Medical cannabis is now legal, roll on recreational legalisation
Following relentless campaigning by countless individuals and organisations from across the political spectrum, medical cannabis has today become legal in the UK with overwhelming public backing. It will take time to ensure adequate patient access but it’s heartening that the traditionally prohibitionist Conservative Party is open to change: spurred on by the bravery of the Home Secretary.
The tide is turning on this issue around the world, with solid evidence that medical cannabis reform not only helps hundreds of thousands of potential patients: it also disrupts drug trafficking and reduces opioid and heroin overdose deaths. Today we join Canada, 31 US states, Australia, Israel, and many European countries in taking this important step.
The same shift is happening with legalisation of cannabis for recreational use. Yesterday saw Mexico’s Supreme Court rule that an absolute ban on recreational marijuana use is unconstitutional; now Mexico’s lawmakers will have to go back to the drawing board to devise a sensible system of regulation. Last month, Canada became the first G7 country to legalise and regulate recreational cannabis, following in the wake of nine U.S. states and Uruguay. There’s popular appetite for change here: a Populus poll released this week found that the general public is now almost twice as likely to support the legalisation of cannabis in the UK than they are to oppose it. Support is strongest among young people, who are some of the biggest victims of criminalisation.
In the coming months and years, we’ll be at the forefront of ensuring the momentum towards more sensible drug policy continues. From packed rooms at party conferences and university talks, to newspaper op-eds and in-depth research papers, we’ve been fighting the good fight for decades. We’re confident that recreational cannabis legalisation will be a reality in the UK. Let’s make it sooner rather than later.
Madsen Moment — Housing
In this week's Madsen Moment it's all about housing. Dr Pirie looks at our new Flexible Right to Buy policy, at how building on the green belt can end the housing crisis, and at whether we should experiment with scrapping the Town & Country Planning Act altogether.
A new record for ending the housing crisis?
Within twelve months, the core of one out of two main proposals in our August 2017 YIMBY report with the Adam Smith Institute is in force as national planning policy. That may be a record for a first report by an author.
The YIMBY campaign found several villages who wanted to have affordable housing or cottages on a piece of land. But permission was blocked by a higher authority because the land was technically green belt.
That made no sense. We said local people should be free to approve new homes if they want to.
Clearly the government agreed: the new National Planning Policy Framework now says exactly that. A parish or neighbourhood forum can approve new homes on a piece of green belt, so long as the layout is open, not creating a new town. It’s called a ‘neighbourhood development order’ in paragraph 146(f).
We already know at least one village working to use that rule. We’re looking forward to meeting people in their new homes when they’ve been built. It’s exciting to have achieved change so quickly.
It turns out that if you find popular reforms, it isn’t hard to persuade politicians to adopt them. Who could ever have guessed?
We’re now pushing for the second idea, Better Streets. We say residents of a single street should be able to vote to set a design code and give themselves permission to extend or replace existing homes – with rules to protect the neighbours.
That would add more homes, make housing more affordable overall and make those homeowners better off, while creating more attractive, more walkable places with more people to support local shops and pubs.
Most people love it, and we still haven’t found anyone who strongly objects. People are mainly affected by building work on their own street. Why not let them approve it if they want to? That could add millions more homes over time, while boosting wages, fairness and growth.
How soon will it be adopted? Encouragingly, the new consultation on building upwards launched with the Budget cited our report.
The biggest obstacle to fixing housing is politics. That’s why we’re promoting popular solutions that get support from local communities.
John Myers is co-founder of London YIMBY and the national YIMBY Alliance, grassroots campaigns to end the housing crisis with the support of local people.
It's not capitalism that fails from its own internal contradictions
So, what does happen to the euro if Italy continues it’s decades long no economic growth, something rather caused by the inability to have the correct monetary policy for that economy? As with the Spanish and Irish property booms, the desperate slumps there and elsewhere when monetary policy was again inappropriate for the varied economies?
ECB heading for 'Titanic iceberg' as Italy crumbles and eurozone slows to five-year low
That might be a little dramatic as a mental image but there’s an underlying truth there. As Herb Stein pointed out, things that can’t go on forever won’t.
The euro is, by definition, the imposition of a single monetary policy upon the varied economies of the eurozone. We can mutter about benefits of such but there are also costs to it. This is what the subject of optimal currency areas is all about. That the peoples of one village use the same currency to transact has obvious benefits, subjecting the entire world to one monetary policy has equally obvious costs. Where’s the sweet spot inbetween?
Obviously, we can all argue about where the euro is on that spectrum. But we’re interested in a rather deeper point.
Marx told us that capitalism would fail because of its own internal contradictions. We’re, to be mild, unconvinced of this. But we do agree that many socio-economic systems do indeed fail for exactly this reason or reasons. The Latin Monetary Union perhaps, the gold standard if you like, the Soviet ruble post there being no Soviet nor Union and so on.
The unifying factor behind those failed systems appearing to us to be when constraints are placed upon that capitalism and free markets. That being what fails, those internal contradictions. When the law, or “the system” imposes too binding a set of constraints upon economic activity then it will be the law, or the system, that eventually breaks.
That is, it’s not capitalism that falls over, it’s those attempts to constrain it too rigidly.
We’d hesitate to insist that this is a law or anything, just an observation. Human behaviour will out and if the State or bureaucratic constraints upon it cannot go on for ever then they won’t.
Blaming capitalism for the failures of the state
They say that an economist is someone who has had human beings described to them but has never actually met one. In which case an Oxbridge economist must be someone who has had capitalism described to them but has never actually experienced it. One such is Oxford economist Sir Paul Collier, who in a recent book aims to instruct us on The Future Of Capitalism. It’s hard to figure why someone who’s never worked outside the state sector is qualified to pontificate on that subject. But having kissed the ring of Oxford, one is apparently entitled to deliver ex cathedra statements on any subject.
Collier has plenty of complaints about capitalism—or about what he thinks capitalism is—that should really be laid at the feet of state interventionism, of the sort that he favours. To him, 1945-70 was a ‘glorious period’ with the creation of the NHS, state welfare, etc., etc. No mention of the strikes, the crippling losses and dismal public service in the nationalised industries, the inflation, the dependency, the taxes, or the economic failure that threw us sobbing into the arms of the European Community.
To him, again, Milton Friedman’s rabid free-marketism, insisting that firms exist only to make profits, eroded the civic responsibility of companies, robbing managers of a social purpose and making them focused on short-term, selfish incentives rather than doing good; and globalisation has made businesses rootless, reducing their civic responsibility even more. No mention again of all the corporate law that drained power from business owners and, perversely, put it into the hands of executives—the ‘principal agent’ problem. No mention of the fact that these days, most businesses are small and SMEs deliver create most of our national product and employ most of our workers. They have a keen sense of responsibility to their community, suppliers, employees and customers. What gets in the way of that is state regulations telling them how to run their businesses and state taxes eating into their ability to generate wealth for all those groups.
London, thinks the prof, absorb too much of the national product; they should be taxed more so that capital is shifted to the regions. One reason for this spatial disparity, he suggests, is rent-seeking by the City and big business. No mention that the bigger the state has grown, the more opportunities for rent-seeking there are. No mention of the fact that the state itself is a centralising force—only praise for ‘state investment’. And that government towns, like London, never suffer economic downturns, but just grow and grow—at taxpayers’ expense.
As for benefits, Collier is shocked that the good old universal benefits created in the ‘glorious’ postwar period have become replaced by targeted benefits, and the idea of whether people deserve (and can benefit from) state help or not has been lost. No mention of the point that while Beveridge had a clear and quite liberal view on such subjects, the politicians who turned his blueprint into deliverable laws did not; nor that state welfare utterly eclipsed charities and friendly societies, working class welfare systems that were highly focused on delivering help to those who really needed it, rather than those who ticked bureaucratic boxes.
Yes, there are a lot of unjustifiable inequalities and unfairnesses around. But is more state intervention and ‘maternalism’ the answer? No, sadly it has been the cause.
Declare victory and yet once more into the breach dear friends
Perhaps a decade ago we started making the point that if you’d like the low paid to have more money then just stop taxing them so damn much. An example from the middle of the campaign of insistence here.
The background was the beginning of the living wage campaign. The idea that the minimum wage - something we shouldn’t have anyway but - didn’t produce the desired lifestyle, therefore everyone should pay more than this. We kept pointing out, along with annual calculations to show it, that if the minimum wage were not taxed then that post-tax income would be the same as that living wage taxed under the current system. So, to achieve that living wage just stop taxing the minimum wage. The personal allowance should be the full year, full time, minimum wage.
At which point, yesterday’s Budget:
The 20% tax band currently starts on earnings above £11,850, and when that rises to £12,500 next year someone earning around that mark will be better of by £130.
Another way to put the same point is that the personal allowance will rise to £12,500. Which is how we can date this pledge. For back when we were shouting about this - and we can track who we convinced, how the proposal moved through policy making committees and into manifestos - that full year full time minimum wage was some £12,500 a year.
Thus victory, do the Happy Dance etc.
Except, of course, time has moved on, the value of money declined as it does. The aim was not that the personal allowance be raised to £12,500, rather the moral point that if there’s some irreducible minimum that someone must be paid for their labour then that amount should not be taxed. If the minimum wage has risen then that personal allowance should also.
We’d also add that national insurance allowances should be raised to the same amount.
So, yes, victory, Happy Dance, but also once more into the breach. It is righteous and just that we wish the poor to have more. The simplest method of which is to stop taxing them so damn much. The income tax and national insurance allowances should be set at the full year, full time, minimum wage. Until they are then we’re over-taxing those low paid. And why the hell do we want to do that?
Some people are just never satisfied, are they?
We’re not wholly convinced by the original pollution complaint here. Our opinion - and it is merely opinion - is that the claims of atmospheric damage done by high sulphur fuels in shipping are rather over cooked. But, you know, the world disagrees, so there must be less sulphur emitted by ships at sea. This could mean using expensive low sulphur fuel or it could mean the less expensive process of scrubbing the exhaust of the sulphur.
We tend to think that getting rid of pollution at lower cost is better than getting rid of it at higher. Apparently some disagree:
Thousands of ships are set to install “emissions cheat” systems that pump pollutants into the ocean to beat new international rules banning dirty fuel.
The global shipping fleet is rushing to meet a 2020 deadline imposed by the International Maritime Organization (IMO) to reduce air pollution by forcing vessels to use cleaner fuel with a lower sulphur content of 0.5%, compared with 3.5% as currently used.
The move comes after growing concerns about the health impacts of shipping emissions. A report in Nature this year said 400,000 premature deaths a year are caused by emissions from dirty shipping fuel, which also account for 14 million childhood asthma cases per year.
But the move to cleaner fuel could see harmful pollutants increasingly dumped at sea.
Assume that we agree with the initial effects - we’d certainly like to miss out on 14 million cases of childhood asthma. And at the lowest cost.
The complaint is that they’ll not put the sulphur into the air by the clever trick of putting it into the water instead. Fine by us. But not, as is apparent here, by them.
Quite why we’re not sure. The Atlantic Ocean apparently contains some 7 billion tonnes of just the one form of sulphur. In general the oceans are 0.1% sulphur. The volcanoes of the Mid-Atlantic Ridge pump out enough sulphur that there’s an entire ecosystem that lives on the stuff. The amount that ships don’t put into the air isn’t going to make the blindest bit of difference to these numbers.
Either some people are just never satisfied or, more realistically, some people want to insist that no one may do anything, ever.
Fiscal Phil's mish-mash means a botched budget
Today the Chancellor suggested his budget would help ordinary Britons, but with a Google Tax, a hidden hit on capital losses, and bad economics in a business rate cut, Philip Hammond looks out of touch with how the many millions on these islands live our lives.
Matt Kilcoyne from free market think tank the Adam Smith Institute said that what the Chancellor gave with one hand, he took with the other:
“Quintupling the investment allowance from £200k to £1m will mean businesses invest in equipment and machinery, it’s a promise to kickstart the British economy’s makers and doers. But if Mrs May and Mr Hammond want to see American levels of GDP and wage growth then they should move to have all investment be deducted from profits before tax.”
“What the Chancellor gave with one hand though, he took with the other as he hit firms large and small that make capital losses by restricting their exemptions—meaning less risk taking, less profit and fewer economic dividends.”
“It was a similar story in personal allowances. While the taxman will let us keep more of what we earn from April next year, the Treasury won’t link this with inflation for another two, so millions more will be dragged into higher brackets. The Chancellor’s penny pinching in the here and now will hit us all in the pocket later.”
The Adam Smith Institute’s Daniel Pryor, rebuked the Chancellor’s decision to bring in a digital revenue tax:
“A digital revenue tax—lifted straight from the Corbynite playbook—will punish the millions of people who shop online and use online services every day. The Chancellor should embrace tech firms that find innovative ways of giving consumers what they want at lower prices: not penalise them for having the temerity to scale-up or move beyond the traditional high street business model. He might not intend for the tax to be passed onto ordinary Brits, but economic facts don’t care about fiscal Phil’s feelings.”
Sophie Jarvis, from neoliberal think tank the Adam Smith Institute said the Chancellor’s cuts in business rates would mean a windfall for rent-seekers:
“The Chancellor thinks that businesses are like babies: he likes them when they’re small and cute, but rapidly loses interest and affection as they grow up (particularly if they’re tech focused). Hammond’s small business rates cut of ⅓ is good politics but bad economics. Cuts to business rates will lead mostly to a windfall for landlords rather than small business owners as they’re able to charge more rent on the properties these businesses use.
“The £675m future high street fund to help transform high streets back into places people live, work and socialise is welcome. In particular we welcome the policy transform unused commercial property to residential.”
Perhaps cannabis legalisation should be just a reverse nationalisation
We are firm supporters of the legalisation of cannabis supply around here. As all know of course. But perhaps the Canadians need to think a little more about exactly how this is done. They’ve just legalised and there are significant supply shortages around the country.
The reason being that they’ve tried to design a marketplace according to the manner in which bureaucrats think a market should operate. This may or may not have an intersection with reality.
For example, a grower might have a licence to grow. But they then need another, separate, licence to market. Which can take 341 days to arrive according to one estimate. Other such problems abound.
At which point some sense:
The only near-term solution to the supply shortage, according to Durkacz at FSD Pharma, is to allow retailers to sell product sourced from the black market.
“You would instantaneously have a supply-demand balance and then you could try to convert people from the black market to the legalized market,” he said. “That’s probably the only way to solve this in the short term.”
Our only problem is about that “short term” qualification.
Consider nationalisations. When the NHS was created what actually happened was the nationalisation of all of the extant medical facilities in the country. On the useful basis that this is where we’d find all the people who could do medical treatment and the equipment with which to do it. The NHS built its first hospital in 1963, fully 15 years after its creation.
Perhaps the same should apply in a legalisation? We know where the people who know how to grow pot are. How to distribute it, get it to market and so on. They’re over in that black market. Thus legalisation could be, probably should be, simply a matter of allowing them to continue without being jailed for their activities.
Well, perhaps should if our intention is to supply what people desire at a price they’d like to pay and at the time they’d like to do so. If the intention is to prove that bureaucrats can’t design market mechanisms then obviously, carry on as right now.
Venezuela Campaign: the amazing corruption machine
In 2003 Hugo Chavez implemented a currency control system in Venezuela, which in turn created a black market for foreign currency and the means for corrupt insiders to manipulate these controls to earn huge sums of money.
PDVSA, the state oil company and the source of almost all of the nation’s export earnings, was required to transfer dollars to a new agency, the Commission for the Administration of Foreign Currency (CADIVI), which then sold those dollars at an overvalued artificial official rate, but only to a selected few. Those who do not have access to this official rate must turn to the black market to obtain foreign currency.
The rigged central exchange rate through the state-controlled DICOM auction system as of 22 October 2018 was 63.81 Sovereign Bolivars (VES) to 1 USD. The black-market exchange rate was 171.34 VES to 1 USD. Without access to the preferential rate, dollars are almost triple the price. Since Venezuela is heavily dependent on imports paid for in dollars, life is nearly three times more expensive without access to the official exchange rate.
Who accesses the official rate? The most recent auction data showed only 9 companies and 975 individuals as successful bidders, from a total of 40,045 companies and 563,777 individuals registered to participate. With a population of 32 million, the vast majority of Venezuelans’ demand for foreign currency is being satisfied by the black market. Even among those who are the registered participants, 99.98% of companies and 99.83% of individuals needed to seek dollars on the black-market. Only a selected few are allowed to buy at the official rate, enabling those insiders to cash in to an extraordinary extent.
This corruption machine enables 1,000 dollars to be turned into 1 million in a matter of days. Anyone with privileged access to the system can earn a fortune by purchasing US dollars at the official price and then selling these dollars on the black-market. The process can be repeated time and time again. The corrupt officials who run the system earn a fortune in kick-backs from those to whom they grant access to the preferential rates.
The US Department of Justice has indicted a sizeable number of Venezuelans on money laundering charges related to funds obtained through the corrupt foreign exchange scheme. The DOJ alleges that the defendants exploited the disparity between official exchange rates and market values to defraud PDVSA and, by extension, the people. Court documents state that in 2014 the open market rate was 60 bolivars to $1, while the official rate was just 6 bolivars to $1. The defendants are accused of acquiring bolivars on the open market and selling them for 10 times that value on the official exchange and then seeking to launder the proceeds of their corruption through South Florida real estate and other investments in the USA. Venezuelan officials are accused of taking bribes for giving access to the favourable official exchange rate.
The $1.2 billion in this case is just a drop in the ocean. Hundreds of billions of dollars have been stolen through Chavez’s currency control system. It represents the largest theft in Venezuelan (and possibly South American) history.
The robbery continues even today. That the government is committed to allowing regime elites to enrich themselves during a massive humanitarian crisis is deeply reprehensible.
More information on the Venezuela Campaign can be found on their website.