavez in 2012 ordered companies to cut prices of shampoo, soap and other personal care products to contain inflationary pressures…

Inflation rose after Chavez restricted dollar supplies in a bid to close a fiscal gap widened by spending before elections in October, in which he defeated challenger Henrique Capriles Radonski by more than 10 percentage points.

The lack of dollars has created shortages of goods that range from toilet paper to detergent and extend to automobiles. Suvinca, a Venezuelan state distributor of Chinese-made cars, posted a notice on its website yesterday that said it had run out of cars and suspended sales…

“The law won’t solve the problem, because it doesn’t resolve the fact that there is still little supply. It won’t reduce demand, either,” Garcia said. “A black market will be created very fast. Instead of solving the problem, it will make it worse…”

“With this law, it will not be permissible to sell a car above the maximum suggested price, and a used car can never cost more than a new one,” Amoroso said. “Notaries will be prohibited from legalizing any transaction that is above the suggested price.”

When you print a lot of money it just makes your money worthless.  Which is why governments frown on people using their computer printers to make money.  If everyone did this money would lose its value.  For it would be as common place as leaves on the ground in autumn.  In countries with high inflation rates people want to spend their money as fast as they get it before it loses too much of its purchasing power.  For the real goods they buy will hold their value.  So it’s a safer place to put your savings.  Instead of in a bank.

The more bolivars (the Venezuelan currency) they print the less each bolivar is worth.  The more they depreciate the bolivar the faster people want to convert them into something that will hold its value.  Like cars.  If the bolivar loses half of its value it will take twice as many of them to buy a car.  So if you own a car its value in bolivars will soar the more of them they print.  Not that people want bolivars.  But they do want dollars.  And getting dollars by selling real goods avoids the inflation problem of the bolivar.  But it also helps to undermine the currency as no one wants to use it.  Or accept it in exchange for valuable goods.

Of course an easy solution to this problem is simply implementing price controls.  If you legally prevent prices from rising in response to runaway inflation problem solved, yes?  No.  Because if prices are held at artificially low levels people will buy so many of these items while the buying is good that these things will disappear from store shelves.  And if the store shelves are empty it doesn’t matter what prices are.  This is why there were gas lines in the Seventies.  Gas sales were so strong that gas stations ran out of gas.  And with prices below real market prices there wasn’t new supply coming on market to meet that excessive demand.  Because having to sell below your costs doesn’t encourage anyone to sell.  Except on the black market.  Where black market prices adjust market supply to market demand.  And everything is available for a price.

This is the socialist utopia that is Venezuela.  Only it’s not a utopia.  It just converts as many people with ability into people with need.  And when there are no longer enough people to tax to provide for those in need societies break down.  And governments collapse.  Unless you have a strong police state.  Which has been the hallmark of all social utopias that put people before profits.  Places like Nazi Germany, the Soviet Union, the People’s Republic of China, North Korea, the communist countries of Eastern Europe, Cuba, etc.  Venezuela, too.

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Byzantine Empire, Bosporus, Silk Road, Dutch East India Company, English East India Company, Tea Act and Opium Wars

Posted by PITHOCRATES - May 15th, 2012

History 101

To encourage Risk Takers to Travel Halfway around the World Mercantile States granted Monopoly Charters

The modern world began because Europeans had a penchant for silk and spices.  Something they enjoyed during Roman times.  When the Romans ruled the world.  And the Mediterranean Sea was nothing more than a Roman lake.  But when the empire stopped conquering new lands and sending the spoils of war home they had to turn to other means to pay for the cost of empire.  Taxes.  To pay for the Roman government and their public spending.  And the Roman legions.  This excessive government spending led to the fall of the western half of the empire.  But the eastern half lived on for another 1,000 years or so.  Why?  Because the capital of the Byzantine Empire was Constantinople.  On the Bosporus.  Trade crossroads of the world.

This city was so rich everybody wanted to conquer it.  So they could have all those riches.  For everything that came along the Silk Road from China crossed into Europe at the Bosporus.  Soon Muslims fought Christians in the Holy lands.  Then more Christians came.  The Crusaders.  Those who didn’t die went back to Europe with some of those Chinese luxuries.  Spices.  Silk.  Porcelain.  Etc.  Sparking a renewed interest in these finer things in Europe.  Especially the spices.  For European cooking was horribly bland at the time.  The Ottoman Turks eventually took Constantinople.  Renamed it Istanbul.  And controlled that lucrative trade.  Making those much sought after Asian goods rather expensive in Europe.  Which they had no choice but to pay.  Because if you wanted those luxuries you had to go through Istanbul.  Until the Portuguese sailed around Africa and found a direct route to those cherished goods, that is.

It was the Commercial Revolution.  A new age of international trade.  A trade even more profitable than what the Ottoman Turks controlled.  Because big ocean-going vessels can carry more cargo than anything coming over land on the Silk Road.  And these new European maritime powers wanted that wealth.  And the power it would provide.  To encourage risk takers to get into those wooden ships and travel halfway around the world they granted monopoly charters.  The Dutch East India Company (VOC) was one of the largest.  And one of the wealthiest.  But this was not your typical company.  The VOC established overseas colonies.  It waged war.  Established treaties.  Even coined its own money.  Because of this thousands of VOC ships stuffed full of valuable cargoes sailed to Antwerp and Amsterdam, making the Dutch very wealthy.  And powerful.

The Tea Act allowed the Company to Ship their Tea Directly to America and exempted them from any Duties

Of course the Dutch weren’t the only ones doing this.  They had competition.  Portugal.  Spain.  France.  And England.  Who would bump into each other numerous times fighting for control of this trade.  And those colonies.  The English and the Dutch would fight 4 wars.  Which is how Dutch-founded Manhattan became part of the British Empire and, subsequently, one of America’s greatest cities.  The English East India Company gave the VOC a run for its money.  Parliament even passed legislation to give the English a monopoly on all trade with their American colonies.  The Navigation Acts.  Which stated that all trade to and from America had to be on English ships.  And all trade had to go through an English port.  Where the ships were unloaded and the cargoes inspected.  And taxed.  Then they could reload their cargoes and continue on their journey.  All tenets of mercantilism.  This kept the lower-priced Dutch goods out of America.  And prevented the Americans from selling to the Dutch directly for higher prices.  So it shut down the Dutch from all American trade (except for a prosperous black market). And brought in some lucrative tax revenue for England.  While extending shipping times and increasing prices for the Americans.  Which they were not happy about in the least.

The English East India Company (the Company) was similar in structure to the VOC.  And soon made the Indian subcontinent a wholly owned subsidiary of the Company.  But it wasn’t cheap.  Waging war was costly.  As was managing those conquered territories (something the Romans had also learned).  Then a famine in Bengal in 1770 claimed about one-third of the local population.  Making laborers more scarce.  And more expensive.  All at a time when the sales of their imported goods were falling in Europe.  There were warehouses full of unsold Chinese tea that they couldn’t sell.  Making for a bad time for the Company.

Higher costs and lower sales spelled trouble.  And that’s what the Company had a lot of.  Trouble.  So the Company turned to Parliament for help.  And Parliament helped.  By allowing the Company to ship their tea directly to America without having to unload it in a British port.  Or pay a duty on that tea.  Which would greatly reduce their costs.  And allow them to sell it in America cheaper than they did before.  So Parliament passed the Tea Act in 1773.  Making life better for all involved.  But the Tea Act left in place another tax in the previous Townshend Acts.  Which was a bigger problem than getting cheaper tea (which they could get on the black market from the Dutch).  These taxes on the British subjects in America were unconstitutional.  Because there were no Americans sitting in Parliament.  This was taxation without representation.  A much bigger issue than cheap tea.  So they threw that first ‘cheap’ tea into Boston Harbor.  The Boston Tea Party being a major step towards war with the mother country.  And American independence.

Britain became the Lone Superpower after Abandoning their Protectionist Mercantile Policies and Adopting Free Trade

The American Revolutionary War was not the only headache the British got from their mercantile policies.  Part of those policies required maintaining a positive balance of trade.  So there was always a net inflow of bullion into the mother country.  That’s why raw materials shipped into Britain from America.  And finished goods shipped out to America.  Finished goods are more valuable than raw materials.  So the Americans had to make up for this balance of trade in bullion.  Resulting in a net inflow of bullion into the mother country.  Very simple.  As long as you can manufacture higher valued goods that other people want to buy.

And this is the problem they ran into with the Chinese.  For though the British wanted those Chinese spices, silk and porcelain the Chinese didn’t want anything the British manufactured.  Which meant Britain had to pay for those luxuries with bullion.  Including all that Chinese tea they craved.  Which resulted in a net outflow of bullion to the Chinese.  The British fixed this problem by finding the one thing that the Chinese people wanted.  Indian opium.  Grown in Bengal.  Of course, this turned a lot of Chinese into opium addicts.  The addiction problem was so bad that the Chinese banned opium.  But the British were able to smuggle it in.  They sold so much of it that they used the proceeds to buy their tea.  Thus reversing the bullion flow.

Not the finest hour in the British Empire.  The Chinese and the British would go on to fight a couple of wars over this opium trade.  The Opium Wars.  Which the British did all right in.  Even gaining Hong Kong in the bargain.  They didn’t build any long-lasting love with the Chinese people.  But Hong Kong turned out pretty nice under the British.  Especially after they abandoned their protectionist mercantile policies and adopted free trade.  Which made the British the lone superpower for about a century as they modernized the world by leading the way in the Industrial Revolution.  And the Chinese in Hong Kong were very happy indeed to be there when the communists took over the mainland.  And caused a famine or two.  For they lived comfortably.  In a state founded on mercantilism.  That achieved its greatest prosperity during the free trade of capitalism that followed Britain’s mercantile ways.

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The More the Government Interferes in the Economy the more they Push the Economy Underground

Posted by PITHOCRATES - February 5th, 2012

Week in Review

Is the cost of government too much?  Are the taxes, licensing, regulations, legislation, etc., proving so costly that it’s pushing the economy underground?  Yes (see World Black Market Booms by Christiane Amanpour, Matthew Drake & David Miller posted 2/1/2012 on Yahoo! News).

We all know black market goods are available all over the world, but what you may not know is that if you add up all revenue generated from un-taxed business it would equal the second largest economy of the world, behind only the United States.

Free market capitalism favors people over the state.  It allows people to come together and make mutually beneficial economic exchanges.  That they enter into voluntarily.  And when the state becomes to invasive in our lives, we apparently take our economic exchanges underground.  To escape confiscatory taxes.  And punishing regulations.  If that isn’t an indictment of the failure of Big Government I don’t know what is.  For when people are left to their own devices, they want to engage in economic exchanges without the heavy hand of government raising prices and/or influencing their decisions.  The prefer the liberty of the free market.  Not the coercion of the state.

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