Hello and welcome to another episode of the minor issues podcast. I'm Mark Thornton at the Mises Institute
fans of Austrian economics
Certainly, no one of the two main reasons for radical monetary reform
In this episode, we look back at my talk at the elections and economy conference
And my paper on legalizing
Cannabis and the crucial role that the gold standard could play
Now, of course, we all have our pet projects for liberty and the economy
Some want stopping war to be the highest priority
Others think it should be tax reform
Still other people work on legalizing cannabis or welfare reform
Few think of returning to the gold standard as the on the top of their list
After all they say it might not even be politically possible
And yet Austrian economists usually put monetary reform
Of a radical nature
On the top of their list and we spend a great deal of time and effort promoting and debating
The best research on this topic
Meanwhile mainstream economists usually ignore the issue
The first reason for monetary reform is of course all the bad consequences of current monetary policy
And the benefits of reform
Such as no problem with inflation in the economy
No artificial business cycles in the economy
And no artificial redistribution of income and wealth
For money printing as a result we get a sound money
A stable and prosperous economy
And we get a just society that minimizes privilege
And rewards people for their effort
The second and less obvious benefit is that the gold standard hampers the growth of government and power
While not obvious
We all know that government especially the power elites that control government
Love that magic checkbook that the federal reserve provides
Because the Fed can print
We can enjoy more government than we actually pay for in taxes
And fewer people complain or even realize the true cost of government
Wasteful expenditures can be overlooked
Big spenders can be re-elected without a challenge
And wasteful programs continue to feed at the public trough
When the excess cost is hidden over by paper and debt
The war on drugs is a good example of a really bad policy
A very costly policy that has been allowed to continue for decades
National marijuana prohibition actually became the war on drugs
The year after Nixon took us off the gold standard in 1971
We have now spent more than a half a century
Trying to reform
Marijuana prohibition through the back door of state and local governments
In contrast with national alcohol prohibition
It had become an obvious failure by the late 1920s
And when the great depression hit and of course we were on a gold standard
Citizens quickly mobilized and passed a constitutional amendment to repeal it
So let's make sound money
The priority it deserves
Get out your copy of Rothbard's what has government done to our money
Or order a free copy with the link provided
I will discuss and summarize
Many of the important contributions
Of this pamphlet in upcoming episodes
All reformers of government need to know
This foundational knowledge
Of society and the state
Austrian economists really don't
Put that much credence
In individual elections
No matter how good the results make you feel
Because
It's not that things are going to be easy from here
But because it represents a clear sign
Of ideological improvement
In the American people the American people have rejected
The politics and government of the left
And they have embraced the more popular ideas
Of what helps the average American person
So we can say that there's very little doubt in my mind and many others
Mind that this election was a signal
About ideological change in the American public
What we're going to find out today
However
Is that that election
Doesn't just simply wipe out all the errors
Of the past in our government or pave the way
To nirvana and perfection
In American society
We have a difficult road ahead
As the speakers will point out
And in the long run we really have a long ways to go
I like to think of the problems of big government
Like an onion
And with the onion
The skin of the onion that we see
Represents the just the surface level problems
The actual political faces who are in charge
The obvious
Nonsense and nuisances
That we hear about government on in the media and in the news
But as we look deeper into the onion as we go through layers of the onion
We see things like all the taxes
All the regulations
All of the bureaucracy
All of the control they they have over our lives all the interference
They have over our lives
And as we get closer to the core of the onion we see
Problems of a lot of looming programs including the national debt
The national debt obviously as we all know in here is enormous. It's been growing at an unsustainable pace
Where the where trillions of dollars are being added to the national debt
And at the core of the onion is where the onion where the new leaves are formed
Where the onion grows
And expands
Ceaselessly
And the way I like to think of it that's where the federal reserve is that's where
A big ultimate problem rests the federal reserve is what allows
And what has allowed government to grow
Enormous and all powerful
That's also by the way
The part of the onion that forms those compounds that makes us cry
When we try to chop the onion. So I think that's a very useful analogy
Next time you're chopping onions. You could think damn that federal reserve
The title of my talk is voting on drugs
And I'm specifically going to be talking today about cannabis
Which is the actual name for marijuana
Which is kind of a propaganda name the government gave it a long long time ago
Now this issue
Would seemingly be very small
And very insignificant
From the point of view that we're really concerned about today
It was an issue in the election this time here in florida. There was a measure on the ballot
To change the constitution of florida
To legalize recreational use of cannabis
Here in the state of florida it did not pass it required a 60 percent
Of the vote to pass it was endorsed
Both by president trump and vice president harris
First time that's ever been done with two of the leading presidential candidates endorsing
Cannabis legalization
It turns out that
Governor disantis was not
Didn't like the cut the state of florida was getting in the whole thing and he opposed it vigorously
With himself and various departments taxpayer money
To oppose that so this time it did not pass
But again, it seems very very small in the bigger picture of things, but it really is
A case study in government so we can learn a whole heck of a lot
About government about the current situation the difficulties of
Changing
The general direction of government
Solving problems like the national debt
Those bigger problems
Somehow seem more understandable and more tractable and more solvable once we see
The
Legality of drugs like cannabis in the proper perspective. So it is big
It highlights the difficulties involved in ideological change and the way austrian economists see
Politics is that you have to change
People's ideology you have to change the way people think about how the world works
And how government works and how society works in order to ultimately win elections and change policies
It also highlights the difficulties indeed the futility
Sometimes of
Electoral change so we see that problem as well
in
Illegal drugs and their legalization
It also highlights
Oddly enough
It highlights the importance of monetary reform
And in doing so it highlights the importance of the work that the mesis institute does
So i'm going to take you back almost a hundred years
To 1937 when the u.s. Congress passed the marijuana tax act
Sort of igniting
Or reigniting prohibition and the war on drugs
The bureaucracy of prohibition which had been thrown out of a job
Saw this is a way
To re-establish their power and re-establish their job, frankly
Organizations like the fbi and so forth
Drive a lot of their power authority and budget budget
um from
The war on drugs and prior to that prohibition
It also highlights the role of progressivism
We think of progressives as a new political ideology, but it's been around for more than a century
progressives
In actually in the late 19th century
Saw it to use government to control the people
They saw it to use propaganda to control society
And they were otherwise a very nasty
Racist
Group that wanted to exert their control over society
When the marijuana tax act came up for passage
Science groups opposed
They said cannabis was a very legitimate
Um thing in pharmacology and in medicine
It was used in a wide variety of
Industries in the united states my father owned a pharmacy
And he had a lot of the old bottles and stuff
Sort of a museum of pharmacology
Uh in his pharmacy
And growing up in the early 1970s
I noticed that one of the large bottles said cannabis sativa
And I thought to myself what in the world is that doing in here?
And he told me no that was a perfectly legitimate thing that pharmacists used
To make liniments, painkillers and so on and so forth
But in 1937
The
Bureaucracy and its propaganda turned away from this
And they started making up stories in order to make cannabis illegal
So propaganda was very much alive and well
As a matter of fact when the bill to tax marijuana and effectively prohibit it
Was in trouble
The person promoting the bill came up with what we now know is the gateway hypothesis
That if we in the gateway hypothesis is that if you smoke
Cannabis or marijuana you will end up dying from a heroin
Addiction and overdose
That was simply just made up on the spot on the floor
Um on the legislative floor
So right from the very beginning it was propaganda and it was anti science
And it was racism it was promoted as a way of
You know getting back at mexicans and blacks and so forth
Um
And keeping them in their place
Now that pretty much was it in terms of news
Related to the marijuana tax act. It was quickly converted into an outright prohibition
And yes, there were stories of famous people who were arrested
for marijuana
But it really wasn't until the 1960s
That where marijuana use was spreading
The vietnam war people bringing the idea of smoking marijuana
Back to the united states
Making it a big deal
Um
And creating really an opposition group the counterculture
Uh opposition to american society
Um
That the war on drugs was actually born
Uh president ridger richard nixon made it a prominent part of his reelection campaign
In 1972
At the time
Gallup started um polling americans about their views on
Cannabis marijuana
And whether it should be legal or not
And in 1969 it was the first poll and it found that only 12 percent
Of american supported the idea of any kind of legalized
Cannabis or marijuana
And those numbers stayed very low throughout the early 1970s
Of course, that's a public opinion poll. I'm not sure how much anybody in here believes public opinion polls anymore
But the the apparently the view of americans was very very low on
legalizing marijuana or cannabis
And that stayed true
For several decades
Uh certainly through president reagan's war on drugs
Um, and this is kind of where I come into play
Um, I went to graduate school in 1982
But in that environment president reagan had been elected president in 1980
He appointed george bush his vice president to become the first
drugs are
And they immediately began implementing
uh, sort of a full-scale drive
to
Fight the war on drugs
They started using the military. They started using interagency task force
um to
Interdict drugs coming into the country
The first lady had her just say no campaign
And little me was in the college graduate classroom
And I started to look at this
issue
As part of a micro economics course and I discovered
What was to become
Or what was to be referred to as the iron law of prohibition
And the iron law of prohibition is simply that
The more you try to enforce prohibition the more you try to interdict
Anything that's illegal coming into the country the higher the
um the number of cops the the the longer
The sentences
The more dangerous and the more potent the drugs will actually become
Okay, so that the iron law of prohibition states
That the more you attempt to enforce prohibition
The more dangerous and the more potent the drugs actually become
And that ultimately became an important
element just one element
In the battle for legalizing drugs
At the same time
President Reagan formed a task force
Right here in florida
To interdict the drugs this is where they brought in the military
This is where they brought in irs agents fbi agents customs agents
All sorts of I think there was like 12 different agencies that were involved in this new
Formed effort to prevent drugs from coming into the state of florida
Actually right here in fort miers
Florida but also miami fort lauderdale and so forth
But that was on the ground here in fort miers
And what they found out with that task force
Was that they couldn't prevent
The drugs from coming into the country even the bureaucrats themselves
Admitted that they couldn't stop all the drugs from coming in
And then the federal agents noticed that hey, not only are we not getting them in
Preventing them from coming in in florida
But they're actually more drugs coming in
In charleston in new orleans in houston
And baltimore in places like that
But one of the things that I noticed and it gave me more support for this iron law of prohibition
Was that the price of marijuana in florida did go up significantly
But it was also
Simultaneously the first time that there were massive new shipments of cocaine
into
The state of florida
So on the streets of miami
It was said that you could hardly find a joint
But that the price of cocaine had been cut in half
By all of these agents trying to interdict
Drugs into the state of florida
So by making it more difficult
The drug smuggler simply switched from the big bulky barrels or not barrels
Bails of marijuana. Thank you
Yeah, not yeah
You're just a farmer
And
They simply switched to the more condensed more potent
More valuable product, which was cocaine
And then right after that the crack cocaine
Epidemics started and spread throughout the country
And and of course this has really come back to haunt us
In
Over the last couple of decades in particular
I myself had a hard time selling this as a dissertation proposal
Something that would make the war on drugs
unwinnable
In theory was not a very popular topic
At auburn university, which is a very conservative agricultural school
And support for legalization in the country was still only in the low 20 percent
sense
But there was a slow rising tide against
Marijuana prohibition
The externalities or costs of the war on drugs
Were building up the cost of law enforcement the cost of the court system in prisons
The cost of broken families the cost of people being killed
Either directly in the business
Or directly as consumers overdosing
From the drugs
Or in the innocent bystanders who were being shot and killed
As a result of the black market
Resulting from prohibition
So the costs in the war on drugs were increasing
This was starting to weigh on the american public
decriminalization
Of cannabis started in the 1970s
So some americans
Saw right off
That the idea of prohibiting marijuana was stupid
These were mostly places in the western united states on the periphery the places that
Progressives don't think are very important status don't think are very important
And then there was also a lot of non scientific discoveries about marijuana
The government
Speaking about being anti science
The government simply suppressed any research
Involving this former
Pharmaceutical drug called cannabis
They simply suppressed any research that would promote any idea that it could provide any benefit
But despite the suppression
People were finding out that hey
Marijuana helps with
This condition or that condition it helps people with cancer
Because it helps fight pain or it spurs the appetite or
Whatever it happens to be or it calms you down
The AIDS epidemic was very similar
It helped people spur their appetite
It helped relax them and reduce their anxiety
Reduce their pain and so forth
So
non scientists were discovering that
Cannabis had a lot of really important medical
Applications that the mainstream medical profession had no answers for
And so in 1996
Despite the effort of the government to suppress it
States started legalizing medical marijuana
Again these efforts were limited
To places in the western new united states and on the periphery the places that
The forces of big government aren't concerned with they don't care. They don't plan to visit there
Um and so on
But they did happen starting in 1996
But the cost of this war and the spreading of the war
Um and the iron law of prohibition
Which resulted in all of a sudden
Methanphetamines
Spreading in use and in production throughout the united states
Um ravaging a lot of communities
The spread and addiction to opiates
Throughout the united states spurred on by a lot the pharmaceutical companies
And the medical profession
Sort of endorsing that whole process
But you know, they would addict people to opiates and then cut them off
And leaving essentially
Uh somebody who's addicted to a heroin-like substance
With no alternatives but to turn to the black market and of course we've seen
Unfortunately thousands upon thousands of
Families ruined and thousands tens of thousands of people dying from overdoses
For those opioid products
And then of course even the government caught on to the fact that their opioid
Description for america was not working
People were suing the pharmaceutical companies
For the for the practices and doctors for their practices
And uh and so they cut off a lot of people's access to opioid painkillers
And what we've seen
Replace all that is unfortunately fentanyl
Which is an even more highly potent
Much more addictive
And incredibly dangerous
Substitute come into the market
Via the iron law of prohibition
So they crack down on things
And the black market necessarily turns to
More dangerous more concentrated
Versions of the drugs or alternative
Drugs that are more concentrated
And therefore easier to get into the country
So since 2012
Which is about the same time that
We were in the midst of the opioid crisis
Reaching a pinnacle before the media was even bothering to report on it
And then of course the fentanyl started coming in to the country about the same time but
Um
Recreational marijuana legalization was being passed
Again in places mostly in the western states
Mostly on the periphery
None of this was ever
Uh supported by leading politicians
It was always the incumbent politicians were always opposed
To these efforts on the part of the people most of them were
You know places where the people got measures put on the ballot
And um more or less forced the issue themselves
Being opposed by the incumbent politicians
Being imposed opposed by interest groups
So cannabis is typically opposed by the tobacco industry the alcohol industry and the pharmaceutical industry
Okay, i'm not sure why
But they're the groups that have been ponying up a lot of money to defeat these measures
On the ballot
But nonetheless recreational
Legalization has won it's won over now the majority of the american population
The majority of the of the american population now lives in states
Where essentially cannabis is legal for adult use
Um and that has spread beyond just western um
Unrelatively unpopulated areas
And has moved into more populated areas heck it's even
It's even passed at the legislative level in my state of alabama. So
You know, we're usually way behind
Uh the times and anything like that. So
um
basically
The american people
Uh could not rely on their incumbent politicians or leading politicians
Or the two leading political parties to make any of this happen. This was the
Uh activities of grassroots americans doing the work themselves
Being opposed by very powerful special interest groups and winning
Winning at the ballot box
Um in a very atypical
Fashion now what i'd like to point out in closing however
Is that of course there's a lot of work to be done just on this little small issue
I mean, it's a very very important issue for many americans many american families
It's a it's a high priority issue
The ravages of drug abuse and addiction and overdoses
And so on is incredibly important for a lot of people
But as a general issue, it's not as
Important in the overall scheme of things, but we still have the iron law of prohibition at work. We still have
Thousands and thousands of people dying from overdoses
Um
And so there's there's a tremendous amount of
Of work yet to be done. There's a tremendous amount of harm that this policy is imposing
And yet we're still getting very little
um
support from
supposedly our representatives
Uh in government or in congress they still
Um, they now allow. I mean they've
They did pass a bill in 2014 which
Restricts the federal's government's effort
um in opposing medical marijuana
But they have not
You know passed national legislation
To allow the states to act independently
On this issue and they have not passed the law
To change the drug scheduling. Uh marijuana is still classified as the hardest type of drug
Which means that it has no medical benefit
At all
And that it is
imminently
Harmful to anybody who consumes it
Now that's a really
hard statement
To stand behind
But basically the two major political parties are still standing behind
That drug classification when all the evidence in the world. I mean cannabis is certainly any kind of drug anything you put in your mouth
is dangerous
and potentially harmful
But the idea that cannabis has no medical applications whatsoever
Is just patently absurd
And also the idea
That it's eminently dangerous anybody who
Smoked one joint is going to be lost to society forever
Is is obviously
counter-dicted
By the experience of hundreds of millions of people
Throughout time and around the world
So let's take a look quick look back because I said I'm going to
touch
monetary policy on this
When alcohol was repealed
In 1932 they had to pass a constitutional amendment
Repealing the first constitutional amendment. So the 21st amendment repeals the 18th amendment
So we were in the depths of the great depression
But we were still on a gold standard
And what that meant
Basically is that not only were the american people in trouble
But american government at all levels was also in trouble
They were starving for tax revenues just like
Americans were starving for their incomes their wages and their jobs
So it was the depths of the great depression in which alcohol
Prohibition
Was repealed. So we still had to rely on the people
But you couldn't count on the federal reserve
Just to write checks to everybody to solve the problem. You could the government couldn't just
Go into five trillion dollars of debt and just tell everybody to stay home
That just wasn't an option because we were on a gold standard
And the gold standard
promotes honest government
And it promotes government to make the hard choices
If government wants our money, it's got to use it for the things that are deemed
The most valuable and obviously alcohol prohibition
Was not the most valuable. It was the least valuable
The most destructive
Of all government policy. So we were actually able to very quickly
And very completely repeal alcohol prohibition
After only 12 years
It was kind of the
Silver lining of the great depression, but the decision was forced the government was their hand was forced
Because they were on a gold standard and they just couldn't
Borrow an unlimited supply of money or they couldn't just print up
Uh an infinite supply of money to solve all problems to fill every budget to pay every bureaucrat
so
You might be
And a lot of people wonder why austrians put so much emphasis on the gold standard
And we're going to talk a little bit obviously today about the direct problems that the gold standard
Solves
But with the lesson of prohibition we realize that
Being on a gold standard not only does a lot of great things economically for us
But it helps keep government honest and it forces government to change itself
To follow the dictates more of the people than of the progressive
politicians