Wednesday, 20 April 2011

4 20 - An occasion to ask why the war on drugs isn't over

April 20th is a significant day of the calendar. It was the day in 1883 that an Adolf Hiedler was born in Austria. He grew up to become the most ruthlessly and notoriously efficient man at attempting to eliminate a race he hated. On the same day in 1999, two high school students in Colorado gunned down 14 of their classmates and themselves in one of the most terrible and senseless acts of individual gun violence in the United States.

These heinous and sombre occasions occurred but once. And year after year, this day is used to commemmorate something else - the unenforced prohibition of marijuana in Canada. Today, thousands of Canadians will smoke bongs, pipes, joints and buckets in public places in front of hundreds of cops. The federal parliament, the provincial legislature, and university campuses in the midst of belching out yet another crop of residence-scarred bewildered 18 and 19 year olds into adulthood will all smell of the sinsey today. Yet the irreverent and boisterous experience, with its illusion of fun and freedom, is a reminder of another scourge that causes levels of heartache and carnage that are starting to keep pace with the other evils associated with this day: The war on drugs. Paradoxically, marijuana demonstrations and marchers have become less and less taboo and risqué with each passing year, to the point of being almost fully humdrum today.

Yet when the government swiftly moved to appeal a recent ruling by an Ontario Court judge that the federal government's monopoly on medical marijuana is effectively unconstitutional, what has been evident for a while (from federally funded anti drug advertising) became perfectly clear: the government considers marijuana to be a scourge on society. The thing you have to remember about conservative politicians in North America is that they are extremely libertarian when it comes to creating carbon emissions, developing land, possessing firearms, privatizing health care and education, and making consumption a tax free endeavour, but they werewolf into the overbearing "nanny state" fascists they despise when it comes to womens' right to choose, fags' right to marry, and people's right to get stoned. There is that nanny state Conservative government telling me what to do with my life Strange, that.

Of course, the propoganda the war on drugs has been deploying for forty years and the Canadian conservative party deploys today was sophisticated; it isn't anymore. The same phrases repeated over and over become truth, this we know, but eventually like beaten eggs whites they lose all meaning and morph back into the bullshit they started as. This is rarely mentioned. Let's mow through them: Drugs ruin lives, create dependencies, destroy families, and keep powerful organized crime networks and street gangs going. This is why we need ever-tougher sentencing laws and ever-greater amounts of expensive police, prison, and courts to enforce them.

It is time to move beyond the simple "for" and "against" approach on this issue, and challenge these assumptions (how widely held? too widely, if they are at all), as the evidence is simply staggering at what a failure this approach is. Details are not needed to show how a system set up this way will never do anything but suck up more money. And as one of my favourite bloggers Charles Hugh Smith prompts us to ask when faced with a situation like this - cui bono? To whose benefit? Society's? The drug user? Or the system that uses this manufactured "problem" to employ a bunch of highly paid people to control people's lives? Let's go with answer three, Alex.

That's what it is, isn't it? And it sounds like a phrase straight out of the mouth of an aspiring Ontario Premier, the provincial conservative leader Tim Hudak. "A bunch of highly paid people controlling people's lives."

This is an issue that requires that the entrenched ideas about to be thoroughly discredited, so that it is no longer an "issue".

To do that, we have to first stop thinking about drugs as a problem. And to do rid them of their "problem" status, we need to take away their forbidden and shady nature: to legalize not just marijuana but all drugs. (I am not actually going to address marijuana anymore as there is already overwhelming evidence that the vast majority of Canadians have used it, know it is not harmful in moderation, and don't think it should be a criminal offence to possess, not to mention cops don't bother enforcing existing laws) This will ensure that a "problem" that doesn't affect the vast majority of people will stop affecting them in ways that it shouldn't, such as their tax dollars being used to fund advertising and law enforcement. Primo, the percentage of the population with any experience with hard drugs is less than 1 percent. Secundo, those people being forced to obtain and use clandestinely causes more social stigma and crime then if nobody thought about them or paid them the disproportionate amount of attention they receive now. Do you really feel threatened or scared that somebody, somewhere right now is shooting up or smoking rock? Well, I got news for you, they are anyway in spite of the incredible amounts of money and resources your government has wasted and will continue to waste. Do you think you will have more success with the status quo or is it time to maybe engage them by bringing them out in the open and seeing what effect sudden simultaneous scrutiny and acceptance of what they do has?

Because if you just think for a minute, think that if the government spent a relatively small amount of money procuring and/or manufacturing high grade, high quality, cocaine, heroin, crack, ecstacy, magic mushrooms, LSD, and most importantly, weed, what an enormous financial windfall that would give them. They could tax the shit out of all these drugs. Think of all that revenue they lose out on now, plus all the costs we have to pay for the war on drugs. But that is just the tip of the iceberg. You put all those drugs on government of canada approved websites and on sale at government of canada sanctioned locations, and watch all their boogeymen disappear. Hollywood and the six O'Clock news would go bust overnight. The boring, staid, informative and bureaucratic government is taking over the business from all the scary, evil men who've been the fodder for fear in propaganda for a generation: Asian Triad gangs, Hells Angels, Colombian drug lords, middlemen and street theives, scarface, the Godfather, and every good cop, bad cop, homogenous and racially diverse cop pair ever to do battle with them. Think about it. You take away the drugs, or rather, their illicit and forbidden nature, and you take away the raison d'être of something that has been used to scare and entertain us in an irrational way for decades. Maybe those cultural references make you sentimental. That's fine, but I'm proposing that you allow them to in a historical, museum sort of way. Let's move on from vicarously feeling heroic from combatting the "evil drug trade"

But it will stay on the black market, some argue. People won't want to pay the government taxes or risk trying their products.

Really? Is that what happened with booze? Are there thousands of people trading in moonshine and homebrew because they think the liquor store prices are too high? If there are, I haven't seen them. Probably because there aren't. Again, watch the dark parts of the public consciousness be illuminated with just not giving a f--- what people do with their lives. There won't be anymore "meth labs" or "crack dens" or "grow-ops". There will just be regulated, supervised production, where it is cost effective and efficient to have it, to meet regular organic supply and demand, just like there is for everything else. Imagine that. Bringing an underground economy above ground, to financially benefit above ground citizens, who up until now have been forced to pay for a futile and unproductive fight against it underground.

A responsible society wouldn't condone its own citizens doing that to themselves. Its immoral. Ah yes, how could we adjourn today without addressing the high horse. Your responsible society which has presided over the dumping of toxic wastes and PCBs into rivers and streams, your responsible society which allows people to become alcoholics, nicotine addicts, gambling addicts, and porn addicts, is too morally upright to engage in the type of logical commerce and reasonable public policy I have proposed. Parents can feed their children coke and high calorie, low nutrition fast food every single day of their childhood without the least repercussion. A house in my neighbourhood has a dozen rusty paint cans rotting on the front lawn - what's to stop those from contaminating the water supply? 3,000 people die on Canada's roads every year - are we willing to accept the risk of letting people take risks with altering their minds as we are with them operating vehicles?

Legitimate grievances and laments about the ills of society could go on all night. I hope I've demonstrated that the way in which we've singled out drugs as some kind of beatable and undesirable scourge is irrational and paranoid, inconsistent with our values as a free democratic society, and serving all kinds of undeserving specials interestes while failing to produde the desired and having terrible adverse affects. Most people make the right choice already, so let's let everyone choose, take the stigma and the allure away, and watch a manufactured problem disappear. How many dutch are hardcore potheads in their nation where they're allowed to walk into a store and buy it? Very few. Let's end the war on drugs, legalize them all, and stop trying to control individuals' lives. Happy 4.20

Tuesday, 19 April 2011

Icesave - Engagement & Enlightenment

Due to the recent birth of my son and the reduced thinking abilities that have resulted from this otherwise joyous occasion, I have taken to re-reading an old favourite classic, as opposed to the now futile attempting at taking on the armfuls of new stuff on my desk and on lists that I still have the good intention of getting through. And how interesting and ironic it is, I thought to myself, that when the main protagonist of Aldous Huxley's Brave New World, Bernard Marx, is revealed to be too much of a natural, flawed individual to conform to the sterilised, eugenically manufactured, drugged society of the novel, his punishment is being sent to Iceland. Iceland is the place designated for the rare people (of the two higher castes, for in a world without reproduction, the three lower classes are genetically engineered to be too stupid to think freely) who realise that the utopia they inhabit (that is in fact a dystopia) without pain, without heartache, without aging, without dirt and disease, without natural reproduction, without books, without unique culture, and without thrift cheats the human experience out of something fundamental despite all the problems it claims to have eliminated. They are of course very few, but their realisation is a severe enough threat to require their relocation to somewhere totally remote and totally unique. Little wonder that Huxley thought of Iceland to serve this purpose in his 1932 novel; then as now, there are few places on Earth that fit this description so well. And the case of Icesave, which I had already planned to write about today, illustrates that perfectly.

To bring you up to speed in case you don't know the story, the small nation of Iceland (population 300,000) discovered the power tools of steroid economic growth in the mid-2000s. Cheap credit, leveraged buyouts, real estate bubbles, ponzi schemes. In a country so small that last names are an absurdity (your last name is merely your father's first name, plus "son" or "dottir", depending on your sex) that depended almost entirely on tourism and fishing before this massive magic financial drug binge, the change was so drastic and the ensuing fallout so dramatic that it made international headlines. The details are an essay themselves so I will just post the excellent April 2009 Vanity Fair article on the subject here, if you want more detailed information (the full article in a 17 page PDF is the fourth link if you google "Vanity Fair Iceland").

Something really interesting and still making news two years later is a debacle inside this debacle, the ongoing case of the defunct Icesave bank. In a flurry of bold-faced bullshitting that would make Bernard Madoff blush, this bank that started as a little subsidiary of one of Iceland's three banks took in approximately 5 billion dollars of deposits for its high interest savings accounts between 2006-2008, which paid 2-3% above market rates. Savers could earn up to 8-9% as opposed to the frustrating 1-3% we've been contenting ourselves with for years now from the likes of ING, PC and the like. Better, as simple online accounts they were able to attract capital fast and furiously, because who wouldn't take a guaranteed investment with that rate of return? And with their domestic market so small and ill-suited to rapid growth, it was not Icelanders' capital they were harvesting, but that of the citizens' of two unlucky members of the European Union, England and Netherlands.

As you may or may not have noticed in these past few years, smaller players have been the first dominoes to fall as the limits of global fractional reserve banking and currency systems in which all new money generated carries an eternal obligation of compound interest debt are placed under increased strain. So even though every nation state (who has to sell its treasury bills to banks and investors with the promise to pay interest even though it is already massively in debt from doing this for 100 years) and every bank (who funnels all this money into the commodities market, the stock market, real estate, bonuses, and other financial institutions or "FIs" in their smooth lingo, except for required "10% capital reserves". This means the money you think is sitting there isn't sitting there at all, and despite the bank collecting interest on the t-bills issued by your government plus all your interest and all your fees, they could never put out everyone's cash because it doesn't exist) is technically insolvent, it is the ones who have nothing to hide behind that have failed first. Greece and Ireland have small populations, which means few financial institutions, plus old populations, high unemployment, and low tax revenues. When their banks, or nation states, or both, went bust, their governments could not intervene credibly with a bailout because they were exposed. They had nothing to hide behind. Portugal is next.

Bigger countries may survive longer because they may bring in more tax revenue from more diversified economies or have younger populations, but also because their size allows greater opacity. Consider the previously unthinkable scenario that really happened: Bear Stearns and Lehman Brothers, two venerable Wall Street investment banks with billions of dollars in investments, cash flow, and market cap were engulfed in a matter of weeks. Lehman was left on its own to wither and die while Bear's remains were slushed into JP Morgan's operation with who knows how many extra tens of billions funnelled in by the U.S. Treasury.

Yet the fed and the treasury seem able to dance this supernatural two-step of creating magic money infinitely, which is why Iceland has had two referendums on how they might pay back this outstanding 5 billion dollars, and the U.S. voters have had nothing of the sort over TARP. You will see the game is already up, however, if you read this excellent and clear explanation of the greatest con ever.

In sum, the market for treasury bills has already dried up because the U.S. government's finances are just about as credible as Greece or Ireland's, although on such a greater scale that it is more difficult at first to wrap our merely human minds around, so the fed has replaced the market as the sole purchaser of these bills (that "QE2" you're always hearing about). In other words, America is in so deep at 15 trillion national debt that it cannot obtain financing any more and has resorted to going in debt to itself, more, somehow. Anyway, Iceland, with one one thousandth of America's population, does not have the luxury now of creating a position for a federal reserve chairman who can engage in this type of cheating. Come to think of it, who ever did?

As the scale of the fraud applies to a much smaller group of people, so then does the length of the cycle. There were barely any kilometres on the Hummers in Reykjavik driveways when the bubble burst in 2008, and Iceland's three banks went under. The three previously nationalised entities had only taken a couple of years to collapse from their unregulated private sector speculation binge, and left a $30,000 debt on the shoulders of every man, woman and child of a nation that had almost no debt in 2004 before they were nationalised again. And this is excluding Icesave.

Britain and the Netherlands, much bigger and much more experienced in finance, had these things called public deposit insurance corporations in place to protect their citizens who invested in a too good to be true ponzi scheme. But now they want their $5 billion back. Damned if they were going to be footing the bill for the reckless idiocy of the perpetrators, the founders of Icesave, who were a couple of twenty-something Hummer drivers in Reykjavik with American business school MBAs.

Now the Icelandic people have been drawn into the long and arduous discussion about what to do about their wayward sons. Although they sound like they could be on the cover of people magazine or the subject of a reality show, the young Icelandic guns of greed would probably not attract $5 billion worth of public attention. Thus the electorate, through two referendums on whether to pay the British and Dutch deposit insurance corporations back (In both cases, the answer was an obvious no) has undergone two processes with capitalism and finance that no other in the west has: Enlightenment and engagement.

Enlightenment that the actions and scheming of bankers and snakes in suits do have repercussions and consequences for regular people who have no idea what these people are doing. Enlightenment that people who comprehend nothing in the slightest about risk, finance, or financial regulation can be on the hook for billions of dollars (as we all are, but unlike Iceland we are citizens of countries who have been big enough, up until now, to defer these payments into the future). Other than some vague idea that there was a "recession" way back before the last season of Cake Boss, North Americans in general have not been enlightened to these realities because they have not been forced to as Icelanders have to confront them directly.

And by participating in referendums, the nation was forced to engage with the issue by taking part in the decision making process. The question was put to them whether they wanted to do the responsible thing and pay it back. The answer is of course no, and will always be no, just as it always is to higher taxes, additional fees, bailouts and collective efforts. Despite the rhetoric about stability and responsibility, a human will not respond well to and see through the bullshit of people who clearly couldn't give a damn about consequences or responsibility of its actions the rest of the time and now come to them demanding money because its "in their own best interest". It is not hard to see what a blatant con this is, what a pathetic and insulting demand for humiliation and slavery from financial interests and their lackeys in governments, and Icelanders will continue to respond how I'm confident everyone will eventually respond when the question is put to them. That sets up the great unknown - what the nature will be of the confrontation that comes next. We don't know because all the politicians and business leaders around the world are stuck in a terrible rut of myopia and narrow mindedness in which they believe the realities of yesterday still apply. But look around at develop countries and the banks your money is sitting in, and you will realise that Icesave is the future. The question as always with the future is when it will become the present.