Despite the fact that I don’t smoke pot — because if I do I will be asleep in approximately three minutes — I have long advocated complete legalization. Largely for libertarian reasons but also because the criminal law is essentially unenforceable. But the medical marijuana regulatory scheme interests me as a grand example of government getting something entirely wrong.
The original medical marijuana regulations allowed people to buy from a single supplier or grow their own or designate a grower. While the system was far from perfect, and found to be unconstitutional, it had the advantage of regulating with a very light hand. But, oh Heavens, there was “leakage”. Medical pot was not always only used by medical users. Yikes.
So Health Canada came up with a regulatory scheme which was going to licence grower/distributors and put the users and their growers out of business. Enter Big Green and a bunch of promoters who sold shares in publicly listed companies based on the new regulations. The promoters made a lot of money using a simple story: there were 45,000 medical pot users in Canada (projected to grow to 450,000 users in a decade) who each used about 3 grams a day and who would have no choice but to pay between $8 and $15 a gram for their “medicine”. You do the math.
To my not very great surprise, people used to paying $0 to $5.00 a gram did not rush to sign up. And, very quickly, at least in Vancouver, pot shops – for registered users only of course – began to spring up. Becoming a registered user was not tough. As the 5th Estate guy discovered, telling a naturopath a charming story about stress and sleep disturbance over Skype gets you your registration. At which point you are free to buy. (I note the 5th Estate did not ask the pot shop owners where they were getting their pot – which is a rather good question because it is certainly not from the licenced growers as they are not allowed to sell except by mail order.)
As anyone who has lived in Vancouver knows, the Vancouver Police Department has better things to do than bust dispensaries. Plus, given the injunction halting enforcement of the Health Canada regs, it is not obvious what they would bust the dispensaries for that would have a chance of getting past the Crown. But even if they did bust the dispensary and even if the Crown brought charges, it is pretty difficult to see how a judge could find a person guilty who was selling to a registered user.
The problem is that the boffins at Health Canada have not quite figured out that their regulations are assuming a world which does not exist. First, they assume that people want to smoke “legal pot”. That might be true if police forces were in the habit of kicking down doors to arrest people smoking pot at home but, I fear, that hasn’t happened in years. (It may occasionally occur as a means of harassment but the probable cause issue is usually sufficient to kick the charges.)
Jay Currie, “Gone to Pot”, Jay Currie, 2015-06-15.
January 16, 2017
January 13, 2017
Markets adapt to political changes, and the hierarchy of values that distinguishes between an hour’s worth of warehouse management, an hour’s worth of composing poetry, an hour’s worth of brain surgery, and an hour’s worth of singing pop songs is not going to change because a politician says so, or because a group of politicians says so, or because 50 percent + 1 of the voters say so, or for any other reason. To think otherwise is the equivalent of flat-earth cosmology. In the long term, people’s needs and desires are what they are; in the short term, you can cause a great deal of chaos in the economy and you can give employers additional reasons to automate rote work. But you cannot make a fry-guy’s labor as valuable as a patent lawyer’s by simply passing a law.
This is not a matter of opinion — that is how the world actually works. One of the many corrosive effects of having a political apparatus and a political class dominated by lawyers is that the lawyerly conflation of opinion with reality becomes a ruling principle. Lawyers and high-school debaters (the groups are not alien to one another) operate in a world in which opinion is reality: If you convince the jury or the debate judges that your argument is superior, or if you can get them to believe that your position is the correct one, then you win, and the question of who wins is the most important one if you are, e.g., on trial for murder. But if you shot that guy you shot that guy, regardless of what the jury says — facts are facts. Galileo et al. were right (or closer to right) about the organization of the solar system than were Fra Hieronimus de Casalimaiori and the Aristotelians, and the fact that Galileo lost at trial didn’t change that.
Kevin D. Williamson, “Bernie Sanders’s Dark Age Economics”, National Review, 2015-05-27.
December 30, 2016
Jeffrey Tucker on why it’s not just your imagination — showers really were better in the old days:
Even I, who have been writing about terrible American showers for 10 years, was shocked with delight at the shower in Brazil. Now, here we have a socialist country and an entire population that grouses about how hard it is to get ahead. And yet, step into the shower and you have a glorious capitalist experience. Hot water, really hot, pours down on you like a mighty and unending waterfall, sort of like it used to sea to shining sea.
At least the socialists in Brazil knew better than to destroy such an essential of civilized life.
But here we’ve forgotten. We have long lived with regulated showers, plugged up with a stopper imposed by government controls imposed in 1992. There was no public announcement. It just happened gradually. After a few years, you couldn’t buy a decent shower head. They called it a flow restrictor and said it would increase efficiency. By efficiency, the government means “doesn’t work as well as it used to.”
We’ve been acculturated to lame showers, but that’s just the start of it. Anything in your home that involves water has been made pathetic, thanks to government controls.
You can see the evidence of the bureaucrat in your shower if you pull off the showerhead and look inside. It has all this complicated stuff inside, whereas it should just be an open hole, you know, so the water could get through. The flow stopper is mandated by the federal government.
To be sure, the regulations apply only on a per-showerhead basis, so if you are rich, you can install a super fancy stall with spray coming at you from all directions. Yes, the market invented this brilliant but expensive workaround. As for the rest of the population, we have to live with a pathetic trickle.
It’s a pretty astonishing fact, if you think about it. The government ruined our showers by truncating our personal rights to have a great shower even when we are willing to pay for one. Sure, you can hack your showerhead but each year this gets more difficult to do. Today it requires drills and hammers, whereas it used to just require a screwdriver.
While the details are American, the Canadian market generally operates in lockstep with theirs, so when Tucker talks about the regulated reduction in both water heater maximum temperature and available water pressure, it’s probably the same here in Canada (and possibly worse, given our longer history of regulatory interference).
December 14, 2016
Published on 13 Dec 2016
This week: Matt Yglesias and Tyler Cowen in a brand new Econ Duel.
Next week: Another Econ Duel! Scott Sumner and Larry White will take on monetary policy.
You’ve no doubt heard it before: the rent is too damn high!
In major cities across the United States, rent prices have been skyrocketing for some time. As a percentage of median income, rent is much higher for those that choose city life over suburbia.
But why are rental prices in these cities so expensive, and what can we do about it?
It’s a classic case of supply and demand: lots of people want to move to big cities because of the opportunities they afford. Naturally, they demand housing. But the supply is often short due to many factors, from geography to regulations. What does economics tell us happens when there’s a lot of demand, but not so much supply? Prices rise. As a consequence, many people are priced out of pursuing the lucrative opportunities available in major cities.
Coastal cities, like San Francisco and New York, have obvious geographical restrictions on building “out.” One way to deal with this problem is to build upwards with more skyscraper housing. This often isn’t feasible due to regulations on building heights, density, parking requirements, etc. But these regulations could be lessened or removed, allowing big cities to become denser and lowering rent prices. Lifelong city-dweller Matt Yglesias discusses this approach in this Duel.
On the other side, Tyler Cowen, who has always lived in the suburbs, argues that allowing cities to become denser may only provide a short-term solution. As more people move in, the cities become more productive with higher incomes for their inhabitants. And the rents rise again.
Of course, we’ve merely skimmed over the arguments here, and you’ll have to watch the Econ Duel to get the full picture! Check it out and let us know in the comments who you think makes a better case.
When writing about the Organization for Economic Cooperation and Development, an international bureaucracy based in Paris, my life would be simpler if I created some sort of automatic fill-in-the-blanks system.
Something like this.
The OECD, subsidized by $____ million from American taxpayers, has just produced a new _________ that advocates more power for governments over the _________ sector of the economy.
But this may not be sufficiently descriptive.
So maybe I should create a multiple choice exercise. Sort of like when students take tests and get asked to circle the most appropriate answer.
The bureaucrats at the Paris-based OECD, working in cooperation with union bosses/class-warfare advocates/other tax-free international bureaucrats/politicians, have released a new report/study/paper urging more power/control/authority for governments in order to increase regulation/taxes/spending/redistribution/intervention.
You may think I’m trying to be funny, but this is totally serious.
How else would you describe a bureaucracy that consorts and cooperates with leftist groups like Occupy Wall Street and the AFL-CIO and routinely published propaganda in favor of Obama’s agenda on issues such as global warming, government-run healthcare, so-called stimulus, and class-warfare taxation.
And never forget that American taxpayers finance the biggest chunk of this bureaucracy’s budget.
Adding insult to injury, the bureaucrats at the OECD get tax-free salaries, which makes their relentless support for higher taxes on the rest of us even more obnoxious.
Dan Mitchell, “More Statist Propaganda from the Taxpayer-Funded OECD”, International Liberty, 2015-04-12.
December 2, 2016
November 28, 2016
Walter Williams on the real danger the hyper-rich pose to the body politic:
Microsoft co-founder Bill Gates, having a net worth of $81.8 billion, and Amazon.com CEO Jeff Bezos, having a net worth of $70.4 billion, are the nation’s two richest men. They are at the top of the Forbes 400 list of America’s superrich individuals, people who have net worths of billions of dollars. Many see the rich as a danger. New York Times columnist Bob Herbert wrote, “It doesn’t really matter what ordinary people want. The wealthy call the tune, and the politicians dance.” His colleague Paul Krugman wrote, “On paper, we’re a one-person-one-vote nation; in reality, we’re more than a bit of an oligarchy, in which a handful of wealthy people dominate.” It’s sentiments like these that have led me to wish there were a humane way to get rid of the rich. For without having the rich around to be whipping boys and distract our attention, we might be able to concentrate on what’s best for the 99.9 percent of the rest of us.
Let’s look at the power of the rich. With all the money that Gates, Bezos and other superrich people have, what can they force you or me to do? Can they condemn our houses to create space so that another individual can build an auto dealership or a casino parking lot? Can they force us to pay money into the government-run — and doomed — Obamacare program? Can they force us to bus our children to schools out of our neighborhood in the name of diversity? Can they force us to buy our sugar from a high-cost domestic producer rather than from a low-cost Caribbean producer? The answer to all of these questions is a big fat no.
You say, “Williams, I don’t understand.” Let me be more explicit. Bill Gates cannot order you to enroll your child in another school in order to promote racial diversity. He has no power to condemn your house to make way for a casino parking lot. Unless our elected public officials grant them the power to rip us off, rich people have little power to force us to do anything. A lowly municipal clerk earning $50,000 a year has far more life-and-death power over us. It is that type of person to whom we must turn for permission to build a house, ply a trade, open a restaurant and do myriad other activities. It’s government people, not rich people, who have the power to coerce us and rip us off. They have the power to make our lives miserable if we disobey. This coercive power goes a long way toward explaining legalized political corruption.
November 24, 2016
When considering the major failures of recent American governance – the 2008-09 financial crisis, the catastrophe that is U.S. policy in the Mideast – the one thing that any honest-minded person must conclude is: Nobody meant for things to turn out this way. It is impossible to make precise predictions about the effects of government policy; that is the nature of systems characterized by high levels of complexity. It’s one thing to predict that it’ll be colder during the winter, but another thing to predict down to the millimeter how much snow will fall on a particular acre in rural Maine on the third Wednesday in February, which is really what we expect from our public policy.
Classic cowboy movies, in contrast, are not complex at all: The good guys wear white hats, the bad guys wear black hats, all hats remain firmly affixed to all heads at all times, and that’s that. You can pretty much always predict how an old Western is going to turn out.
But that isn’t how the real world works.
On Tuesday, I had a conversation about Elizabeth Warren and Wall Street, pointing out that the popular version of that story – Senator Warren vs. Wall Street – is so oversimplified as to be not merely useless but misleading. The reality is that there are people working on Wall Street who dislike Senator Warren – investors and bankers, mainly – and people who adore her – notably Wall Street lawyers, who are reliable donors to her campaign and to those of other Democrats. My naïve interlocutor said: “Hopefully, it’s the lawyers that fight against Wall Street,” as though there were such a thing, as though there weren’t nice progressive lawyers in Manhattan who jokingly refer to their yachts as the SS Dodd-Frank.
Spend any time writing about this sort of thing and you’ll hear angry and panicked denunciations of derivatives-trading from people who pretty clearly do not know what a derivative is, just as you’ll hear paeans to Glass-Steagall sung by people who don’t understand the difference between a commercial bank and an investment bank, who don’t know how Goldman-Sachs makes its money or what it is that Standard & Poor’s does.
But they’re quite sure they know who is wearing the black hats.
Kevin Williamson, “Black Hats and White Hats”, National Review, 2015-04-15.
November 23, 2016
Answer: when federal bureaucratic rules interact unhappily with state-level bureaucratic rules. Eric Boehm explains why an artist is not legally allowed to market her beadwork as “American Indian-made”:
Peggy Fontenot is an American Indian artist, of that there can be no doubt.
She’s a member of the Patawomeck tribe. She’s taught traditional American Indian beading classes in Native American schools and cultural centers in several states. Her work has been featured in the Smithsonian’s National Museum of the Native American.
In Oklahoma, though, she’s forbidden from calling her art what it plainly is: American Indian-made.
A state law, passed earlier this year, forbids artists from marketing their products in Oklahoma as being “American Indian-made” unless the artist is a member of a tribe recognized by the U.S. Bureau of Indian Affairs.
The Patawomeck tribe is recognized by the state of Virginia, but not by the federal government. Fontenot says she can trace her Native American heritage back to the 16th Century, when the tribe was one of the first to welcome settlers from Europe who landed on the east coast of Virginia. She’s been working as an artist since 1983, doing photography, beading, and making jewelry.
According to PLF [Pacific Legal Foundation], Oklahoma’s law could affect as many as two-thirds of all artists who are defined American Indians under federal law. The state law also violates the U.S. Constitution’s Commerce Clause by restricting the interstate American Indian art market, the lawsuit contends.
November 14, 2016
… this is also known as “licensure”. And the rate in the 50s, at that peak of union power, was around 5% of workers needed such a licence to go to work. And union membership was, at that peak, 35% and is now around 10% or a little above, and licensure has gone from 5% to 30%.
For my point to work we have to consider unionisation and licensure as being the same thing. And they’re obviously not exactly the same thing. But they are sorta, kinda, the same thing. For all the claims that the requirement for a licence is in order to protect consumers (a theory for which the technical economic term is “codswallop”) it’s really a way to protect the wages of the ingroup against competition. As, of course, is being in a union a method of protecting those economic interests of the ingroup.
Actually, licensure is most akin to the medieval and early modern guilds system, out of which the union movement itself grew. So it’s really not surprising at all that they share certain attributes. That aim and desire of protecting the incomes of members of the group against the economic interests of everyone else.
So, my argument is that we’ve not in fact had a fall in the power of organised labour over these recent decades. We’ve just seen a change in the form of it, from unionisation to licensure. The point being that this is absolutely and definitely true in part and may or may not be true entirely. I tend towards the entirely end of that spectrum and I’d be absolutely fascinated to see if there’s been any academic comparisons made of the strengths of the two systems in protecting workers’ wages and conditions. I’d even be willing to believe that licensure works better than unionisation, given that the first is a conspiracy against the consumer, something easier to carry off than the unions’ conspiracy against the employer.
Tim Worstall, “More Union Power Won’t Raise Wages Or Reduce Inequality”, Forbes, 2015-03-07.
November 13, 2016
Ed Morrissey on the strange new respect being shown on the left to the concept of checks and balances in the US federal system:
For the past six years, the media has lionized Barack Obama for his increasing autocratic acts in pushing executive power to its limits — or past them — rather than compromise with Republicans in control of Congress. “I’ve got a pen, and I’ve got a phone,” Obama declared, “and I can use that pen to sign executive orders and take executive actions and administrative actions.” Despite serious rebukes by courts over his attempts to bypass the Senate on recess appointments and flat-out violate the law on immigration, the media has always cast Republicans as villains for frustrating Obama’s agenda rather than focus on his abuses of executive authority.
Suddenly, though, an epiphany has begun to dawn on the media. Pens and phones are old and busted, and checks and balances are the new hotness. […]
Under a true federalist system, Californians could run their own state, as could Coloradans, Minnesotans, and also Texans, Floridians, New Yorkers, and, er … whatever people from Wisconsin call themselves. All it would take would be a repudiation of Wickard v Filburn to reduce federal authority over economic activity to commerce that actually takes place across state lines. Each state could have their own EPA, if they desire it, and maintain their own land in the manner they see fit.
In such a system, the authority of the president would greatly diminish on domestic affairs, allowing voters to consider candidates for such a position based on issues such as diplomacy and national defense rather than which of the two will be the biggest busybodies. Rather than trying to run a nanny state and failing as miserably as F. A. Hayek predicted, Congress could focus on a much narrower range of tasks and do those well. Most importantly, states could keep much of the revenue pouring into Washington and provide a lot more effective accountability over its use.
Does that appeal to all the special snowflakes looking for safe space in the Age of Trump, and to all of those protesting because they just found out what it feels like to lose an election? Sound like a novel idea that could shield you from the potential side effects of a presidential election? Well, then congratulations — you are well on your way to becoming a conservative, or perhaps a libertarian. Feel free to ask us about the principles that we have (imperfectly to be sure) espoused all along while Barack Obama set all the precedents that Donald Trump will expand to your detriment. We’ll try not to snicker when explaining them to you … much, anyway.
October 29, 2016
Michael Pinkus gets an uncharacteristic rush of optimism over the sale of Constellation Brands:
[W]hile it’s nice to see Canada’s Inniskillin and Jackson-Triggs back in Canadian hands what does all this say about the selling of wine in Canada? When the world’s largest holder of wine companies/brands decides to throw in the towel here and sell off their Canadian division, yet still holds the remainder of the wineries and brands they acquired with their 2006 purchase of Vincor to me speaks volumes. Now I’m just speculating here, as I do in many of my commentaries, but could it be that Constellation sees the writing on the wall: that making money in Canada (in general) and in Ontario specifically, will not be as easy as it once was under the Liberal’s new proposed “sharing the retail space plan”. Let’s face it, the real selling feature of Vincor’s Canadian holdings were those Ontario money makers: those off-site stores that were a license to print money in the province … and now if the world’s largest can’t figure it out how in the world are the rest of Ontario’s wineries supposed to do it? Are we about to embark down another rabbit hole of when it comes to the sale of booze in this province?
[…] Just last week, I was asked for my thoughts and I immediately went to the pessimistic side of things: “does not bode well for the selling of wine here in Ontario”; but then after some careful thought I decided there still might be room for optimism, especially if you look at the purchaser. At one point in the process it was rumoured that Peller was in the mix of buyers to take over the Constellation Canadian holdings, but in the end it was the Teachers’ Pension Plan that took it for $1.03 billion. Many on social media lamented that if the teachers do for booze what they did for Toronto sports teams we’re all in big trouble. But I thought of a better angle: Nobody is better at lobbying and twisting the arm of the provincial government to get what they want than the Teachers’ Union … and once they learn how difficult selling wine is, and the antiquated laws we have surrounding it, here in Ontario, they’ll set their sights on making changes, and while the fairly ineffectual Wine Council of Ontario seems to be a mouse nipping at the heels of the governmental elephant, the Teachers’ Union and their Pension Plan will seem like a pack of wolves and hyenas working together to wrestle the elephant to the ground. So while Peller (had they succeeded in their purchase efforts) would have become the largest Canadian winery by far, they would not have been any more effective at invoking change to the system; on the other hand, the Teachers’ Union could play a large and important role at getting laws passed that will loosen up our repressive and antiquated system up; because who is in more need of a drink at the end of the day than a teacher, and it should be easier for them to get it and sell it..
October 18, 2016
In the 1970s, municipalities enacted new rules that were designed to protect farmland and to preserve green space surrounding rapidly growing cities by forbidding private development in those areas. By the late 1990s, this practice evolved into a land-use strategy called “smart growth.” (Here’s a video I did about smart growth.) While some of these initiatives may have preserved green space that can be seen, what is harder to see is the resulting supply restriction and higher cost of housing.
Again, the lower the supply of housing, other things equal, the higher real-estate prices will be. Those who now can’t afford to buy will often rent smaller apartments in less-desirable areas, which typically have less influence on the political process. Locally elected officials tend to be more responsive to the interests of current residents who own property, vote, and pay taxes, and less responsive to renters, who are more likely to be transients and nonvoters. That, in turn, makes it easier to implement policies that use regulation to discriminate against people living on low incomes.
Sandy Ikeda, “Shut Out: How Land-Use Regulations Hurt the Poor”, The Freeman, 2015-02-05.
September 21, 2016
Amy Alkon on the mainspring of some (possibly many) altruistic actions:
I write about this sort of thing in Good Manners for Nice People Who Sometimes Say F*ck. It’s called “pathological altruism,” and describes deeds intended to help that actually hurt — sometimes both the helper and the person they’re trying to help:
[Dr. Barbara] Oakley notes that we are especially blind to the ill effects of over- giving when whatever we’re doing allows us to feel particularly good, virtuous, and benevolent. To keep from harming ourselves or others when we’re supposed to be helping, Oakley emphasizes the importance of checking our motives when we believe we’re doing good. “People don’t realize how narcissistic a lot of ‘helping’ can be,” she told me. “It’s all too easy for empathy and good deeds to really be about our self-image or making ourselves happy or comfortable.”
One example of this is The New York Times series on nail salons — intended to help the workers but actually keeping a number of them from being able to get work…work they were able to get before the crackdowns the NYT piece led to. From Reason‘s Jim Epstein:
Salon owners have also stopped hiring unlicensed workers, whether they’re undocumented or not. By law, every manicurist working in New York State must complete 250 hours of training at a beauty school, which costs about $1,000, and then obtain a government-issued license. This is a barrier to entry, and some aspiring manicurists can’t afford the time or tuition. There are some salon owners in the industry who, up until recently, were willing to hire them anyway because they were desperate for employees and the state rarely checked. Cuomo’s task force changed that.
Kim sponsored a state law, passed in July, that attempted to remedy the situation. The bill made it legal for nail salons to hire workers as apprentices receiving on-the-job training. After a year, they’re eligible for a state license without attending beauty school.
Few are utilizing the apprenticeship program. “It needs tweaking,” Kim admits. Despite assurances to the contrary from state officials, Kim says he’s hearing on the ground that when signing up for the program, applicants are being asked their citizenship status, which is scaring off many would-be apprentices.
Licensed workers legally working in the U.S. have also been hurt by the inspections. “Workers themselves prefer to be paid in cash, and it’s not just at nail salons,” says Kim. Salon owners have started recording every dollar that passes through their shops to avoid getting fined. The inspection task force has had “unintended consequences,” he says.
The biggest victims, however, are people like Jing Ren, the main character in the Times series. Ren, 20, is undocumented, penniless, and “recently arrived from China.” Instead of paying $1,000 for salon school, she signed on as a trainee at a shop in Long Island. By the end of the article, she’s making $65 per day in base wages.
When weaving its cartoonish tale of evil bosses and oppressed workers, the Times never considers what would happen if all of the nail salons willing to hire Jing Ren disappeared. Would future immigrants like her be better or worse off?
September 20, 2016
Another land-use regulation that makes space more expensive is municipal requirements that establish a minimum number of parking spaces per housing unit.
According Donald Shoup’s analysis, parking requirements add significantly to the cost of housing, particularly in areas with high land values. For example, in Los Angeles, parking requirements can add $104,000 to the cost of each apartment. Parking requirements limit consumers’ choices and increase the cost of housing even for those who prefer not to pay for parking.
Developers typically build only the minimum amount of parking required by law, which indicates that those requirements are binding. That is, in a less-regulated environment, developers would devote less land to parking and more land to living space. A greater supply of living space will, other things equal, lower the cost of housing.
Sandy Ikeda, “Shut Out: How Land-Use Regulations Hurt the Poor”, The Freeman, 2015-02-05.