Kevin Drum

Marijuana for Millionaires

| Sun Nov. 1, 2015 2:31 PM EST

Yesterday a friend emailed to ask if I had any thoughts about Ohio's Issue 3, which would fully legalize marijuana cultivation and sale in the state. Ohio? I barely pay attention to California, let alone Ohio.

But Issue 3 turns out to be surprisingly fascinating—or venal and repellent, depending on your tolerance for sleaze. Apparently one of the authors of the initiative came across a Rand report on marijuana written by a bevy of drug-policy worthies, and it offered up a dozen possible options for legalization. One of them is called "structured oligopoly":

It is natural to ask whether there is some way to get for-profit businesses to behave in the public interest. The answer is “Perhaps.”

....States might prefer [] to offer only a limited number of licenses, creating artificial scarcity that makes the licenses valuable—valuable enough that firms will have a strong incentive to cooperate with regulators rather than risk revocation....Limiting the number of licensees also makes monitoring their behavior easier. A rogue company could more easily break the rules if it were one of 1,000 licensees than if it were one of just ten.

....So a structured-oligopoly strategy might involve licensing a limited number of firms, monitoring them closely, and not being shy about rescinding a firm’s license if it behaves in ways contrary to the public interest.

This might not be your cup of tea, but let's stipulate that it has some potential. How would you distribute these licenses? The straightforward approach is to auction them off for set periods. Unfortunately, this has a big drawback: it maximizes the payment for licenses, and thus minimizes the profit of the oligopolists. This is obviously vexing.

So how about this instead? Pick out ten rich friends. Each is required to put up $2 million to help pass a ballot initiative. In return, you promise to write the names of the investors directly into the initiative, giving them a perpetual and exclusive right to grow marijuana in the state of Ohio.1 In addition, you write a special, unalterable flat tax rate into the law, as well as a minuscule annual licensing fee. Now that's an oligopoly you can believe in! Keith Humphreys, who brought this to my attention, has a few comments:

It has taken the alcohol industry decades of lobbying to roll back many of the restrictive, public health-oriented regulations established after the end of Prohibition. Booze industry executives must look with envy upon the emerging marijuana industry, which can use the ballot initiative process to achieve complete regulatory capture from day one.

....No one should be surprised that in a country with an entrepreneurial culture, a commitment to free markets, and a political system highly attuned to corporate donations, legalized marijuana would develop a significant corporate presence. Indeed, many drug policy analysts, including me, expected this to happen eventually. But the rate at which the change is happening is truly startling, and will become even more so if the Ohio initiative passes.

If the marijuana industry ends up being a clone of the tobacco industry, will legalization supporters experience buyers' remorse? It depends who you ask.

Well, you could ask me. I don't care what they're legalizing. This stinks. It's crony capitalism without even a veneer of decency, and if it applied to anything else nobody would have the gall to ever let it see the light of day. If this is the price of pot legalization, count me out.

1Technically, no names are actually in the initiative. Instead, it limits marijuana cultivation to ten specific parcels of land that are owned by the ten investors. Also, individuals are allowed to cultivate small amounts for their own recreational use if they get a license.

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Carly Fiorina Has Found a New Dedication to the Truth. Let's Help Her Out.

| Sun Nov. 1, 2015 12:19 PM EST

Good news! Carly Fiorina has turned over a new leaf and now admits that she was mistaken to say that 92 percent of the jobs lost under President Obama belonged to women:

“The fact-checkers are correct," she said....Fiorina then criticized the “liberal media” for picking apart the statistic rather than her broader argument, which was that liberal polices are bad for women economically.

“It is factually true that the number of women living in extreme poverty is at the highest rate in recorded history,” she said. “It is factually true that 16.1 percent of women live below the poverty line, the highest level in 20 years. It is factually true that 3 million women have fallen into poverty.”

This is good news for fans of factually correct statistics. And Fiorina got all of her facts right! Still, since liberal media shill Martha Raddatz1 decided not to investigate any of these facts further, I'll go ahead and make a few wee points myself:

  • Fiorina only looked at the women's poverty rate for the past 20 years. Why? Because the highest levels ever were in 1982, under Ronald Reagan, and 1992, under George H.W. Bush.
  • It's true that the absolute number of women in poverty is at its highest level ever. Needless to say, this is only because the population is bigger than it was under Reagan and Bush.
  • The current rate of women in poverty is indeed 16.1 percent according to the Census Bureau. Does this mean that liberal policies are bad for women? Well, that number went up 3 percent during George W. Bush's term and has (so far) gone down 0.2 percent during Barack Obama's term. I report, you decide.2

Since Fiorina is now dedicated to getting her facts straight, I figured she'd appreciate this clarification. You're welcome, Carly.

1You may recall her as the moderator of the vice-presidential debate in 2012, during which she pummeled Paul Ryan over and over about his fantasy budget math.

2But in case you're having trouble deciding, the basic answer here is that poverty goes up during recessions and goes down during economic expansions. The only exceptions to this rule are under George H.W. Bush, who saw an increase starting in 1989, and George W. Bush, who oversaw in increase starting in 2006.

Want a Safer City? Keep Daylight Savings Time Year Round!

| Sat Oct. 31, 2015 6:06 PM EDT

Tonight we bid sadly adieu to daylight savings time. That means this is also the time of year for a spate of stories about whether daylight savings time makes sense. Sure, you get more daylight, which cuts down on lighting bills, but it's colder in the morning, which increases heating bills. But wait! There's more time for golf, and that helps the economy. Etc. Economists have conducted ever more sophisticated natural experiments about this, and the ultimate answer is....meh. Maybe it's a tiny economic benefit, maybe it's a tiny economic loss. Who knows?

But now we have a new study. The authors ditch the whole economic benefit argument and instead justify DST based on lower crime rates:

They found that "when DST begins in the spring, robbery rates for the entire day fall an average of 7 percent, with a much larger 27 percent drop during the evening hour that gained some extra sunlight." The mechanism that might cause this drop is fairly simple: "Most street crime occurs in the evening around common commuting hours of 5 to 8 PM," the authors write, "and more ambient light during typical high-crime hours makes it easier for victims and passers-by to see potential threats and later identify wrongdoers."

Moreover, according to the paper, the drop in crime during evening hours wasn't accompanied by a rise in crime during the morning hours. Criminals aren't morning people, as it turns out. In addition to the decrease in robbery rates, the researchers found "suggestive evidence" of a decrease in the incidence of rape during the evening hours, as well.

The authors do provide an estimate of the economic benefit of this reduction in crime, and they peg it at several billion dollars per year. They're economists, after all, so I guess they feel obligated.

But forget that. The DST haters will just come up with some reason why making kids wait for the school bus in the dark costs several billion dollars. Nobody will ever win this game. Instead, just focus on the crime. Everybody wants less crime, and the anti-DST forces are never going to come up with an answer to this. What kind of crime could possibly go up because of daylight savings time? White-collar theft?

So we win! Assuming "we" are all the righteous lovers of year-round DST. More daylight savings time, less crime. It's a winner.

A Defense of Becky Quick

| Sat Oct. 31, 2015 1:04 PM EDT

CNBC's Becky Quick has come in for some criticism for being unprepared during Wednesday's debate. To refresh your memory, here's what happened during an exchange with Donald Trump:

QUICK: You had talked a little bit about Marco Rubio. I think you called him "Mark Zuckerberg's personal senator" because he was in favor of the H1B.

TRUMP: I never said that. I never said that.

....QUICK: My apologies. I'm sorry.

In fact, Trump had said that in his own immigration plan. Why didn't Quick know this?

I think we all know what happened here. Someone on Quick's staff prepared some notes that included the quote, but didn't specify where it came from. So when Trump denied saying it, Quick was stuck.

Now, sure, the staffwork here was bad, and Quick should have been better prepared. But that's not the real problem here. The real problem is that Quick was unprepared for bald-faced lying. She expected Trump to spin or tap dance or try to explain away what he said. She didn't expect him to just flatly deny ever saying it. That's the only circumstance that would require her to know exactly where the quote came from.

This was a real epidemic on Wednesday night. Candidates have apparently figured out that they don't need to tap dance. They can just baldly lie. Trump did it. Rubio did it. Carson did it. Fiorina did it. They know that time is short and they probably won't get called on it. The worst that will happen is that fact checkers will correct them in the morning, but only a tiny fraction of the viewing audience will ever see it. So what's the downside of lying?

Future moderators are going to have to be aware of this sea change. Modern candidates understand that they don't need to bother with spin and exaggeration any more. They can just lie, and etiquette limits how much debate moderators can push back. I don't think debate etiquette is going to change, so this probably means that moderators are going to have to learn to ask questions a little differently. We live in a new era.

Friday Cat Blogging - 30 October 2015

| Fri Oct. 30, 2015 1:50 PM EDT

Hopper has been hogging the catblogging show lately, so today you get a double dose of her brother: Hilbert and his shadow. That shadow looks very Halloween-y, doesn't it? Of course, that means lots of firecrackers tomorrow, which probably means lots of time spent hiding under the bed. On the bright side, we also set our clocks back, so everyone gets to sleep in an extra hour to make up for it. That sounds like a pretty good trade to me. I'm not sure what the cats think of it.

Head Witch Hunter Now Wants Fewer Witch Hunts

| Fri Oct. 30, 2015 1:25 PM EDT

Today's Charles Krauthammer column cracks me up:

Skip the investigations, win the election

I’m all for demonstrating malfeasance. But the GOP House has given a five-year display of its inability to successfully demonstrate anything.... Operation Fast and Furious....IRS....Planned Parenthood....Benghazi.

....In each of these cases, Republicans had the facts and the argument. And yet in every one, they failed. What makes them think that they will fare any better in the next iteration, the impeachment of a minor official in an expiring administration?

Krauthammer is a hardcore conservative, but he's also a very high-IQ conservative. So this makes me wonder: does he really believe this? Or does he know it's baloney but figures he needs some kind of acceptable cover to get Republicans off their Ahab-like zeal for investigating nothingburgers?

As I'm sure Krauthammer knows, the problem Republicans have with their mania for investigations is that what's turned out to be scandalous wasn't high-ranking, and what was high-ranking wasn't scandalous. Fast & Furious was scandalous, but it was a local botch. The IRS was slightly scandalous, but never went beyond middle management. Planned Parenthood did nothing wrong at all. And Benghazi—well, that reached the very highest levels, but there's just no scandal to be uncovered. There may have been some bad security decisions, but the evidence of malfeasance by anyone in the Obama administration is all but nonexistent.

Anyway, it probably doesn't matter. All through the Clinton administration and now the Obama administration, Republicans have been fixated on uncovering the scandals they just know have to be out there. But the plain truth is that Obama has run perhaps the cleanest administration in modern history. It's actually sort of remarkable. There's plenty of stuff you can legitimately disagree about with him, but there's been virtually no scandal of the conventional sort.

Either way, though, Krauthammer is probably right. The latest obsession in the House is to impeach the head of the IRS. It's idiotic because he did nothing wrong, and it's doubly idiotic because it would never pass in the Senate. It devalues the whole notion of impeachment and makes Republicans look like crackpots.

Then again, PPP recently polled Republicans in North Carolina, and 66 percent supported the idea of impeaching Hillary Clinton "the day she takes office." This is the conservative movement people like Krauthammer have built. It can hardly come as a surprise to him that their primary mode of governance now consists mostly of an endless quest for malevolent phantoms that Krauthammer and his buddies have been assuring them all along are out there.

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Republicans Very Upset At How Bad They Looked on Wednesday

| Fri Oct. 30, 2015 12:38 PM EDT

I guess this was inevitable:

The Republican National Committee has pulled out of a planned Feb. 26 debate with NBC News after widespread criticism of this week's CNBC debate from both the party and campaigns. "CNBC network is one of your media properties, and its handling of the debate was conducted in bad faith," RNC Chairman Reince Priebus wrote in a letter to NBC News Chairman Andrew Lack.

CNBC did screw up, but mostly by failing to keep the toddlers on stage under control and being poorly prepared to deal with brazen lies delivered with a straight face. For what it's worth, I'd also agree that a few of the questions they asked were stupid and/or churlish. Not much more than any other debate, though.

But conservative grievance culture is once again demanding someone's head on a platter. After all, if conservatives look bad on television it's gotta be someone else's fault, right? So it's off with NBC's head.

Jeebus. And these guys claim that they're the steely-eyed folks who can take down Putin and the ayatollah? What a bunch of crybabies.

Obamacare Performs Miracle Time Machine Destruction of Past Economy

| Fri Oct. 30, 2015 12:22 PM EDT

In Wednesday's debate, Carly Fiorina said this: "We have 400,000 small businesses forming every year in this country....The bad news is, we have 470,000 going out of business every year. And why? They cite Obamacare."

Later that night, I spent more time than I'm willing to admit trying to track down that number for business closures. Today, via Steve Benen and the Washington Post, I found it: it's from a 2014 Brookings study about business dynamism. Annotated chart below. So there we have it. Mystery solved. Small business closures have been rising steadily since Reagan was president, and in 2011 the number hit 470,000. And the reason they closed is because of Obamacare. Who would have guessed?

We Should Stop Helping the Silver Scammers

| Fri Oct. 30, 2015 11:10 AM EDT

We've all seen ads like this a million times, but for some reason this one finally caught my attention. It's the usual pitch: there's a limited supply of silver bars, and California residents can get them cheap if they act fast! "For the next 2 days residents who find their state listed on the Distribution List above in bold are getting individual State Silver Bars at just the state minimum of $57 set by the Federated Mint." And if you order ten bars, shipping and handling are free!

The current fixing for an ounce of silver is about $15. So if you pay $1,140 for $150 worth of silver, they'll throw in shipping gratis. What a deal.

Anyway, I know this is all legal because the fine print says yada yada yada, and there's no law that prevents selling goods for an astronomical price. But really: are we all so desperate for advertising dollars that we have to sell space to folks like this? I guess the answer is yes, but maybe that ought to change. We all know who gets taken in by these kinds of ads, and it doesn't speak well of any publication that continues to be complicit in this.

Are We Allowed to Say That Marco Rubio Is Lying About His Tax Plan?

| Fri Oct. 30, 2015 10:25 AM EDT

I've written a couple of posts about Marco Rubio's debate tiff with John Harwood, which revolves around the question of how the poor and the middle class fare under Rubio's tax plan. Harwood wanted to know why it was so much better for the rich than the middle class, and Rubio responded by saying his plan would help the very poor a lot.

In other words, Rubio declined to answer the question and instead answered a different one. But today Dylan Matthews digs into this a bit and concludes (surprise!) that Rubio's plan probably doesn't even help the poor all that much:

How is Rubio helping the poor so much? Well, Rubio's plan would replace the standard deduction and personal exemption with a $2,000 credit ($4,000 for couples)....But Rubio's proposal, as originally laid out, is not a plain old credit. It's a fully refundable credit. Think about that for a second. Rubio's original proposal would give any household in America $2,000 or $4,000, no questions asked. It was a basic income. It was a massive increase in the welfare state of a kind that no Democratic candidate, including Bernie Sanders, is proposing.

So it's perhaps no surprise that when I asked his team about this, they insisted that this was a mistake, and the credit was in fact much more limited. "Rules would be tailored to ensure that our reforms would not create payments for new, non-working filers," a Rubio aide told me in April.

It's unclear what exactly that means....Here's the problem, though: The Tax Foundation assumed that Rubio had proposed a basic income....Given that Rubio will not, in fact, create a massive new welfare program, this finding is pretty dubious.

How about that? Rubio misled the Tax Foundation into concluding that his plan would help the poor, and for some reason he's never gotten around to correcting the error. In fact, he's been aggressively touting the Tax Foundation analysis to "prove" that his plan helps the poor. He even accused John Harwood of misrepresenting his plan on national TV even though he knew perfectly well that he was the one misrepresenting his plan. If I were the Tax Foundation, I'd be pissed.

Still, I'm sure this was all an honest mistake on Rubio's part, and he'll rush to give the Tax Foundation updated information now that he realizes what he's done. Right? He's an honest young man, after all.