Prop 19 and Federalism

Has America begun its awakening from the nightmare of prohibition? Of course, the prohibition I'm talking about is of marijuana. Thanks to California and several other states, the idea that marijuana could be used for good (tax revenue), not evil is helping to remove the veil of reefer madness across the country.

Over the past two decades, California has made steady progress to get be the position it is in today. In November of 2010, California voters will get to decide whether or not to take the next step. Proposition 19, the piece of legislature in question, will impact the state in several ways. First of all, it will allow for the legalization of personal marijuana-related activities. Basically, you have to be over 21 years old, you can't have more than an ounce on your person, and you can grow small amounts of it in your house. The main difference here is that current California laws imply a small fine for possession of under an ounce and jail time for possession than more than an ounce. Prop 19 also calls for local government regulation of commercial production and sale. But I think the most important aspect of Prop 19 is going to be the fiscal impact.

Currently, California is in the worst economic state... of all the states. Cali's legislators estimate that taxing the pot that is already being grown in the state would lead to $1.4 billion in revenue per year. In addition, Prop 19 would result in significant savings of state and local governments, potentially adding up to tens of millions of dollars, because of the reduction of those incarcerated and paroled. Indeed, the fiscal impact is certainly a very attractive side of Prop 19.

But what about, you know, the federal laws stating that marijuana is illegal? Isn't that at all important? The disagreeing levels of government pose a grey area in federalism unlike anything before. Legal scholars have made a few guesses on what would happen if Prop 19 does pass. Firstly, federal government would still be able to prosecute the use and sale of marijuana. Secondly, federal government would not be able to require California to help enforce the federal laws. This is a big deal because it is mostly state officials making marijuana arrests. In 2008, about 850,000 marijuana related arrests were made nationally. Of those, only 1% were made by federal officials.

It is a unique position that California is in. If the state can follow through with legalizing pot and show that it can be done safely and effectively, I think other states will follow. There are already 13 states that have decriminalized it. How many more will follow suit if California sails out of debt and doesn't collapse under moral turmoil in the process?

Evil Conservatives

Dennis Prager, of the National Review Online, wrote a rather incendiary post about "Why the Left Hates Conservatives." In his blatant attack on liberals, which is not in response to any specific argument liberals may have, he picks several isolated examples of left wing insults towards well known right wing supporters. The title of the article is itself incriminating and immature and Prager does a good job of beating down any reputation he may have as a reporter with principles. His choice of the word "evil" is interesting, considering the article is written for a conservative audience, who happen to believe that "evil" is the one thing they are not.

Prager's three main arguments for "why the left hates conservatives"...(I'm still hung up on how absurd that title is) are, by definition, opinions. The first point he brings about in his tirade is that "the left thinks the right is evil." Prager utilizes two quotes from the former head of the democratic party and a democratic representative of Fla:
“In contradistinction to the Republicans, Democrats don’t believe kids ought to go to bed hungry at night.”
and
“I want to say a few words about what it means to be a Democrat. It’s very simple: We have a conscience.”
Both of these quotes are indeed biased towards Republicans and are taken so far out of context their meaning is completely lost. Well Dennis Prager, I can do the same thing. Here are two quotes that turn the tables: Republican Jim Robinson says, "The Democrat Party is beyond corrupt, It's also evil." and Ann Coulter said, "So for those of you who haven't read any of my five best-selling books: Liberals are driven by Satan and lie constantly."

Prager's second point is that "when you don’t confront real evil, you hate those who do." Oh I see the logic there. Since conservatives are the only ones who confront evil and liberals hate conservatives (liberals do hate conservatives... Prager says so in the title) then in general, anyone who confronts evil must be hated by those who do not confront evil. Prager must be referring to the tendency of the Republican party to declare war in his assumption that conservatives are the only ones to oppose evil.

Lastly, Prager argues, "the Left’s utopian vision is prevented only by the Right," in which he says that the all the nice things liberals hope to bring to the world is stopped by conservatives. He makes a harsh generalization that all liberals are Utopians and that conservatives are the only thing standing in their way. This last point is more so a jab at liberal ideals than it is a constructed argument and flows rather nicely with the theme of the article. That is, the internet is indeed opinionated.

Denny, I feel inclined to disagree with your opinions and I hope you do not hate me for it.

Forever Stamps

In a New York Times editorial "The Next Financial Crisis (the Stamp Bubble?)," Eduardo Porter explains why investing in stamps could reap large profits... and why we shouldn't do it. In the near future, the Postal Service plans to raise the price of first-class postage by 2 cents, which is about a 4.5% increase. They also plan on selling forever stamps at their current price until the switch is made to the higher price. This means that companies willing to invest in forever stamps at the old price and then sell them at the higher price would be making a fairly decent return.

Porter likens the situation to the unsteady mortgage market that was the root of many problems last year and I'm inclined to disagree. Porter's argument stems from big banks pouring borrowed billions into forever stamps and "Jan. 2 would come around and stamp-stuffed banks would find there weren’t enough letter writers left in the country to buy their hoard. Many would try to sell them at 45 cents. Meanwhile, their loans would come due," Porter cautions. But is the risk of a drastic drop in postage sales that big? Stamp usage should be a steady, if not predictable market. As long as investors stay on the side of caution, an investment return of 4.5% is surely better than that of a treasury bill.

Sure, it's good to be wary of detrimental investment trends, but where do we draw the line? Every investment has a risk, but the disaster Porter speaks of is a bit exaggerated. If banks were to invest a safer, more moderate amount (like millions instead of billions) then there will be an opportunity for profit. The real lesson that we should have learned from investing in mortgages is that too much of one thing is always bad. There will always be different markets to invest in, but as long as banks and companies don't drown them in borrowed cash, the system will work just fine, as it has done for so long. Porter's frightening warnings about some banks going under and others liquidating bonds in order to pay back borrowed cash only apply to the most extreme situations. With the mortgage market collapse still fresh on investors' minds, surely they would know the safe amount to put into forever stamps.

Cautious Optimism in the Gulf

BP has finally reported a fix on the seal that ruptured over three months ago in the Gulf of Mexico. NPR reports on the matter explaining that tests are still running on the new seal and it could take days before engineers can be sure the seal is for good.

NPR, who I fully support as one of the last truly unbiased news sources, does a good job getting the perspective of all the people effected by the oil spill. It's interesting to see the reactions to BP getting over the hurtle of actually stopping the leak because those who aren't necessarily affected by spill seem more relieved than those who were. That's because the problem of the oil is still very present and is still very seriously affecting people, whether the leak is stopped or not. Alabama Governor Bob Riley seemed extremely relieved at the news while some locals seemed unaffected because their businesses aren't going to see improvement anytime in the near future.

If this cap does prove successful, BP still has one of the largest environmental catastrophes to deal with.