Verifying Hayek, #7328

Continuing the noxious trend of cutesy-acronym legislation, this week saw the introduction of the Prevent All Cigarette Trafficking (PACT) Act, brainchild of Messrs. Hatch and Kohl, which is an attempt to crack down on the booming black market in cigarettes created by sky-high cigarette taxes. Also par for the course, this is being sold as a way to fight terror.

Comments

[Charles Hueter]

Ugh. Combined with the Austin smoking ban, I wonder sometimes if there really is a good chance some forms of tobacco could be outlawed. The way individual freedoms are treated in this country...

[Brian]

Steve--

Yeah, it's kind of like that racket in...Goodfellas, I think...where the mob bribed the freeway weigh stations to look the other way while they overloaded their trucks, which cut their shipping costs--and damaged the roads, the repair of which they controlled the contracts for.

[Plutarck]

I just realized something: Terrorism has become the new "children". Think about it. No longer is the reason for anything going to be that it is "for the children", but that it "fights terrorism".

We can only hope that they don't realize the two are not mutually exclusive...oh my.

[Brian]

We must stand together against the menace of the terrorist children! I mean, we're doing it for ours terrorists' children. No wait...we will hunt the children to the ends of the earth for the sake of our terrorists. Or is it...

[Thomas Luedeke]

This fits right in the surgeon general's comments (see commentary at http://www.lewrockwell.com/white/white33.html)

where he asserts he'd have no problem with a complete tobacco ban. What a bunch of morons. Not only did they NOT learn anything from Prohibition, they DO think it was a good idea....

I agree with Jay D - call me when the revolution starts, I'll be pulling a John Galt strike until then....

TPL

[Ira Weatheral]

Let's hang ALL the practicing lawyers and politicians!

Do they have a Muffin Monster that can breakdown a politician as quickly as a cartoon fish?

[Jay D]

Warning: Muffin Monster and Muffin Man have been hijacking random Reason forums. Please take appropriate precautions.

[Mr.Poge]

Thank God the taxes on pot are still low, so I can still afford to smoke.

[Warren]

ROFLMAO
Best H+R thread I can remember. I agree with all the above.

Call me for the revolution, I'll start stocking up on amphetamines.

[Ferber]

Rhett Butler, where are you. We need you, NOW!

[thoreau]

>

Good one!

My university's newspaper once had a column by a pot-smoking student who argued in favor of marijuana prohibition. He said that pot is currently a small local business, while tobacco is controlled by big corporations and taxed and regulated by government. If pot were legalized, big corporations would edge out the local dealers, and the gov't would slap a big tax on every joint.

Not sure if I agree with his facts, but it would explain why the left wants to crack down on tobacco but loosen some drug laws: Tobacco executives are wealthy and powerful members of society. Pot dealers are part of the underground economy, not part of the "capitalist system."

I wonder if that student realized that his dealers run a for-profit business...

[thoreau]

I was trying to excerpt from Mr. Poge: "Thank God the taxes on pot are still low, so I can still afford to smoke."

Somehow that quote got left out.

And when I said "Not sure if I agree with his facts" I should have said "Not sure if I believe what he purports as facts." If his assertions were clearly facts then agreement or disagreement would be irrelevant.

[Tuning Spork]

I love how Kohl complains that the states will "lose" about 1.5 billion dollars in the next two years if internal sales remain at these levels.

BWAHAHAHAHA!!!!

Aside from the fact that not non-existent tax revenue is not a "loss" to the gubmint ("oh my Gawd, look at the money the Gvt is LOSING by not taxing incomes at 50%!!")... the real fraud is that they claim it may prevent The Children (TM) from smoking, and/or inspire smokers to quit.
Of course, if we smokers all quit Kohl would be bitching about all the revenue the Gvt is LOSING and demand that we resume smoking. And, for that matter, all you non-smokers are stealing money from the Treasury, too!

IT IS YOUR PATRIOTIC DUTY TO SMOKE!!
Because if we don't pay those taxes THE TERRORISTS WIN!!

[mojo jojo]

thoreau

the underground or black market is the purist capiltalist system around today. products are bought and sold at mutually agreed upon prices without government taxation or coercion. also not all dealers sell for profit. unless you count the drugs they use after they make back their money as profit. lol.

[Steve in CO]

Outrageous! Must be f_cking nice to create a problem (raise taxes) and then increase one's power and influence to combat the very problem they themselves created.

Jerks.

[Jay D]

I give up...I seriously give up. Call me when the revolution starts. I'll be sleeping under a rock until then.

[Luca Brasi]

Maybe I'm stupid, but that first link didn't work for me.

[Julian]

My bad, fixed. Didn't realize the Thomas pages expired.

[thoreau]

Mojo Mojo-

First, I recognize that the underground economy is subject to the same laws of supply and demand as any other economy. I was merely observing that the underground economy lacks the "big business" _appearance_ of corporations. The underground economy is an enemy of "the system". It's the only reason I can think of why a significant number of people on the left (but not necessarily politicians on the left) sympathize with at least partially liberalizing narcotics and pot laws while also supporting stricter tobacco regulations.

Second, I wouldn't dignify the underground economy with the term "capitalism." Capitalism requires recognition and enforcement of property rights via the rule of law, not the rule of Vito Corleone. Sure, some say the gov't is just a bigger version of the Mafia, but a properly limited government would derive its limited powers from the consent of the governed. On the other hand, crime lords derive their unchecked powers from their own cunning and violent abilities.

Finally, there may be a handful of drug dealers who don't sell for profit, but if they want to stay in business (and alive) for very long, they had better come up with enough cash to pay their wholesaler.

[Spooner]

('preciate your honesty, thoreau.)

Now, in response to your, "good luck finding somebody who can be trusted to limit his own power."

We sure need that kind of kismet. But it makes me wonder why in heaven's name some of us are growing a Libertarian Party out there if we'll need "luck" to git us where we wanna git?

I always thought "reason" not "lick" would do the trick.

[Plutarck]

"Aside from the fact that not non-existent tax revenue is not a "loss" to the gubmint ("oh my Gawd, look at the money the Gvt is LOSING by not taxing incomes at 50%!!")..."

Great point, and that reminds me of a quote from someone: "To say that the government loses money by failing to tax people is to say that I lose money every time I drive by a bank and fail to rob it."

[Plutarck]

"Finally, there may be a handful of drug dealers who don't sell for profit, but if they want to stay in business (and alive) for very long, they had better come up with enough cash to pay their wholesaler."

Actually you are making a bit of a technical mistake with your definitions. Profit is revenue above and beyond the expenses to create that revenue; as such, a dealer could have more than enough money to pay their own respective dealer/wholesaler/gang for the drugs, but still not make a profit.

If a dealer uses drugs himself, however, this would reflect profit in a proprietorship, as in accounting it would be considered a withdrawel, which would lower their Capital fund, which is a decrease in owner's equity and assets, NOT an expense, and thus it would have no effect on the profitability of the business. Remember: An expense results from expending an asset to produce a revenue.

However, if the dealer/owner paid other dealers, runners, or pushers in drugs, then such payment would be considered an expense, and such a transaction would effect the profitability of a business.

Those who have some problem with "profit" very rarely (if ever), when asked, could actually explain what a profit actually IS, and almost never have any actual understanding of the fundamentals of both Economics and Accounting. This is yet another tragedy - yes, as in the proper definition of tragedy, not merely as-in a synonym for disaster - of leaving education in the hands of (government) schools, wherein nearly no children are ever taught such profoundly important fundamental principles and concepts.

[David 2]

This news clip reminds me SO much of last Sunday's "Doonesbury" strip, where Ari Fleisher is telling the press that from now on all questions will be anwered by saying "9/11".

Here's the link in case you haven't seen it:
http://www.uclick.com/client/mwy/db/2003/06/01/index.html

AG John "We don't need no stinkin' Constutition" Ashcroft went before Congress this week demanding more power. Why? 9/11.

And now we have members of Congress demanding that online tobacco sales be outlawed. Why? 9/11.

Not that Herr Hatch NEEDS a reason to suppress the rights of others, mind you. He's never needed to before, other than "Beacuse I SAID SO". It's just so d@mned convenient for him to simply let those numbers slip forth as a justification.

[L.Spooner]

Thoreau! I can't believe you said that!

"but a properly limited government would derive its limited powers from the consent of the governed."

You really believe that?! Or are you simply spouting the nonsense you were forced to suck up in Hi Skool.

A properly limited government is what we HAD! But no caged beast is going to let itself remain caged for long; not if it has the power to break free from its cage. The beast gave itself that power when, first Lincoln, then FDR, wrote themselves blank checks -- WITHOUT YOUR CONSENT!

[thoreau]

L. Spooner-

I'm not saying our current government is properly limited, nor am I saying that anything given the green light by an election is within proper limits. And I'm not saying that the American people directly or indirectly consented to all of the big government we have.

I'm just saying that a necessary condition for properly limited government is free electoral processes. Sure, it would be nice if we could have a "benign despot" who would choose not to exercise too much power, but good luck finding somebody who can be trusted to limit his own power.

So I put this question to you: If consent of the governed has no place in properly limited government, then who does get to call the shots? Landowners? Hereditary nobles? Priests?

Finally, to bring this back to where it started, the only reason I made that point was to emphasize that the underground economy isn't really capitalist, because capitalism requires a limited government to enforce and recognize property rights and contracts, but the underground economy is run by self-appointed crime lords. That's all.

[Plutarck]

OK, I played rather loose with the definition of profit. I do know that profit in accounting terms is anything above and beyond operating costs, and that profit in economic terms also allows for opportunity costs. I'm willing to believe that there are some drug dealers who mostly operate at cost, and hence earn no accounting profit.

My only point was that pot dealers still run a business and still care about the bottom-line, and it would be interesting to see how a leftist responds when told that his pot dealer is operating in a market system just like the "big evil tobacco executives."

[thoreau]

The previous post, wrongly attributed to Plutarch, was by me. I was tired and in a hurry, so when replying to "Plutarck" I put his name in instead of mine because his name was on my mind. Then I re-read it and thought "Wait, I posted this."

Mea Culpa

[Lefty]

Thoreau/Plutarck - "it would be interesting to see how a leftist responds when told that his pot dealer is operating in a market system just like the "big evil tobacco executives."

I'd respond "so what?"

[Plutarck]

thoreau: "I'm willing to believe that there are some drug dealers who mostly operate at cost, and hence earn no accounting profit.

My only point was that pot dealers still run a business and still care about the bottom-line, and it would be interesting to see how a leftist responds when told that his pot dealer is operating in a market system just like the "big evil tobacco executives.""

Actually, I entirely agree. One must also remember that, unless one secures loans, growth of any kind must be financed by profit (investments themselves require profit, since an investment is simply trading an asset now in exchange for a claim on profits to be generated later). Without profit, the dealer will never be able to serve more customers (he'll have no money to buy extra drugs to deal with the increased demand, unless he gets everything on consignment - and then someone in the supply chain still must be making a profit or securing a loan), or increase his selection, or anything like that. He also can't give any away for a lower price or for free, as then he wouldn't have enough money to pay his costs.

The point of all this, as Lefty asked, is this is in response to the Communist-ish sort of objection to "profit". That is, the principle that there is something inherantly wrong or objectionable about profit itself - which, in every such argument I've heard, is ignorant, stupid, or otherwise wrong/mistaken.

In conclusion: there is nothing inherantly wrong with profit, neither as it relates to individuals and proprietorships/partnerships, nor as it relates corporations.

[Russ]

back to thoreau's original post:

That student pot smoker was more likely the dealer and not a customer. The gummint kept his potential competitors to a small number.