Drug Decriminalization in Portugal
Nick Gillespie |Glenn Greenwald is a civil rights attorney, a blogger for Salon, and the author of a new Cato Institute policy study called “Drug Decriminalization in Portugal: Lessons for Creating Fair and Successful Policies.” The paper examines Portugal’s experiment with decriminalizing possession of drugs for personal use, which began in 2001. Nick Gillespie, editor of reason.com and reason.tv, sat down with Greenwald in April.
Q: What is the difference between decriminalization and legalization?
A: In a decriminalized framework, the law continues to prohibit drug usage, but it’s completely removed from the criminal sphere, so that if you violate that prohibition or do the activity that the law says you cannot do you’re no longer committing a crime. You cannot be turned into a criminal by the state. Instead, it’s deemed to be an administrative offense only, and you’re put into an administrative proceeding rather than a criminal proceeding.
Q: What happened in Portugal?
A: The impetus behind decriminalization was not that there was some drive to have a libertarian ideology based on the idea that adults should be able to use whatever substances they want. Nor was it because there’s some idyllic upper-middle-class setting. Portugal is a very poor country. It’s not Luxembourg or Monaco or something like that.
In the 1990s they had a spiraling, out-of-control drug problem. Addiction was skyrocketing. Drug-related pathologies were increasing rapidly. They were taking this step out of desperation. They convened a council of apolitical policy experts and gave them the mandate to determine which optimal policy approach would enable them to best deal with these drug problems. The council convened and studied all the various options. Decriminalization was the answer to the question, “How can we best limit drug usage and drug addiction?” It was a policy designed to do that.
Q: One of the things you found is that decriminalization actually correlates with less drug use. A basic theory would say that if you lower the cost of doing drugs by making it less criminally offensive, you would have more of it.
A: The concern that policy makers had, the frustration in the 1990s when they were criminalizing, is the more they criminalized, the more the usage rates went up. One of the reasons was because when you tell the population that you will imprison them or treat them as criminals if they identify themselves as drug users or you learn that they’re using drugs, what you do is you create a barrier between the government and the citizenry, such that the citizenry fears the government. Which means that government officials can’t offer treatment programs. They can’t communicate with the population effectively. They can’t offer them services.
Once Portugal decriminalized, a huge amount of money that had gone into putting its citizens in cages was freed up. It enabled the government to provide meaningful treatment to people who wanted it, and so addicts were able to turn into non–drug users and usage rates went down.
Q: What’s the relevance for the United States?
A: We have debates all the time now about things like drug policy reform and decriminalization, and it’s based purely in speculation and fear mongering of all the horrible things that are supposedly going to happen if we loosen our drug laws. We can remove ourselves from the realm of the speculative by looking at Portugal, which actually decriminalized seven years ago, in full, [use and possession of] every drug. And see that none of that parade of horribles that’s constantly warned of by decriminalization opponents actually came to fruition. Lisbon didn’t turn into a drug haven for drug tourists. The explosion in drug usage rates that was predicted never materialized. In fact, the opposite happened.
Bonus Video: Click below to watch Glenn Greenwald and Reason.tv's Nick Gillespie discuss both the lessons from Portugal and Barack Obama's disappointing performance so far on drug policy, executive power, and civil liberties.
A Real Jobs Solution
Free Trade: With unemployment at 9.4% and worse on the way, there's no doubt the economy's hurting. If the White House and Congress are serious about ending job destruction, they must open up new markets.
It's not easy to flip-flop on a campaign promise, but it's urgent for President Obama to push for free trade as a way to create new jobs — one of the few really effective ways of doing it.
Obama's appointment of Ron Kirk as U.S. Trade Representative shows he's coming around. Kirk, a free-trader, has reached out to Korea, Colombia and Panama, allies who've been waiting three years for Congress to approve trade deals.
Opening Korea's market alone will create a market for American goods as big as that of Mexico, our third-largest trading partner. The jobs that follow from that would be in the millions.
That's attention-grabbing because recent data look so ugly.
Forty-eight out of 50 states and the District of Columbia lost 345,000 jobs in May, adding to the 5.7 million lost since December 2007. Michigan's jobless rate hit 14.1%, California's 11.5%, Oregon's 12.4%, South Carolina's 12.1%, Illinois' 10.6% and Indiana's 10.2%. Some 20,000 people have lost their jobs each day in 2009.
Moody's Economy.com economist Mark Zandi estimates the U.S. must create 150,000 new jobs each month just to break even.
Obama's 66,000 government jobs added since the Democratic Congress' $787 billion stimulus doesn't begin to address what's needed. Only a big stimulus for the private sector — like new markets or tax cuts — can do this. Even with the economy showing some signs of recovery, employers still aren't hiring.
The public knows this. Two polls last April showed a dramatic turnaround in pro-free-trade sentiment. Congress supports it, too — how else to explain House Speaker Nancy Pelosi's backroom maneuver last year to prevent a vote on free trade for Colombia?
Meanwhile, a month ago, a congressional letter seeking to halt a vote on Panama's pact drew a mere 55 signatures from Congress, not even close to a majority, yet somehow enough to ice that treaty.
The reality is, free trade is a proven job creator, responsible for six million new manufacturing jobs in the U.S., or one out of six, according to the USTR's new Web site, which shows a state-by-state analysis of the jobs created by exports. In Michigan alone, a quarter of all factory jobs are created by exports.
Creating more jobs by opening new markets will cost government nothing, add tax revenues and cut welfare rolls. Now with joblessness hitting new highs, Obama must move immediately on trade — or get politically buried by the economic fallout.
Clinton did it (and others helped)
Commentary: How would effective financial services reform look? Like 1999
By David Weidner, MarketWatch
NEW YORK (MarketWatch) -- On Wall and Main streets they call William Jefferson Clinton the "comeback kid," but it's not because of some election-day surprise.
It's because most everything he did regarding financial services regulation has come back to haunt us.
If it wasn't apparent before, the former president's handiwork became clear last week when President Obama announced sweeping financial services reform. The plan's efforts to bring fair dealing to the mortgage markets, rules to the derivative marketplace and restraint to big financial firms underscored the missteps of the second Clinton term.
ReutersPresident Bill Clinton
That's because we had weakly regulated markets when Clinton took office. When he left, they were an invitation to lawless dealing where, for the ease of it, Willie Sutton would have traded his gun and mask for a briefcase and necktie.
During his final three years in office, Clinton created a fertile environment for home-lending charlatans, hiding places for Wall Street swindlers and a regulatory structure that had served the financial marketplace so well for more than six decades.
Clinton bashing -- like Bush bashing -- is often a cop out, but he made some critical mistakes when it came to dealing with the financial industry. Three poor decisions stand out.
The first was a change in 1997 to the amount of taxes a homeowner had to pay on the sale of his or her home on up to $500,000. This change effectively made buying and selling a home for profit the most compelling investment in America by tax standards. It changed our housing market from one of supply and demand to one of rampant speculation.
The second mistake was one of inaction. In 1998, Long-Term Capital Management's use of derivatives and leverage required a massive $3.6 billion hedge fund bailout organized by the New York Federal Reserve Bank. After the fiasco rocked the markets, the administration was on the spot. Would it require tighter regulation of this new form of investment vehicle? Would it rein in the derivatives markets?
Federal Reserve Chairman Alan Greenspan and Securities and Exchange Commission Chairman Arthur Levitt and Treasury Secretary Robert Rubin counseled against it to varying degrees and Clinton relented.
Repeal of Glass-Steagall
But perhaps the biggest mistake of the Clinton years regarding Wall Street and the one that rings loudest today was the repeal of Glass-Steagall, a 1933 law that effectively split investment banking and brokerages from commercial banks.
In the years leading up to the repeal, Wall Street had been grumbling that the law had become an anachronism. Financial technology was sophisticated. We were so much smarter than they were back in 1929 that there was no way a financial services conglomerate could pose a threat to the system, Wall Street experts said. Besides, they argued, it was a good idea for a bank to handle customers' investments and savings as a hedge in the bad times.
The Clinton administration effectively had its hand forced in 1998 by the merger of Citicorp and Travelers Group in 1998. The creation of Citigroup Inc. /quotes/comstock/13*!c/quotes/nls/c (C 3.01, +0.01, +0.33%) required a lot of chutzpah by its CEO, Sandy Weill, because it was effectively prohibited under Glass-Steagall.
Enter the Gramm-Leach-Bliley Financial Services Modernization Act of 1999, which not only allowed Citi to exist but also eliminated key barriers between bankers who are supposed to limit risks and investment bankers who were supposed to take them.
The biggest argument critics have against bringing back Glass-Steagall is that it would be too chaotic. Whole companies would have to be cleaved. Relationships would have to be unwound.
Well, back in 1933 the law effectively split J.P. Morgan /quotes/comstock/13*!jpm/quotes/nls/jpm (JPM 33.88, +1.01, +3.07%) , the bank, from what would become Morgan Stanley /quotes/comstock/13*!ms/quotes/nls/ms (MS 26.97, +0.34, +1.27%) , the brokerage. Both seem to have come through the disruption fairly well.
Aides who abetted
Clinton didn't do it all alone. He had a lot of help from Congress. He was under pressure from a legislature controlled by laissez-faire Republicans who were hell bent on taking up the Reagan ideology of deregulation and free markets. The repeal of Glass-Steagall passed 90-8 in the Senate and 362-57 in the House.
Greenspan, the universally loved chairman of the Federal Reserve, gave everyone bad advice in regard to interest rates, home ownership and derivatives. Under Levitt at the SEC, Wall Street accounting reached its nadir only to reveal itself with WorldCom and Enron after he left office.
Then, Clinton's Republican successor closed the deal. George W. Bush took the ball into the end zone, and making buying a home easier than spelling FNMA or FICO and removing the last vestiges of capital requirements at U.S. brokerage firms.
Ultimately, however, the big bang -- the wall torn down between brokers and banks -- happened on Clinton's watch. It's largely the problem that's being tackled in the current administration's 85-page white paper on reform. After all, Citigroup's banking side probably would not have loaded its balance sheet with toxic loans had it not been under pressure from the arm making all of the stuff.
Citi also wouldn't be the size it is today, a monster that the government deems "too big to fail" and required more than $300 billion in cash and guarantees to stabilize.
Citigroup's drag on the nation probably isn't what Clinton envisioned, but that's the problem with modernizing markets and making our financial system cutting edge. Too often we get cut.
David Weidner covers Wall Street for MarketWatch.
The Overrated Unwinding
Brian S. Wesbury and Robert SteinThere's too much pessimism in David Brooks.
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And in "The Great Unwinding" (published June 11, 2009), Brooks perfectly describes the pessimistic zeitgeist of many analysts about the long-term prospects for the U.S. economy. His argument is that economic growth of the past generation was built on a mountain of unsustainable debt and consumption, fueled by the collective bad decisions of America's households.
Unfortunately, while this description of the economy captures the pessimism and doubt many people have about capitalism and the future, the economic argument is flawed.
First, consumer demand and borrowing do not drive long-term trends in productive capacity. Debt does not generate economic growth. When someone borrows money to buy more than they produce, they must get the money from someone else who spends less than they earn. Debt is a claim on someone's production or assets; it does not by itself make a business or a worker more or less productive. And every dollar of debt is equaled by a dollar of savings.
Second, the numbers Brooks uses are accurate but misleading. While it is true that consumption is now measured at 71% of gross domestic product, versus 63% back in 1960, comparisons of consumption and GDP can be tricky.
For example, about half the increase in consumption's share of GDP is due to higher medical spending. But health care is counted as consumption at the time it is purchased, even though it often generates benefits that (literally) last a lifetime. Amortizing health care spending would make consumption look much less frothy. The same goes for education spending.
In addition, government undercounts business research and development. And, because many small businesses make purchases at big-box stores (think Staples ( SPLS - news - people ), Office Depot ( ODP - news - people ), Home Depot ( HD - news - people ) and Lowes ( LOW - news - people )), government attributes many of those purchases to consumers. As a result, government data overestimate consumption and underestimate investment.
Meanwhile, an aging population means that a growing share of consumption comes not from carpe diem workers but from retirees who are drawing down some of their assets. This boosts consumption relative to measured income.
Back in 1960, personal consumption, home building and net exports combined for 69% of GDP. In 2008, these same three factors again added up to exactly 69% of GDP. Of course, the key difference is that the U.S. had a small trade surplus in 1960 and a large trade deficit in 2008.
But that's the source of our opportunity, not our economy's demise. Brooks makes the rhetorical jump that slower consumption growth must ipso facto mean slower economic growth. But then how do we explain Post-World War II Japan or Germany--or China, India and Singapore, today? These are all countries where, for long periods of time, production growth substantially outpaced consumption growth. Savings rates were very high, but so was/is economic growth.
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In other words, even if Brooks is right about a slow path for consumption ahead--which we doubt--output growth need not falter. Households would become a growing source of capital for U.S. businesses and foreign investments, elevating the incomes of U.S. savers and creating lower U.S. trade deficits and perhaps even trade surpluses. It's not the unwinding that threatens the economy, but the government's reaction to a mistaken analysis.
Brian S. Wesbury is chief economist and Robert Stein senior economist at First Trust Advisors in Wheaton, Ill. They write a weekly column for Forbes.
What Iraq can teach Iran
Ayatollah Sistani in Iraq shows religion can play an influential, but background, role in a secular democracy.
By the Monitor's Editorial BoardAlthough Iran's postelection protests appeared crushed for now by brutal violence, a giant theological chasm has opened among Iran's Shiite clerics – one that also gives President Obama a safe opportunity to influence Iran's course.
Ever since the 1979 Islamic Revolution, the weakest reed in Iran's complex system of government has been the claim of a supreme leader with absolute political authority based on his Islamic credentials. It is an idea not accepted by the 90 percent of the world's Muslims who are Sunni. And it is rejected outside Iran in other Shiite strongholds, such as in Hezbollah-controlled areas of Lebanon and in Iraq.
Known in Arabic as velayat-e motlaqeh-ye faqih (guardian or the jurist), this concocted religious doctrine, enshrined in Iran's Constitution, was recently rejected by a leading Iranian cleric, Ayatollah Hossein Ali Montazeric, who was once the designated successor to the founder of the Islamic revolution, Ayatollah Ruhollah Khomeini.
"Even the prophet did not have absolute velayat-e faqih," Mr. Montazeric stated earlier this year in open defiance of Iran's current supreme leader, Ayatollah Ali Khamenei. (Montazeric fell out of favor with Khomeini just before his death in 1989, but is still influential.)
This challenge to one-man rule is also championed by Akbar Hashemi-Rafsanjani, a powerful former president and the head of the 86-member Assembly of Experts which, in theory, oversees the office of the supreme leader. He reportedly has sought recently to form an alternative political rule in Iran to be run by a collective religious leadership making day-to-day decisions.
That concept of a committee of clerics ruling Iran instead of a supreme leader may not be much of a step toward fuller democracy with a separation of religion and state. And it won't resolve the theological dispute over a supreme political leader among Shiites.
But at the least, it is a small step toward the common Shiite notion of a small number of grand ayatollahs in the faith sticking to their role as simply givers of religious rulings and as models of good behavior.
With his rule as Iran's ultimate arbiter under threat, Mr. Khamenei moved swiftly last week to try to consolidate his support among Iran's clerical bodies. The Assembly of Experts, for instance, signaled its confidence last Thursday for his "sagacious directions."
But the debate over a supreme leader may not fade. There are signs in Iran of increasing popularity for Ayatollah Ali Sistani, the leading Shiite figure in Iraq. Since the 2003 US invasion, he has supported a democracy that is run by secular leaders and inclusive of all faiths. (The Shiite spiritual leader in Lebanon, Muhammad Hussein Fadlallah, also does not see himself as a political leader.)
An Iranian by birth, Mr. Sistani holds much sway over the clerical establishment in Iran's most religious city, Qom. And he lives in the Iraqi city of Najaf, the most holy of Shiite sites and a popular pilgrimage for Iranians.
If he wants to send a subtle signal to Iranian dissidents, Mr. Obama could simply praise Sistani's calming, background role as the top ayatollah in helping Iraq's secular democracy.
He could also point out, as many Shiite leaders have warned, that Islam's best protection is not to run a government for fear it would harm the religion.
Iran's clerical rule and its support of terrorism have certainly harmed Islam over the past three decades. Perhaps that is one reason why so many Iranians took to the streets in opposition to an election that they suspect did not reflect their will.
Obama has a chance to side with them now by siding with Sistani and the mainstream in Shiite Islam.
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