01/02/15 – Mark Thornton – The Scott Horton Show

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Welcome back to the show, first show of the new year here.
I'm Scott Horton on the Liberty Radio Network, scotthorton.org for the archives, at scotthortonshow on Twitter.
First up today is our friend Mark Thornton.
He is senior fellow at the Mises Institute, that's mises.org.
He's the book review editor of the Quarterly Journal of Austrian Economics.
His publications include The Economics of Prohibition, Tariffs, Blockades, and Inflation, The Economics of the Civil War, The Quotable Mises, The Bastiat Collection, An Essay on Economic Theory, and The Bastiat Reader.
And boy, it goes on and on and on like this for another just as long.
Welcome back to the show.
How are you doing, Mark?
Good.
I'm doing great, Scott.
It's great to be back on the program.
Things are looking up for the new year, 2015.
All right.
Well, I sure like your sunny optimism, and your latest essay is good news.
So, good.
But I'm sorry, and there's so much we've got to cover on the show today, but I've got to start with this biggest and most important news going on right now, and that is the completely – oh, and sorry for no warning for this, but I bet you have something to say – the crash in the price of oil.
Now, Peter Schiff says, well, that's just because it's the end of QE, and it's just like the coming stock market and housing bubble crashes.
It's just the energy market crash first.
That's all.
And then there are others who are saying, oh, no, this is just like in the Reagan years.
The Americans are conspiring with the Saudis to stick it to the Iranians, and especially the Russians, by dumping the price of oil through the floor.
And then others say, no, it's just because all the fracking, all that extra oil and natural gas is coming online and hitting the global markets, and this and that and the other thing.
And I wonder whether you have a favorite explanation, or if you have a different one, or if you want to mix them up, or what do you think?
Well, Scott, that's an incredibly important question.
All three of those factors are probably playing some role, but the way I look at it is the price of oil is like the barometer for the global economy.
And so the most important thing to know about the crash in the price of oil is that it indicates clearly and globally that the world economy is slowing down.
And it's easy to make the case that this is the most important explanation because the Chinese economy is slowing down, and the latest reports have been even worse than anticipated.
The Japanese economy is faring badly under Abenomics and is in contraction or recession.
The European economy is in shreds, and most of the countries in Europe are either in recession or teetering on recession.
And then, of course, there's contractions in Brazil.
There's contractions in South American countries.
The United States has done fine the last couple of reporting periods in terms of GDP growth, but if you look at the global economy, it's a sure sign that the global economy is in contraction, and a slight contraction in the economy means a significant change in the demand for oil.
And so with oil supply in the short run, it's very inelastic.
And so you see this big drop off in prices.
So the Saudis may be conspiring in some sort.
They have a very low cost of production versus countries like Russia.
And so there may be some conspiracy going on there.
And, yes, the end of QE2 will add to the at least slowdown in GDP growth.
But ultimately, this is probably in the longer run a sign that the economy is going through its contraction.
What they call recession is a correction phase in the Austrian eyes where the bad investments, the bubble activities are extinguished and resources are freed up for production and services where consumers want them, not where central bankers want them.
All right, well, I've got a bunch of questions, but I don't want to head too far down that path, so we'll just leave that right there for now and change the subject back to the drugs here.
You have this great article coming out at Mises.org.
The sky is not falling.
Recreational pot turns one in Colorado.
So come on with it.
Tell us the horror.
Well, you know, of course, a lot of people predicted that things were going to go drastically wrong in Colorado, that there would be an epidemic of use and abuse, that pot would fall into the hands of every schoolchild, that companies would abandon Colorado, that it would give Colorado a bad name and a black eye.
And, of course, nothing like that has happened.
The people of Colorado have embraced legal recreational marijuana, and everybody really is benefiting.
Thousands of people are not being arrested and are not going to jail.
Dozens of families have moved to Colorado so that they have access to medical marijuana without any constraints.
There has been no dire consequences.
There's been a couple of anecdotes regarding edible marijuana, which, if you're not really experienced with edible marijuana, it's very easy to consume too much because you're not smoking it.
And edible marijuana is more, in the longer term, it's more potent because you absorb all of the THC in the marijuana, whereas when you smoke it, a lot of it is wasted.
And so there was one fellow who, instead of eating one cookie, ate all six cookies and freaked out and jumped off of a hotel and was killed.
There's another anecdote where a dog ate the owner's brownies off of the table and died as a result.
And so Coloradans have quickly adapted to those circumstances, and they're taking precautions, and the producers are putting warning labels on them and packaging them in single-use packages.
Of course, the government's getting revenue from this, and so it seems like everybody's pretty happy.
And the polls indicate that, that the people who voted for legal marijuana still strongly support it.
And even those who voted against legalizing marijuana now realize that, just like alcohol prohibition in the 1920s, it's really stupid to try to outlaw something like this.
And they're realizing that this guy hasn't fallen in, and so they're very happy with it.
So support for legal recreational marijuana has actually increased, and of course it's very, very strong for medical marijuana being legal, both in Colorado and across the country.
There's a supermajority now that supports legalizing medical marijuana, except in the most senior age groups or demographics.
In other words, the people who really had no experience with it whatsoever and only know from the scare stories and that kind of thing.
Yeah, I mean, these are people who grew up in an age, who were born in an age when the reefer madness campaign by the federal government, you know, first of all, they called it, you know, marijuana and reefer, rather than cannabis, which was a product that was being sold in pharmacies during those days and used by most households in various medical preparations, veterinary medical preparations and so forth.
They demonized marijuana in those early days.
They said that initially the government claimed that it could kill you, that it could drive you insane, and that it would make you violent.
And then of course experience over time, people in the 60s and 70s realized, A, it didn't kill you, B, it didn't drive you insane, and C, it didn't make you violent, it made you very docile and, you know, unhappy.
And so all of those lies about marijuana are only still affecting those senior age groups.
And basically everybody else says it's okay, it's a drug though.
I mean, it still has dangers associated with it.
You shouldn't operate mechanical activities and so forth, but it's a great thing otherwise to have it legalized.
Hold it right there.
We've got to take this break.
We'll be right back with everybody and with Mark Thornton right after this.
Mises.org, y'all.
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All right, you guys.
Welcome back.
I'm Scott Horton.
This is my show, Scott Horton Show.
Talking with Mark Thornton from the Ludwig von Mises Institute, which I can never say right.
Oh, yeah.
Just Mises.
It's the Mises Institute because everybody can say that.
Like I hate Mises to pieces, only love instead.
Okay.
Mark Thornton.
He's the author of a book, The Economics of Prohibition, of course, from as free market as you can possibly get of a point of view here.
And we're talking about the decriminalization, legalization with much regulation of pot for the last year in Colorado and the results.
And you mentioned this scare story of the kid that jumped from the balcony, which reminds me of a Bill Hicks joke that I can't play because all the cussing in it, but where he says, hey, don't go blaming acid, because that's the same story you hear about acid all the time.
Go blame an acid on this guy.
If he thought he could fly, he should have taken off from the ground and checked it out first.
You don't see a duck take an elevator up to the roof and jump off to try to fly for the first time.
So, you know, one less doorknob in the world.
Oh, well, but anyway, sorry.
These things do happen.
And yes, it's true that probably someone who has no experience with pot should not eat a whole lot of it at first.
That would be like if you've never drank before and going for chugging a bottle of the strongest liquor instead of, you know, warming up with a couple of beers or something.
But anyway, as you said, this is the best that anybody can come up with as a downside.
Right.
Other than what the states next door are complaining because they still want to keep it illegal.
And yet the supply has gone up and the price down in neighboring states.
They're kind of throwing a fit, huh?
Yes.
I mean, the neighboring states, you know, they're complaining that they're finding more people crossing from Colorado into their states and they're arresting them with marijuana smuggling charges.
And the main reason they're catching more people is that they're really cracking down at the border.
And so if you're in Colorado and you're leaving the state, you know, if whether it's Oklahoma, Nebraska, New Mexico and so forth, they're pretty much on alert about, you know, people trying to smuggle marijuana.
So there's really not an increase in smuggling.
It's more of an increase in them trying to catch smugglers that has resulted in those stories.
And there's a funny anecdote at the Denver airport.
There's a special bin near all of the entrances where you can throw away your marijuana before you go through the checkout and the security check.
And my brother just went through there recently and he asked the guy, he said, how much marijuana have you collected through these bins?
And he said, none, of course, because nobody's going to be carrying marijuana into the airport and then taking it out of their pocket and putting it into, you know, a barrel.
You know, a barrel with federal security agents looking at them.
So it's really not an increase so much as they're cracking down at the border.
And that's the real story.
You know, and there are stories being planted in the media by the White House Drug Office, which constructed a report recently.
It's like 150 pages where they try to say that the sky is falling.
For example, they said that there's been a 30 percent increase in high school students who've been expelled for drug issues.
Of course, that's not necessarily marijuana issues, but the points in time before and after the study, they failed to point out that there was also a 30 percent increase in the number of high school students.
And so the report is misleading at every important juncture that they try to show.
Like, for example, they said that there was a 100 percent increase in the number of traffic fatalities before versus after drug legalization.
But what they failed to show was that in the year that they used as the starting point, which was 2006, only 40 percent of traffic fatalities were tested for marijuana.
And in the after year, the traffic fatalities, 100 percent of them were tested for marijuana being present in the body of the deceased.
So in reality, they should have shown, if everything had stayed the same, that there was a 120 percent increase in marijuana involved in traffic fatalities.
So, you know, that federal White House report, which didn't even show that it was really from the White House, is completely misleading and does not show, as far as I could tell, any, you know, sky is falling type statistics, basically.
Well, let me ask you this.
Are there any interest groups in America who really support the war on pot?
I mean, the war on harder drugs, that's not even really up for discussion at this point.
But the war on pot, I know that there are police unions and probably, you know, the arms manufacturers who sell guns to cops on government contracts, giant welfare payments for them, the iron bar and concrete companies that build the prisons and the corporations that administer them, those kinds of, you know, very connected, corrupt, conflict of interest type interests.
But what about the concerned Republican wives of America who just want to keep their little baby safe from the pot?
I mean, do they have a group to pressure to keep it against the law?
Or is it simply just the police unions and their cronies at this point?
Well, certainly the police unions.
Most importantly, it's the private prison industry that backs and spends lots of money lobbying for long prison terms.
You know, surprise, surprise, because they're raking in $50,000, $60,000, $70,000 a year per prisoner.
So as they add people to the prisons, you know, even just consumers sometimes get thrown in prison for long prison sentences.
And so that's a big interest group.
There's also, of course, the alcoholic beverage industry.
They see, to a certain extent, there's been indications from the tobacco industry that they financially support efforts that oppose drug legalization.
So we can see in some cases these interest groups directly contributing to the campaigns against liberty and against legalization of marijuana, medical marijuana, decriminalization efforts.
So they're definitely financially involved.
And they come out sometimes, like in California, Proposition 19, the Beer Distributors Association came out and said that they were worried that their drivers might be driving these heavy, dangerous trucks around while being stoned, which of course is ludicrous because companies can prevent their employees from drinking or smoking marijuana or taking heroin or cocaine while on the job or even not on the job.
And then there, you know, and then very often these financial interests funnel money to religious groups and nebulously sounding groups that support, quote-unquote, the public interest in keeping drugs illegal.
So you'll very often find, if you follow the money, you'll see that money is supporting opposing marijuana legalization and they're very often funneling it to religious leaders who then tell their followers and make TV and radio ads to fight this effort for liberty in this country, Scott.
And so, you know, that's really the main opposition, is that they create stories, horror stories, and they finance putting ads on the air and on television to fight these efforts to legalize marijuana.
You know what, though, that sounds like a big no.
There is no real concerned mom group.
Like even Mothers Against Drunk Driving, there may have been some other interest behind that.
But it started with just moms of dead, innocent people kind of a thing.
We really don't have any kind of honest grassroots, not that they would have the authority to pass laws like this in my libertarian world or anything, but it's just there is no interest that's not a conflict of interest on this case, it doesn't sound like.
There's real people who don't know the situation and who are swayed by these ads.
You know, we've seen that.
I've seen that up close and personal.
But no real public interest group that I've seen or that I've been made aware of through these different campaigns in the various states.
You know, I'm sorry, because I wanted to get back to some of the history here and talk about FDR and all that, like I promised you the last time we spoke.
But to wrap up here real quick, I wonder whether you've seen many statements, obviously not the police unions, but I wonder whether you've seen many statements by just regular cops or sheriffs saying, oh, yeah, you know what?
It turned out this really was a good idea and now we can focus on chasing criminals and that kind of thing.
Oh, no.
There's a lot of law enforcement agents that support legalizing marijuana.
There's a group called Law Enforcement Against Prohibition.
And so, you know, cops will tell you that, you know, in terms of violent altercations with citizens, that they see them all the time involving alcohol, but they never see them when it's just marijuana consumption.
And I'm sorry, I didn't really phrase that right.
I guess what I really meant was Colorado cops in the last year saying that, hey, you know, this turned out to not be that bad of a thing as, you know, they may have been opposed to it before or concerned about it before.
Yeah, I mean, there are people who have, you know, in the polling data that, you know, admitted that they were wrong.
They interviewed a cop.
They interviewed somebody who was drastically opposed to legalization and then said, you know, I should have known better because of what happened during and after alcohol prohibition.
Things turned out much better.
And there's, I think there's more mothers that are concerned about their children, not about the drugs themselves, but about all of the violence and criminality that drug prohibition has created and the state of fear that exists in inner city public schools and the destruction to families, particularly in the African American community, that they've bumped into, that they've come into contact with, and they all of a sudden they realize, geez, people smoking pot is probably a lot better than kids being killed, than kids being terrorized in public schools, that kids dying in Chicago as a result of drive-by shootings of, you know, black African American families being broken up with a breadwinner thrown in prison for five or ten years.
Man, the kids in juvie, too, man.
That can be really hard on somebody when they're 14 years old.
Oh, yeah, it's a life-changing, not-for-the-benefit, usually, situation.
And, you know, children are exempt from obviously going to federal prisons and things like that, but, you know, ending up as a result of broken families and the war on drugs and committing petty crimes and being caught with possession of marijuana and so forth.
You know, it does everything from putting you in juvenile hall to making you ineligible for student loans.
You know, so it ruins your career.
It ruins your life.
It ruins your education.
And more and more people are seeing that.
They're arresting hundreds of thousands of people until this recent, you know, wave of drug marijuana legalization and decriminalization, now more than 50% of Americans can't be thrown in jail as a result of marijuana consumption.
So that's why I think that's the one bright light that we see on a horizon that is otherwise dark with government, with war, with inflation, you know, with terrorizing the citizens, whether you have a militarized police force, police killing innocent citizens for no good reason, all of that darkness, we can see the one light of liberty shining through where the American citizens themselves have gotten up, they've gone to the polls, and they've said, legalize marijuana.
We don't care if it's a federal crime.
We don't care if it's an international crime and an international agreement.
We don't care.
We're not putting up with it.
And if the feds intervene, we're going to go to the polls and get all of those turds out of office as well.
So it's one good sign, and I think that if Americans realize that, that they can make a change at the local and state level to stand up to this federal leviathan and put it in its place, Scott.
You know, that's what you do every day, I'm sure, with your show, and that's a great thing, and that's why I love to come on it.
Yeah, well, I think you're right that the proof is just right in front and it's undeniable, and hopefully it'll be seen as more and more of kind of a juggernaut.
You know, I don't want to say a snowball rolling downhill because that usually has a negative connotation, but it does seem to, it's undeniable, right, ever since the first medical marijuana legalization in California.
There's just been no stopping it for the last, you know, I don't know, 20 years now.
Nullification is a great thing, and that's why federal laws, they can kick the feds out and stand up to these international agreements and international crime that the U.S. has been leading this international war on drugs, and so I think it's a great thing.
All right.
Well, thanks so much for coming back on the show, Mark.
I sure appreciate it.
Thank you, Scott.
I love being on this program.
It's one of the great shows on the Internet, and it does play such a vital role.
Well, very nice of you.
Happy New Year.
Happy New Year, Scott.
All right, y'all, that's Mark Thornton.
He is senior fellow at the Mises Institute.
That's mises.org, author of The Economics of Prohibition.
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