Price of Illegal Drugs Is Dropping, Purity Is Increasing, and the Global War on Drugs Is Failing
Supply and demand in action? Legalising and regulating drugs would drive prices further whilst providing additional tax revenue streams and reducing costs of law enforcement and “justice” departments. Releasing prisoners would save even more. What better place than here, what better time than now?
The same story unfolds in the data for heroin and cocaine. Prices for both drugs are down by eighty percent, while heroin purity is up sixty percent and cocaine purity is up eleven percent in the United States. In Europe, the price of heroin dropped seventy-four percent and cocaine price dropped fifty-one percent. Prices declined and purity rose despite ever-increasing seizures of those drugs and eradication of the drug crops globally.
Crack Addicts Make Surprisingly Rational Decisions
And now for something completely different. File this under Economics of Crime or The Marketing of Poor Social Policy.
“There is a belief, for example, that crack cocaine is so addictive it only took one hit to get hooked, and that it is impossible to use heroin without becoming addicted,” he said. “There was another belief that methamphetamine users are cognitively impaired. All of these are myths that have have been perpetuated primarily by law enforcement, and law enforcement deals with a limited, select group of people—people who are, in many cases, behaving badly.”
Hart’s work to understand addiction and addicts tackles common misconceptions about several forms of drug addiction and addicts. He conducted similar studies around methamphetamine addicts in the past, as the Times article points out, and “found that when he raised the alternative reward to $20, every single addict, of meth and crack alike, chose the cash. They knew they wouldn’t receive it until the experiment ended weeks later, but they were still willing to pass up an immediate high.”
via Crack Addicts Make Surprisingly Rational Decisions, Fascinating Study Reveals | Alternet.
“There is no such thing as society.”
And, you know, there is no such thing as business. There are individual men and women, and there are families. And no business can do anything except through people, and people must look to themselves first. It’s our duty to look after ourselves and then, also to look after our neighbour.
Recasting Margaret Thatcher’s Speech to Conservative Party Conference where she proclaims, “there is no such thing as society,” 9 October 1987, replacing “society” and “government” with “business.”
25+ years on, on it just struck me. Of course, there is society; there is government; and there is business. Look after your neighbours.
Ronald Coase, Law Professor and Economist, Dies at 102
I am not a huge fan of Ronald Coase, but I do respect his insight into transaction costs. It is his further work in support of private property as a means to mitigate social costs I find lacking—and of course the necessity for zero transaction costs for his theory to apply to the real world.
Ronald H. Coase, whose insights about why companies work and when government regulation is unnecessary earned him a Nobel Memorial Prize in Economic Science in 1991, died on Monday in Chicago. He was 102.
via Ronald H. Coase, a Law Professor and Leading Economist, Dies at 102 – NYTimes.com.
The Problem with Price Gouging Laws
Many states have anti-gouging laws that curb price increases during disasters. In California, for instance, the maximum that retailers can raise prices after an emergency is 10%. Since this minimal upcharge wont effectively temper demand, limited supplies end up being rationed on a first-come, first-serve basis. While many view this policy as “fair,” gouging laws have two key drawbacks…
via The Problem with Price Gouging Laws – Rafi Mohammed – Harvard Business Review.
Big Unemployment, the New Normal?
I tried to respond to a post by Don Peppers responding to this article, but LinkedIn limits the character count. I quote Don’s post here for context.
It’s common knowledge that LESS government, LESS regulation, and LOWER marginal tax rates will all improve employment. Unfortunately, the politics of envy is irresistible to some, and there are very few politicians on either side of the aisle who will vote for less of anything related to the government.
It may be common knowledge that less of these things might increase employment, but this favours a local maxima at the expense of a global maxima. It is the typical short-term benefit with a long-term detriment. Still, this argument and its subarguments are specious. I won’t even give any more attention to the dubious official unemployment figure definition and methodology.
Less government is a vague term. What government? Fewer dog-catchers? Interesting how, ad reductio, this becomes an argument for anarchy.
As for regulations, business favours regulations that shield it from the public and markets; intellectual property “rights” come to the top of my mind. Government (or a quasi-government acting entity) are necessary so as not to devolve into a situation where warlords rule. Afghanistan comes to mind. I could imagine a football match with no rules or regulations. Even rugby and UFC have rules, as do wars.
In economic terms, the lower marginal taxes argument is patently false (without even delving into marginal verse effective territory). Laffer’s concept is not false in and of itself, but it fails on two accounts. First, we can agree that at some point lowering marginal tax rates will create positive incentives, but it doesn’t follow this is true at all levels. Empirically, we can easily determine that we are below that point. On a practical level, this not only means that a reduction with not have positive effects; there will be negative effects. Second, the primary driver to hiring is demand for products or services (or at least the prospect thereof). A marginal tax rate of zero has no impact if no one is purchasing what I am offering.
How the Temp Workers Are Getting Crushed
Across America, temporary work has become a mainstay of the economy, leading to the proliferation of what researchers have begun to call “temp towns.” They are often dense Latino neighborhoods teeming with temp agencies. Or they are cities where it has become nearly impossible even for whites and African-Americans with vocational training to find factory and warehouse work without first being directed to a temp firm.
via How the Temp Workers Who Keep Huge Corporations Running Are Getting Crushed | Alternet.
Why Should Taxpayers Give Big Banks $83 Billion a Year?
The top five banks—JPMorgan, Bank of America Corp., Citigroup Inc., Wells Fargo & Co. and Goldman Sachs Group Inc.—account for $64 billion of the total [US government tax] subsidy [of $83 billion], an amount roughly equal to their typical annual profits see tables for data on individual banks. In other words, the banks occupying the commanding heights of the U.S. financial industry—with almost $9 trillion in assets, more than half the size of the U.S. economy—would just about break even in the absence of corporate welfare. In large part, the profits they report are essentially transfers from taxpayers to their shareholders.
via Why Should Taxpayers Give Big Banks $83 Billion a Year? – Bloomberg.
Economics @ ITT 
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