July 6, 2012
So Who, Exactly, is Winning the Drug “War”?

Well, let’s think about it:

As I recall, the purpose of the “Drug War” and ancillary operations like the “Just Say No” campaign were intended to reduce the use of illegal drugs in the US. In part, this would be through an education process that sought to teach people the evils of illegal drugs, much as happened with tobacco use. The “war” would also contain a militarized intervention wing, the end point of which was to raise the price of drugs by destroying crops overseas or interdicting them in transit. Finally, the penalties for illegal drug use would be raised so high through things like mandatory sentences for drug possession and use that a simple cost-benefit calculation would deter most people from considering drug use.

Basically, the “war” promised lower drug use through education (“only dopes smoke dope!”) penalties (“if you use, you lose”) and economic disincentives (abstinence through high prices).

So how’s it all working out? Let’s take each in turn:

Education: no doubt one could fill the prison system with DARE graduates who have been arrested for drug use. It seems clear that the scare tactics of the drug war have backfired — that education has played only a limited role in curtailing illegal drug use in the United States. More, given the growth in numbers of Americans advocating at least the legalization of marijuana, if not most other drugs, I’d say the education campaign has been a total failure.

Penalties: on this one the US certainly has been “successful.” The United States incarcerates the highest percentage of its population, per capita, of any democracy in the world. Most of those in prison are there for minor, nonviolent drug offenses. However, the very size of the drug-related prison population suggests that prison is not quite the disincentive the planners of the “drug war” imagined: lots of people clearly don’t worry about going to jail when they start dealing with illegal drugs … or else they wouldn’t get arrested for using or possessing illegal drugs.

Prevention/interdiction: This one has been a profound failure. Cocaine is from all accounts plentiful and cheap, as are most illegal drugs. Heroin is apparently really inexpensive. New drugs like meth and even those ridiculous bath salt things are plentiful and apparently fairly easy to make, transport and sell. If anything, America’s interdiction efforts have only fueled a turn to a domestic, chemistry-based drug culture. Which is on the ironic side of consequences of the drug war.

So who’s winning the drug war?

Well, on the government side of the ledger, at least two groups have done pretty well for themselves. One is the prison-industrial complex: private and public prisons and the associated interests that support the prison system in America (courts, communities, prison guard unions, contractors who provide services, etc.). The other is the prosecution industry: police and other departments that have expanded; prosecutors who have parlayed their “get tough on crime” stance into runs for higher office; the hanging judges who do pretty much the same. That seems about it.

On the non-government side of the ledger, it’s pretty clear that the drug gangs, drug dealers and chemists have done really well. They make a broadly desired product that people are willing to face some risk — both legal and personal, up to and including murder by one’s own gang — to buy and consume. Their operations have grown exponentially and, despite even the horrible violence in Mexico, they don’t seem to be on the verge of slowing down.

It seems to me pretty much all the rest of us are losers. We pay vast sums of money to fund efforts that fail to achieve their intended results, and write open-ended checks to put ever more people into prison for drug offenses of all kinds. And then we wonder where the money went.

It’s hard to imagine Americans fighting any other “war” for 40 years with such utterly miserable results. It’s been said — probably too often — that the definition of insanity is to keep doing the same thing over and over and expecting different results. But the fact that the saying has been overused in no way detracts from its truth.

The United States has lost the drug war. It’s time for a change.

June 20, 2011
One of those things that drives you mad about the drug “war”

I was just listening to a bit of NPR’s Talk of the Nation, which was broadcasting an interview Salon.com had done with Eric Sterling, who served as counsel to the House committee that created the laws mandating differential sentencing for possession of crack versus powder cocaine. He now serves as president of the Criminal Justice Policy Foundation. You can read the full interview here.

As you read this excerpt, remember that in addition to the social costs Sterling notes, it also costs something like $45,000/year to house a prisoner in a federal prison. But tea partiers want to start to solve the budget deficit by slashing pensions of teachers, police officers and firefighters, and by slashing support services for the poor.


—(From the interview)——

What were the social effects of these laws?

In 1986 the federal prison population was 36,000. Today it’s 216,000. And in the 25 years since, more than half of federal prisoners are brought in on drug charges. The prison population is disproportionately black and Hispanic. The federal government does about 25,000 cases a year and only one out of four of those defendants is white. Also, it’s widely believed that crack cases are mostly minorities, while the powder cocaine cases are mostly white, but that’s a myth. It’s true that only one in 10 crack cases are white, but the overwhelming majority of powder cocaine defendants are still black or Hispanic.

From that angle it certainly looks like intentionally racist legislation.

There were all of these mythologies about how Congress did this intentionally because powder was only used by whites. The way it was put together wasn’t racist, it just wasn’t thought out.

But the other thing that was skewed was that the Department of Justice was supposed to be focusing on high-level traffickers. You look at global trafficking — this stuff is coming in on boats by the ton, but more than a third of federal cases involve less than an ounce of crack cocaine.

So the federal government is looking at insignificant local cases and handing out long sentences to defendants that are predominantly black or Hispanic. No matter what the intentions were in 1986, if these measures had been carried out by a local D.A. instead of the federal government, that D.A. would be indicted for violating civil rights laws.

June 20, 2011
On Executive Compensation

As debates about raising taxes on the rich and/or cutting social programs continue, Gretchen Morgenson at the New York Times has offered a summary of a study of the realities of executive compensation of the companies in the Standard and Poor’s Top 500 stock index. It’s revealing. You can read it here.

Before offering a take on Morgenson’s points, it is perhaps worth reminding ourselves that finance companies—the folks who invented the over leveraged house of cards that collapsed starting in 2007—have been restored to vast profitability on the backs of US taxpayer loans. It is also worth reminding ourselves that industry in general—not just the finance system—justifies its compensation practices on the grounds that they are essential to recruiting and keeping talented executives.

Selected highlights:

  • Total compensation for companies in the S&P 500 increased 13.9% in 2010; 2591 executives at 483 companies (all records were available for) made $14.3 billion. That is approximately the GDP of Tajikistan, a country with 7 million people. [PP: That’s about $5.5m per executive.]
  • 158 companies paid more to their executives than they did to their accounting firms for audits.
  • 32 companies paid more to their executives than they paid in cash taxes.
  • 179 companies raised executive compensation even as average stock value fell 2008-10.
  • At 24 companies, cash compensation exceeded 2% of the company’s net incomes from continuing operations. The most notable case was the healthcare company Allergan Inc., whose top executives received 50% of the company’s continuing operations earnings.
  • Median executive pay was 5.3% of the company’s budget for research and development. Over the past 4 years, the electronics manufacturer Jabil Circuits, averaged executive compensation that was 57.2% of its R&D budget.
  • 11 companies paid their executives an average of 1% or more of their market capitalization. The mutual fund company, the Janus Group, averaged almost 2% of its market capitalization; its stocks were flat in 2010 and have fallen 30% in 2011.
  • The shareholders at only 34 companies, or 2% of the total, have rejected their executive compensation plans.

June 7, 2011
"I don’t want to see the parks become refineries or anything like that…. But it’s a tough decision to make. If parks deteriorate, what good is keeping drilling out of the parks?"

Paul Wolf, president of Friends for the Preservation of Ohio State Parks.

Mr. Wolf, it should be noted, is not advocating this, but his comments illustrate at least part of the conservative agenda in America: cut support for the public sector on grounds that government is ineffective and inefficient, and then when public resources and services decline, claim that government is ineffective and inefficient and so should be cut further. It’s a classic self-fulfilling prophecy. You can read the accompanying article here.

It’s increasingly clear that Nicholas Kristof is on to something, and that the US is headed towards the way of life common in much of the rest of the world: the rich buy security and education and other services privately, and the rest of us can fend for ourselves.

April 20, 2011
Now here’s a surprise: “Poll shows Americans oppose entitlement cuts to deal with debt problem”

After 30 years of being lied to by elected officials and the intelligentsia that peddles supply side nonsense, the headline above, from today’s Washington Post, may be the least surprising headline in the history of American politics. 

For 30 years now, Americans have been told that they can have high levels of entitlements (the costs of which are paid at some future time, making promises easy) AND low taxes since, somehow or another, growth will fill the gap between promises and tax receipts. It’s been wrong for 30 years. It’s wrong now (as the photo embedded in this post demonstrates). 

So it’s hardly surprising that Americans don’t want to cut entitlements today. It’s also hardly surprising they don’t think they have to pay more taxes. 

But the truth is they’ll have to do both. And the sooner we start the better.

US debt growth

December 14, 2010
A brief thought about health care

Now that a federal judge (a Republican who owns part of a Republican lobbying firm) has ruled against part of the new health care law, a brief thought:

It turns out that lots of Americans like lots of parts of the health care law. They like that there are no life time caps of payouts. They like that the pre-existing conditions clause has been dropped. They like that children can stay on parents’ insurance policies until they are 25. And they like these things by big majorities.

In contrast, they seem to hate the “you must purchase insurance” mandate. Socialism and totalitarianism will surely follow this government order!

The thing is, if you’re going to have a health care system managed by the private, for-profit insurance market, you can’t have the things you like without the things you don’t. Just like working persons support the retired by paying Social Security and Medicare taxes today without receiving those benefits until well into the future, insurance companies want healthy young people who likely don’t need much in the way of health care services to pay into the insurance system so the companies can afford to cover the new costs of no lifetime caps, no preexisting conditions clauses, and the like—all while still making a profit.

Unsurprisingly, Americans once again want it both ways: they want the benefits without the costs. They want no lifetime caps and no preexisting conditions clauses—they just don’t want to make payments to insurance companies so the companies can afford to provide the services (at a profit). (Interestingly, many insurance companies are working for health care reform the other way—seeking to keep the requirement that everyone buy insurance while eliminating the no lifetime caps and no preexisting conditions clauses.)

People need to either accept that they should pay for services they want, or should not demand services (including emergency health care) if they’re not willing to pay. The hypocrisy and stupidity has just gotten too high to stand.

December 7, 2010
The Real Death Panels

As Democrats sought to pass a broad reform of the American health care system last Spring, Sarah Palin scored substantial political points by insisting that the proposed reforms would lead the creation of “death panels”—government bureaucrats who would determine if you would live or die.

Well, it turns out that death panels already exist—and they have nothing to do with so-called Obamacare.

Arizona eliminated its Medicaid (health care for the poor) support for heart, liver, lung, pancreas and bone marrow transplant surgeries for at least 1000 patients on October 1, 2010. (You can find the story here: http://www.nytimes.com/2010/12/05/us/05transplant.html?_r=1&ref=health.) The reason was simple: the state is out of money, and has decided it can’t afford to meet its previous standards for providing Medicaid services for many poor patients.

Note that this is an entirely financial decision. No effort was made to assess either the medical need for these procedures or the likely effectiveness of these surgeries on the lives of the people who need them. And that’s exactly the problem.

Consider the following scenario: two Arizonans need heart transplants, but there is only one heart available that meets their needs. Like it or not, there’s one heart, and whoever doesn’t get it is almost certainly going to die. Both potential transplant recipients are 50 and likely to be gainfully employed and raising children and grandchildren for another 30 years. One, however, is for some reason a greater risk than the other.  One candidate is more likely than the other to reject the heart and die anyway, thus condemning both candidates to death if he or she gets the heart and the transplant fails. So who gets the heart?

Before answering this admittedly discomfiting scenario, let me add one more piece of information: the lower risk candidate is poor and on Medicaid, while the higher risk candidate has high quality insurance with transplant coverage (like mine). 

No one wants to talk about things like this, of course. No one wants to talk about dying, after all. Absolutely no one wants to talk about things that mean we are, like it or not, making choices about who is going to live and who is going to die.  We just all want all the money in the world spent on us, no matter what. This is quite human. It’s completely understandable.

But the scenario I described here is real. It happens every day in emergency rooms and doctor’s offices and insurance companies all across America. We have X number of dollars, Y number of organs and Z number of patients. We are making choices about lives every day. Now.

The thing is, Arizona’s Medicaid decision has now answered the question, “Who gets the heart?,” based on nothing more than a financial calculation. There is no argument to make: the riskier person with insurance gets the heart no matter what, while the less risky—but poor—person dies.

Such outcomes are the result of the fact that we in the United States refuse to have hard conversations about health care. Instead, we prefer the easy politics of fear-mongering—“death panels!”—and self congratulation—“America has the best health care system in the world!”  As a consequence we have created a world in which we turn our heads and pretend not to notice the simple fact that we are quite literally killing the poor for the sin of being, well, poor. Welcome to death panel America. Check your insurance and hope.

October 5, 2010
What if the tea party wins?

As an obvious followup to my last post, let’s imagine the tea party is able to sustain its momentum past this fall’s elections, and can win the Presidency as well as significant representation in Congress and in the states over the next few years. While this runs counter to political science predictions—fringe movements typically moderate and get co-opted into established parties—it could happen. So then what?

At one level, there’s no precise answer to this question: the tea party movement lacks a developed manifesto that it could then promise to enact in office. It seems to be as much about anger as about policy. But then again, who amongst us hasn’t made important and meaningful decision while ramped up emotionally? Whatever the motives, the effects are real.

Three impulses that are in tension with each other seem to lie at the heart of the tea party movement: the desire for low taxes, the fear of the budget deficit/national debt, and fear of an overpowerful federal government using its power to destroy human liberty through addicting the American people to social programs. So what might happen if the tea party were able to enact programs to fulfill its vision of low taxes, low deficit/debt, and low social programs/maximum freedom?

Enacting the first part, lower taxes, is easy. Who doesn’t want low taxes? Indeed, the political rewards for reducing taxes are immediate: people vote for you, and not for the people who promise to raise your taxes. And since the problem of rising budget deficits is both complicated to explain and felt down the road, the impulse is to cut taxes now, enjoying the sugar rush of public approval while cementing your political advantage. Thus a tea party government would surely lower taxes, regardless of the merits of doing so.

The second part, worrying about budget deficits, is easy in the abstract and hard in reality. It’s kind of like paying for pizza with a credit card even when you can’t pay off your balance every month: the pizza tastes good, and fills your belly, while the payment isn’t all that bad if you just make the minimum every month. But unless your income expands dramatically, the accumulated debt eventually rises up and demands ever-increasing shares of your money. And, of course, you’ve already substantially cut your income (taxes), and you still have to eat. So you squint at the bill and cross your fingers and hope somehow your income will grow to cover your increasing costs. Meanwhile, new political opponents will claim that the only way out of the budget hole is, you guessed it, to cut taxes to promote economic growth.

So don’t let’s kid ourselves. The tea party has no plan at all for cutting the deficit.

This is especially clear in light of the third leg of the tea party platform: government programs. Like the deficit, it is easy to imagine cuts in government spending, and very difficult to enact them. As I’ve pointed out before, almost 80% of federal spending goes to five programs: Social Security, Medicare, Medicaid, interest on the debt, and defense. Any meaningful cuts have to come from these programs. And even if one were to privatize Social Security, the short term effect would be to radically increase the deficit or compel substantial increases in SS taxes: benefits of current recipients would have to be paid out of current taxes (which is how it is done today) even as enough money is collected to create investment plans for future retirees. “Privatizing” Social Security will save you nothing for the next 30 years.

The simple fact is that the current arguments we are having about these problems are inadequate to the problem. Sometime in the not too distant future the political system will produce a politician who can coalesce a new coalition that recognizes the cuts in some services will need to be matched to increased taxes and a revised military strategy for the US—at least, we should hope it does. That group will remake American politics and set its tone for a generation. But whatever else is clear, it is clear that that group is most decidedly not the tea party.

September 3, 2010
Squeezing the Middle Class and Getting Away With It

Yesterday I posted on the fact that in general, over the last 30 years people at the top of the economic strata have become much better off, people in the middle have pretty much stagnated, and people at the bottom have fallen further behind.

Today I’d like to carry that conversation forward and talk about the effects the great middle class squeeze has had on our politics, and how the rich have gotten away with it.

The punch line is fairly straightforward: as middle class people have felt themselves increasingly squeezed, they have grown ever more reluctant to pay for social services like welfare, and schools, and roads, and public transport, and yes, even higher ed. Indeed, many have grown profoundly resentful of making such payments, which is at least part of the explanation of the intensity of the tea party movement these days. Or of the “take a drug test to get welfare” meme I discussed yesterday.

Of course part of this “squeeze” is entirely the middle class’ fault. Somewhere along the line many otherwise perfectly well off people began to feel left behind if they didn’t own a 4000 square foot house by the time they were 40, and didn’t have SUV’s with flat screen TVs in them so their children could watch DVDs on one of their endless shuffle trips around town, and didn’t have 60 inch flat screen TVs with surround sound systems in their man caves at home. It is, of course, possible to live a perfectly lovely life with slightly less than these top end amenities.  Once people got caught up in the consumerist fantasy that happiness could be bought at WalMart, they were candidates for messing up their own lives all on their own—as we have seen with the chickens coming home to roost in the Great Recession and concomitant credit crunch.

But it is also the case that the squeeze is self-generating. For example, one of the aspects of the middle class squeeze is the increased difficulty many people have in paying to send their kids to college. This difficulty largely comes from decreased state aid to colleges and universities—at least public ones. When states cut higher ed budgets, universities jack up tuition. This means that rather than distributing the costs of higher ed across all taxpayers in the state, the costs are concentrated on current students and their families. Then, once they (hopefully) graduate, those students have big debts that: 1) keep them compliant at work since they can’t afford to lose their jobs; and 2) squeeze their budgets, making them immensely unwilling to pay higher taxes to subsidize “new” students’ higher educations. It’s a death spiral that, among other things, portends the end of public higher education in America.

As I noted yesterday, though, almost all the benefit of tax cuts in the last 30 years went to the most well-off in society. Moreover, these cuts had nowhere near the job-generating effects that their advocates claimed they would. The rich save rather than spend (it’s part of the reason they’re rich); and they invest globally, not just in the US. Thus US tax cuts have in part funded China’s boom, and India’s. 

So why, then, is the middle class mad at the poor rather than the rich? This is an ironic side effect of the American Dream. Poll after poll, generation after generation, has shown the same thing: most Americans imagine themselves getting rich one day, not poor. They are far more worried about protecting their potential future wealth than worrying about their declining current condition—much less about becoming poor. In addition, Americans have an innate sense that rich people earned it—they did the work, they had the ideas, they should keep the money. This is, of course, sometimes true, but vast amounts of the wealth in the US is inherited by people who did nothing to earn it. The idle rich abound, and are really, really idle.

Thus in the US the great squeeze has encouraged middle class people to adopt ideas and strategies that both guarantee the squeeze will continue to tighten, and that the rich will keep on getting richer for very little effort of their own. Which is why, as I have mentioned before, someone invented the brilliant concept called “irony.”

September 2, 2010
Class War

Last week on Facebook my account was peppered with posts that friends had “liked” the group, “If I Have to Take a Drug Test to Get a Job, You Have to Take a Drug Test to get Welfare.”

Aside from the obvious critique of this snarky comment—do you, in fact, have to take a drug test to get a job? I don’t think very many people actually have to take drug tests to get and keep their jobs—I was struck by the class war component of this complaint. It is another of the many examples of middle class people believing that “they”—in this case, the poor—are taking from “us” without “deserving” it. 

Now I understand the sentiment. I don’t like wasting money any more than the next person. And I sure don’t like the idea of people using money I earned and then had taken from me in the form of taxes to be used to buy drugs, or hang out all day without working, and the like. I have a job I think I work pretty hard at, and I am not a fan of such waste.

My problem with the complaint, though, is that it is misdirected. Americans are so fundamentally incapable of thinking in terms of class that many really do think that “the poor” are why we have budget deficits, crime, and other social ills. As a partial corrective to this way of thinking, let me offer the following insights:

1. The primary beneficiary of federal government aid is retired persons. 33.5%, or $1.94 trillion of the United States’ FY10 $3.6 trillion budget, is spent taking payroll taxes from working persons and transferring them to retired persons. And before anyone screams “they earned it,” let me point out that: a) relative benefits have gone up over time, meaning that recipients today receive more benefits per capita than retired persons did when current recipients were working; and b) the prescription drug benefit is entirely new, meaning no retired person paid for it in their working lives. We have an obligation to support retired people, but the notion that they paid in and so now should get their share out is not at all what actually happens.

2. If you combine federal welfare expenditures (aid to families, housing support, etc), with Medicaid (health care for the very poor), these programs consume 21.4%, or $767 billion of the US FY10 budget. This is real, and one can think we shouldn’t spend it, but if you cut every penny of it, the US deficit this year would still be about $700 billion. Medicaid and welfare combined take about the same amount of money as the defense budget.

3. There is a tool called the “Gini coefficient” that measures relative inequality in society. Since 1980, when the US went on its massive tax cut and spend anyway orgy of irresponsibility (with most new spending concentrated in the military), the Gini coefficient has shown the following pattern: a) people in the upper income classes through the upper middle income classes have gotten much, much richer; b) people in the middle income classes have essentially stagnated; and c) people in the working and underclasses have gotten much, much poorer. When you consider the way that schools now demand students buy vast amounts of school supplies, and public transport services have been declining, and how other social programs that used to make being poor at least tolerable in this country have been cut in the last 30 years, it is easy to see how bad things at the bottom of the economic heap have gotten.

In a remarkable reversal of past practice, over the last 30 years and as a result of changes in the tax code and economic changes like globalization, society has transferred vast amounts of money from the poor to the rich and to the retired.

But are we mad at senior citizens or the people who have bought us a military carefully designed to fight the Soviet Union in central Poland and northern Germany? Of course not. We’re mad at the poor for being, well, poor.