Crime, homelessness, economics, & the politics of cannabis

Local policy makers are touting the economic benefits of commercial cannabis cultivation as a meansNational Public Radio’s Central California affiliate, a one-acre grow operation could bring in $19 million a year![1] While profits vary, jobs in the 420-industry, such as bud trimmer earn $12-13 an hour, according to Forbes. The grow master or cultivator can expect to earn $100,000+ per year.[2] to replenish depleted coffers. Looking at the numbers, it is hard to deny their claims. According to a report by

Colorado’s Amendment 64 was passed by the voters in November 2012; and the commercial sale of marijuana to adults, 21 years of age and over, for recreational use began on January 1, 2014.[3] This date is important, because in the March 15, 2017 issue of the Grand Junction Daily Sentinel, it was reported that property crimes and all crimes reported saw a major increase from 2014 onwards. While violent crimes declined in the year 2014, thereafter, violent crimes have also seen a significant increase.[4]

One hypothesis is that crime and homeless have increased in Colorado since the legalisation of recreational marijuana.

The Sentinel article quotes Grand Junction Police Chief, John Camper, as saying, “I talk to police chiefs throughout the state and they’re seeing the same thing that we’re seeing – a level of violence that we haven’t seen before,” noting that it’s hard to pinpoint the reason for the rise.[5] Chief Camper is quoted later in the article as saying increases in property crimes are “often an indication of an increase in drug activity.”[6]

From 2014 to 2016, School District 51 students, who are broadly identified as homelessness, soared nearly 55% from 388 to 600, according to a Daily Sentinel article at the time.[7]

The 2016 Housing and Urban Development Report on Homelessness, reports that “Between 2015 and 2016, the number of individuals experiencing homelessness increased in 22 states. The largest absolute increases were in California (4,504 people), Washington (1,374 people), and Colorado (721 people).” [8] Percentwise, this was 13 points up from the previous year and represented a reversal of the trend which showed homelessness slightly declining over the past decade.[9]

In privileged conversations, some Western Colorado policymakers have expressed to this author their belief that the legalisation of recreational cannabis has led to an increase in crime and homelessness.

Looking at the numbers state-wide, the Colorado Bureau of Investigation reports that all major crime classes have increased 6.20% since the beginning of 2014.[10] Between 2013 and 2014, crime actually decreased by one percent. Looking at the aggregate picture of crime in Colorado for the decade 2005 to 2015, crime generally was decreasing annually until 2012.[11]

Comparing these state-wide numbers with more pronounced local findings, there does suggest a slight correlation between increased crime and legalisation of recreational cannabis. More data and in-depth analysis will be required to know for sure, but certainly those who have expressed concern are not without merits.

The Financial Crisis 2007-08, sparked by the subprime mortgage market and excessive global barrowing and risk taking, had major ramifications at the local level. By 2009, Colorado hit the high-water mark with 46,394 home foreclosure filings.[12] Smaller jurisdictions, such as Delta County saw their worst numbers in 2010, with 264 foreclosure filings.[13]

In 2009, a small group of Delta citizens, from various churches, concerned by seeing homeless people lingering around town, organized to start a homeless shelter. As the Financial Crisis became entrenched and foreclosures mounted, industries such as the local lumber company and saw mill closed, followed by the North Fork coal mines. At the same time, Mesa County saw a major reduction in the Oil and Gas industries. As the layoffs, failures, and foreclosures mounted, so did the homeless situation.

Homelessness had increased enough locally, that in November 2014, the Abraham Connection (Delta County’s Homeless Shelter), made the decision to move out of the Delta Methodist Church’s basement and begin construction of a $750,000 facility,[14] which opened in November 2015.

During the Nov. 2013–May 2014 season, the Abraham Connection provided 840 bed nights. Contrast that number with 2,665 which was the total number of bed nights provided during the Nov. 2016–May 2017 season.[15] In three years’ time, that is a 217% increase in homelessness.

Looking at Delta County as a case study, with over 1,000 coal mining jobs gone, a couple hundred timber related jobs chopped, and countless ‘mom and pop’ stores shut for good, a rising homeless population and a school district and hospital struggling under declining revenues due to ratcheted-down property valuations, many policy makers have turned to marijuana as the saviour.

Delta County Commissioner, Mark Roeber, told the Denver Post that he receives calls “almost daily, saying marijuana is going to save us.”[16] While Delta County, and the municipalities within the county, have sustained a prohibition on commercial retail and cultivation since 2013, some towns have explored the retail pot question.

In 2014 Paonia voters rejected a retail pot question, as was the case in Hotchkiss in 2016. By 2017, Orchard City considered repealing their prohibition on commercial marijuana, as did the Paonia town council.[17]

Aside from the cultivation operation owner, the grow master or cultivator is the only employee who would earn what a displaced coal miner had earned annually.[18] Other jobs in the 420-industry would pay comparable to entry level west slope salaries.[19]

While the Green Rush has more likely than not increased crime and homelessness, the costs of these increases to local societies should be calculated when setting budgets for social serves, programs, and law enforcement. Communities should factor in all costs when considering the economics of boosting a city or county’s coffers.

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[1] Romero, Ezra David. "California Farmers Consider Cashing In On A New Crop . . . Marijuana." Valley Public Radio. NPR, 15 Dec. 2015. Web. 15 Mar. 2017.

[2] Borchardt, Debra. "The Five Best Marijuana Jobs." Forbes. Forbes Magazine, 27 May 2016. Web. 15 Mar. 2017.

[3] Healy, Jack. "Up Early and in Line for a Marijuana Milestone in Colorado." The New York Times. The New York Times, 01 Jan. 2014. Web. 15 Mar. 2017.

[4] McIntyre, Erin. "All Categories 
of Crime in GJ 
rising Sharply." GJSentinel.com. The Grand Junction Daily Sentinel, 15 Mar. 2017. Web. 15 Mar. 2017

[5] Ibid.

[6] Ibid.

[7] Langford, Katie. “Homelessness on rise for kids in District 51: Increase due to better identification, economic and family reasons.” The Grand Junction Daily Sentinel, 18 April 2016. A1+

[8] “The 2016 Annual Homeless Assessment Report (AHAR) to Congress.” US Department of Housing and Urban Development. Office of Community Planning And Development, Nov. 2016. Web. 1 May 2017. Pg.14.

[9] Ibid.

[10] “Crime in Colorado Annual Reports 2005-2015.” Colorado Bureau of Investigation. Colorado Department of Public Safety, 2016. Web. 8 May 2017.

[11] Ibid.

[12] “Foreclosure Reports and Statistics 2002-2015.” Division of Housing. Colorado Department of Local Affairs, 2017. Web. 8 May 2017.

[13] Delta County Treasurer’s Office Report 2006-2016.

[14] Press Release Nov 2014. Abraham Connection / Delta County Homeless Shelter.

[15] Facebook announcement 1 May 2017. Abraham Connection / Delta County Homeless Shelter. Web. Accessed 8 May 2017.

[16] Finley, Bruce. “Collapse of Colorado coal industry leaves mining towns unsure what’s next.” The Denver Post, 14 May 2016. Web. Accessed 8 May 2017.

[17] Soper, Matt. “Timeline details Marijuana votes and regulations (Delta County, Colorado).” Delta County Independent, 1 March 2017.

[18] Op. Cit. see Finley article and Borchardt article.

[19] Ibid. 

It's time to simplify the tax code & reduce governmental spending

With over 30,000 pages in the UK tax statutes it is time for parliament to tackle the ever burgeoning and convoluted mechanism for growing the governmental Leviathan and redistributing wealth. What modern social states like Britain and France and even the United States fail to grasp is that one must create wealth before you can re-distribute it.

Some argue that since paying taxes, by sheer definition, is inherently unfair, then the net should be cast wide to speed the pain equally. In other words, taxing or creating fees, surcharges, tariffs or levies for everything from income to interest earned from a bank account or building society; from tobacco and alcohol to bread and cheese; and from corporation tax to inheritance (death) tax.

The UK saw its highest tax rate in 1966, when the Labour government of Harold Wilson ushered in a 134.25% tax rate. This outraged George Harrison of The Beatles, who was affected the 95% super-income tax bracket, that he composed the music and lyrics for the ‘Taxman’, as a form of revolt. The Beatles band recorded the song in April and it was released in the album, ‘Revolver’ in August 1966.

 Tolly's UK Yellow Tax Handbook 2010 being burnt in protest

Many criticise the Thatcher-Major era as being ‘soft’ on taxing the rich and giving away government assets to private industry. The critics fail to acknowledge the quantitative data. The highest income tax bracket was 98%. Stated differently, for every £1 a person earned, 98p was going to the government. Today, the highest income tax bracket is 50%, which took effect in assessment year 2010 and catches individuals earning over £150,000 per annum. Under the New Labour government of Tony Blair, much of the neoliberalist economic policies of the Thatcher-Major governments were continued. This led Labour MP, Peter Mandelson to coin the term “Neo-Thatcherism” to describe the economic policies of New Labour.

Neoliberalism is a school of modern political theory which stresses market-driven approaches to economic and social policy, based on neoclassical theories of economics, which advocates efficiency of private enterprise, liberalization of free trade and open markets, and encouraging consumer free choice, individual thinking, and private enterprise. The tenets have frequently been a topic of conversation at Bohemian Grove. The ‘Washington Consensus’ is considered the theory’s definitive statement. International organizations such as the International Monetary Fund (IMF), World Bank, and World Trade Organization, along with regional trade associations such as the North American Free Trade Agreement (NAFTA), Association of Southeast Asian Nations (ASEAN), the Southern Common Market (MERCOSUR), and the European Union (EU) have endorsed the general principles of the theory.

National tax policy should encourage innovation and efficiency. Jobs must be created, at the core is build and maintain a strong and vibrant middle class, which broadens the tax base and brings stability to volatile global markets. The UK tax statutes are so complicated that while everyone in society gets caught by the tax ‘net’ burden, the lofty weight of a growing public sector places high demands to grow the public coffers. Government must learn to do more with less. A focus should be on prioritization of national policy objectives and efficiency placed at the heart of society’s vision and mission. An athlete performs best when he/she is in lean and well trained. Likewise, a government who learns to operate on less is able to understand the benefit of competition and getting quality.

One of the most efficient governmental organizations is the EU, which operates on a relatively small budget and meagre staff, yet the data they produce is unprecedented when comparing to national governments. An example is a student who is living on a shoe string budget is able to do far more than a professional paid a monthly salary. Why? The student understands the value of every pound-sterling and looks for the cheapest option (eg- riding the bus as opposed to the train, sleeping in a hostel compared to a 5-star hotel, et cetera et cetera). If governments operated in the same manner, more money would be in the hands of the private sector to grow the economy and allow citizens more options with how to live their lives.

In protest of the UK’s and US's confusing and convoluted tax policy, I took part in a tax act protest, where students burned their tax statutes in protest. Please join me in supporting a simplification of the tax statutes - the first step towards creating a more just British or American society.

Beyond the Crash: an evening with Gordon Brown

Tonight, a friend of mine, Magda, and I listened to a speech followed by a question and answer session with the former UK Prime Minister Gordon Brown. Since Labour losing the parliamentary election of 6 May 2010 to a Conservative and Liberal-Democrat coalition government, Gordon Brown has stepped down as his party’s leader and taken his ranks among the back benchers. The former prime minster, an alumnus of the University of Edinburgh and Scottish native, has been making the case for a global response to national problems.

The beginning of Mr Brown’s speech focused around memorable highlights of his 28 year career in the House of Commons – which included ten years as Chancellor of the Exchequer and the previous four as Prime Minister of Her Majesty’s Government. The speech was hosted by the University of Edinburgh and Blackwell’s bookshop in the George Square lecture theatre and featured a sold-out crowd of well over 300 people, many of whom were from the academic community of Edinburgh. Magda and I sat front and centre with only an agent of the Metropolitan Police’s Specialist Protection separating us from the former head of government. Brown looked at the crowd and immediately told the story of his first campaign for parliament, back in 1983, in which only three people attended the meet and greet, including him. Brown said that his journey through politics could be summed up by the custodian at the university telling him, “Mr Brown, I’m sure glad you remembered your roots on the way up and then again on the way down.” Mr Brown studied history and politics at the University of Edinburgh, earning a BA (Hon), MA and PhD while serving a three year stint as Rector of the University.[1]

Brown talked about how 300 years ago the first Scottish banking crisis resulted in a nationalized bail-out and the merger of the Scottish and English houses of parliament. He described this as a national solution to a local problem. In 2008, when news broke that Northern Rock, followed by Bradford & Bingley and the Royal Bank of Scotland were to be nationalized, along with the forced merger (shotgun wedding) of Lloyds TSB and Halifax-Bank of Scotland to stabilized the British economy[2] it became apparent that while these banks were headquartered in the UK, much of the risky investments, such as the purchasing of debt bundles from American sub-prime mortgages, were outwith the purview of British regulators at the Financial Services Authority (FSA).

“In every forum, my theme was that the financial crisis reflected a global problem that could not be resolved by one nation alone but needed a global solution”, Gordon Brown emphasised numerous times during the evening.[3] Brown called for addressing the problems posed by 2007-2009 crises in public international law, creating an international banking tax scheme, along with national regulations creating higher reserves and criminal laws for bad faith and undue-diligence. The former prime minister also called for the shutting down of international tax havens, calling them loopholes for circumventing national revenue tax collectors. This was a point I disagreed with, as the UK is in a good position to compete head-to-head with these so called tax havens, by lowering business taxes and creating a more favourable investing climate to stimulate the private sector to keep assets within the British Isles.

Mr Brown said he accepted full responsibility for what happened, as he was the Chancellor of the Exchequer the decade prior to the financial crisis. He went on to explain that what was known was limited and his office was preparing for an inflation crisis and had no warnings that an even greater threat existed, which was the concept of many banks failing at once due to poor liquidity and the purchasing of foreign toxic debt and speculations which were tantamount to gaming with Briton’s savings and investments. He averred that the problem requires global solutions, especially went banks are linked internationally. Mr Brown’s solution is a global banking tax to create a reserve fund for such an event as a global financial windfall.

“The American dream is one of the most powerful and enduring stories of hope that continues to inspire the world,” writes the former UK Prime Minister, Gordon Brown, in the opening sentence of chapter six of his new book, Beyond the Crash.[4] Before a joint-session of the US Congress, Brown said, “[E]arly in my life I came to understand that America is not just the indispensible nation, it is the irrepressible nation.”[5] Brown warns, the American dream is under new and unique pressures with consequences not just for the US but for the world, “The manifestations of this are high unemployment, falling middle-class incomes, and concern about educational opportunities and upward mobility amid rising competitive pressures from Asia.”[6] Brown explained the crunch on the middle class is an area of the economy to watch out for, as they are the ones who have been the biggest contributors to fuelling economic growth and providing a standard for morals.

Mr Brown concluded the evening by saying he was optimistic about the future, as new markets emerging in Asia would create demand for western made goods and services allowing for increased economic growth in both the service and manufacturing sectors. He said to stay abreast of the east, the US and EU must invest in higher education to train the specialists of the next decade, look for ways to create jobs – as to prevent another lost decade as he saw in Britain during the 1980s, and fund science and technology.

After the speech and question time I approached Mr Brown, shook his hand as he was taking off his microphone and he said to me, "...there, now I can talk to you." I asked if I could have a photo taken with him and he agreed, telling me how much he admired America and was happy to see the exchange and diffusion of knowledge across the pond. He then signed my copy of Beyond the Crash and shook my hand saying, “thank you.”

Magda and I walk out of the lecture theatre chatting about his talk, debating the pros and cons of his averments and observations along with chuckling about the number of times he said “global solutions” in the course of an hour. All in all I was very impressed with his address and am very proud to of had the honour of meeting a British prime minister.

__________________________________________
[1] “Gordon Brown as Rector”, http://www.archives.lib.ed.ac.uk/gallery/brown.shtml (accessed:17 February 2011)
[2] UK House of Commons, Finance Report Re the Banking Crisis of 2008, http://www.publications.parliament.uk/pa/cm200809/cmselect/cmtreasy/956/956.pdf (assessed: 17 February 2010)
[3] G Brown, Beyond the Crash: overcoming the first crisis of globalisation (Simon & Schuster, London 2010) 45
[4] G Brown, Beyond the Crash, 143
[5] Since the 1st US Congress in 1789, only 105 foreign heads of state, government or diplomats have addressed a Joint-Session of Congress.
[6] G Brown, Beyond the Crash, 143

Thoughts on Economics: Coke Index & the free market

Perhaps living in the city of Adam Smith, who wrote the Wealth of Nations in 1776, the year my forefathers signed their names to a declaration to King George III declaring their intentions to sever ties with the colonizing power, has sparked an interest in economics and the interaction with law. Prior to Christmas 2010 I was in Marrakesh, Morocco and met four students from Malaysia, who, were finishing their degrees in London, respectfully in medicine, economics and international trade. Our conversation on a train ride to Rabat sparked my interest in the Coke Index, which was promulgated in the affirmative by two of the four. First, I will explain the index and then contemplate UK tax law with a comparison to the health care. This latter point was prompted by recent discussions with fellow course mates about the Republicans in the US House of Representatives voting last week to repeal “Obamacare” (US National Health Care Act (H.R. 676)), which is the American version of socialized medicine, signed into law by President Obama in 2010 and set to take effect in 2014.

The Coke Index is a variation of PPP (purchasing power parity), an economic theory of long term equilibrium exchange rates is based on the relative price levels in two different countries. The theory has an absolute and a relative model. In the former, the purchasing power of different currencies is equalized for a given good. Whereas the latter is the difference between the prices, in say a can of Coke, between country A and B. The difference in the inflation rates will be more or less equal to the percentage of appreciation or depreciation in the exchange rate. The Coke Index can therefore give you an on-the-ground indication of the “real exchange rate”, because you know that a can of Coke costs $0.50 in Denver and 5dirhams in Marrakesh. According to XE.com the exchange rate is $1.00 = 0.12149 Moroccan dirham, so the “real exchange rate” is actually a little worse than quoted, as the can of Coke actually cost $0.61. Where the Coke Index breaks-down and becomes subject to volatility is in the arena of non-traded goods and services, in other words, I could have purchased a haircut for the same value as a can of Coke or hired a driver for a similar price. The Economist popularized the “Big Mac Index”, which I personally reject as the magazine is a bit too pretentious and arrogant for my tastes, though it is the exact same principle. Both the Coke and Big Mac Index are criticised in developing countries because those two goods are seen as luxury items. Coke is less so, as it is found even in the most rural of regions – according to Jessica Stern’s book, Terror in the Name of God, members of al-Qaida and the Taliban always served Coke as an aperitif. All this said, a 1,5 litre bottle of water in Marrakesh cost me the equivalent of £0.04 – a bit shocking since a similar bottle would cost between £0.34 and £0.65 in Edinburgh! I still drank a lot of Coke, because a medical doctor (single & female) I befriended said Coke kills any bugs which might have been on the Moroccan food – good advice – I didn’t get sick!

In regards to tax law in the UK, I have been reaking Tolley's Yellow Tax Handbook 2010-11 and Revenue Law: Principles and Practice. These books, along with lectures indicate the UK-US comparison is actually not that much differnt as far as revenue collected per capita, The US still has over-all lower taxes, but not by as great a differnce as existed in the 1980s. The textbook authors seem to insinuate Americans perceive themselves as paying fewer taxes and receiving fewer benefits, though the lecturer of the course commented that Americans contribute slightly less (when considering federal and state income tax, plus sales tax and property taxes), but receive tremendously fewer benefits. I almost stood up and said, “I’d gladly pay minimal taxes and receive limited equivalents.” Though I can tell my Republican ideology doesn’t exactly flow with the average Brit. The largest tax increase in American history was signed into law by President Obama in 2010 - the National Health Care Act - which binds all citizens into a single federal scheme (in my opinion usurping the concept of dual-federalism and the autonomy of the states) Europeans love the concept of 'free health care' (though if they thought about it, they are paying for it and even if it is less than most American insurance plans, the quality of service, expertise and facilities are considerably behind the US). Take all the factor which create value and Americans have BMW plans compared (using the auto analogy) Vespas in the UK. Cost wise, there should be a more affordable plan, but it should also carry a linear equivalence as far as value. I wouldn’t expect to buy a real BMW at a Vespa price, nor would I suspect the showrooms look similar. Yet both should take me from point A to B. I also dared to say that the free market should guide these prices and services, not the government – I was called a few cute and short names for what seem to be rather reasonable ideas. Much of my reasoning comes from observing how my fellow law students act at an “open-bar”, as opposed to a “cash-bar”. They’re sloshed in the former instance and reasonable in the latter (mind you, they’re British, students and in the faculty of law – all of which have high drinking propensities).