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A new and amazing plan for economic stimulus
Indeed, and I am not being sarcastic.
Of course there are many illegal markets that would generate stimulus were they to be legalized. Here are some of the big ones.
- Drugs
- Guns
- Prostitution (except in Nevada)
- Gay prostitution (even in Nevada)
- Gambling
- Trade with Cuba
- Liberalized immigration
I can assure you that today Delta stimulated the book trade. Thank you all for the comments, I am genuinely pleased that I have all of you to complain to. It is a real pleasure.
Posted by Tyler Cowen on April 3, 2009 at 09:38 PM in Economics | Permalink
Comments
Ah, most guns are legal for most people in most circumstances.
And the election already stimulated the guns and ammo market, there is a serious shortage of ammo due to hoarding.
Which reminds me, I need some 9mm.
Posted by: save_the_rustbelt at Apr 3, 2009 9:41:21 PM
So, if I understand correctly....legalizing drugs will reduce violence among gangs and bring in revenue?
All the thugs and low-lifes who cheat, steal, and kill when selling drugs, are now going to go legit? Get a gov't license? Pay taxes? FICA tax? Medicare taxes? Payroll taxes? Provide lunch rooms and break rooms for their employees?
Will there have to be a gov't program for the stilted who can't or won't do those things to legitimately sell drugs when smarter and larger corps. take over?
Who wants to make a profit of 8-10%% when you can do it illegally and make mo' money?
Like we don't have enough trouble with boozers...
Morons....
Posted by: Mike at Apr 3, 2009 10:16:33 PM
Mike, our government is incompetent at a lot of things. But when it comes to the IRS and other tax agencies, you bet your ass that they're going to put superhuman efforts into making it work. It's the one major profit-generating activity the government has.
Posted by: Zephyrus at Apr 3, 2009 10:22:22 PM
Just think about all the money to be saved by releasing, or never imprisoning nonviolent drug offenders. And the majority of the violence arises because of prohibition, just like it did with alcohol prohibition in the 20s.
So Mike, you're saying that the drug lords, runners and pushers, like the bootleggers of yesterday, are behind the political movement to keep certain drugs illegal?
One final point. Prohibition just doesn't seem to work, unless of course, you like spending billions of dollars on a "drug war", turning even local police forces into paramilitary organisations, and ceding ever more power to central government.
Posted by: Crawdad at Apr 3, 2009 10:53:20 PM
Who needs economic stimulus, phooey. What we need in reality is a social stimulus to increase the quality of our lives. Drop your bank account for a credit union. Turn off the expensive advertising you pay for called a TV. Shop Thrift. Invest in your community with municipal tax free bonds. All the while decreasing your total tax collective footprint, the ultimate evasion statement. Live in the third sector, use all the non-profit businesses and agencies you can, and live functionally very well.
Posted by: Oliver at Apr 3, 2009 11:05:44 PM
Mike: All the thugs and low-lifes who cheat, steal, and kill when selling drugs, are now going to go legit??
Why does this silly notion keep on being brought up? Legalization isn't to provide existing producers with relief. Many of them will try to go legit, and some will succeed. But new businesses will pick up the slack. Drugs aren't special commodities requiring exotic skills to make, they can be easily produced.
Posted by: daksya at Apr 3, 2009 11:19:19 PM
Legalizing anything will reduce the costs associated with it. Fewer jails built, fewer body bags, guns, bullets sold, etc.
That means less waste, less "stimulus".
Of course, legalizing victimless crimes is not really a bad thing. Only according to the logic of the current Klepto-demo-publican regime.
In really, efficiency makes capital available for other things. Mor value for the same money.
Such is the stuff of economic growth. It really has nothing to do with pissing away economic wellbeing by shifting resources to silly things more visible to the media.
Posted by: Alan Brown at Apr 3, 2009 11:35:09 PM
Funny, I really see no downside to opening trade with Cuba. We get fancy cigars, they get access to Chevys built post 1960. Heck, they get access to parts to Chevys from the 50s. What's not to love? Fidel will live to be 105. Who cares? The Soviets are gone and the Chinese are capitalists now. Cuba is all alone. Time to light up?
Posted by: James at Apr 3, 2009 11:40:57 PM
Fidel will live to be 105.
Posted by: tn chaussures at Apr 3, 2009 11:45:04 PM
Indeed, legalizing drugs would be huge. Many billions saved from unproductive police, courts and prisons; *many* more billions from newly productive private sector work by those previously imprisoned; and many more billions released from rent-seeking activity of the criminal class... I could not agree more with this. The others too, but I think drugs probably the most. A MASSIVE WASTE currently exists in this area. It would be amazing if this is addressed now. There is some noise on this issue right now, with (unfortunately potentially misplaced) optimism that Obama might address this issue:
http://cato.org/pub_display.php?pub_id=10080
Posted by: liberty at Apr 4, 2009 12:17:12 AM
"The demand for stimulus means that the cost of being morally opposed to these transactions increases and the margin between what is repugnant and what is not slides outward. (Tyler Cowen worries half-seriously that economists are evil when they try to persuade others to think in these terms.)"
Is this true? Morality that is subject to marginal economics is not morality at all, but preference. This is in fact the whole problem with everything! Seriously. People for whom it costs little can enforce their preferences on the rest of us. It is not evil to get over on these people by making them feel the costs. Beleive me, the Rahm Emanuels are not going to waste the crisis.
Posted by: Andrew at Apr 4, 2009 2:58:33 AM
Trade with Cuba is just a no-brainer, and it is a good analogy for drug legalization, which is a bit more counter-intuitive.
We want people to be free and prosperous. We hate socialism because it's the opposite. So what do we do? We take all the people under socialism and isolate them in a confined island and don't even offer them what freedom and prosperity we can that would in fact make us freer and more prosperous. So, in order to make their lives better, we make theirs and ours worse, in the hopes of, what? They will forget their nationalism and not blame us, but their own people for their plight?
Posted by: Andrew at Apr 4, 2009 3:02:48 AM
Liberalized immigration
When it is sunny, Cowen is for liberalized immigration. When it rains, Cowen is for liberalized immigration. More immigration when it is peace, more immigration when there is a war.
More immigration during Dot-Com boom, more immigration during Dot-Com crash, more immigration during Housing bubble, more immigration during resulting (dep)recession.
Is there ever a time when immigration is not in the interest of the American folk, Doctor?
And how liberalized immigration should be?
We already import more people than the rest of the world combined. Should we import 5 Million / year?
10 Million? Why not 50 Million?
If not, why not?
If immigration is always good with no negative side, why not to have a lot of it?
Even at 100 Million per year it will be at least 15 years before we reach level of India in living standards, so what's wrong with 100 Million a year?
I have never seen Cowen mentioned any numerical limits on immigration, nor any requirements for prospective immigrants.
Assuming that even Dr Cowen would not want to admit known Al Queda members or serial killers, are there any criteria you would apply, Dr. Cowen?
Any numerical limits?
American immigration policy is based on 3 immovable legs:
Cheap Labor
Cheap Votes
Cheap Sentimentality (as in my great grandpa was an immigrant and he was a good man, therefore we have no moral right to turn away anybody)
People in the first 2 categories (cheap labor and votes) know what they are doing and could be shamed.
No amount of any data can convince people in cheap sentimentality group and Dr. Cowen is there forever.
Posted by: Mick at Apr 4, 2009 3:08:26 AM
How outrageous can those blogs get?!
"Trade with Cuba?!" - are you out of your mind, mister. Next thing you will be proposing helping and feeding impoverished third world countries as part of your stimulus.
Surely the wise man that run that country did not keep a hostile and isolationist policy towards Cuba for 20 years after the Berlin wall fell for no reason.
Posted by: Shocked Reader at Apr 4, 2009 3:25:09 AM
We already import more people than the rest of the world combined.
Not per capita. Not even close.
1,107,126 immigrants became permanent residents of the USA in 2008
Total American Population in 2009: 306,148,000
Current Immigration Rate/Year: 0.36%
247,202 immigrants became permanent residents of the USA in 2008
Total Canadian Population in 2009: 33,605,000
Current Immigration Rate/Year: 0.74%
So yeah, you're going to need to double your immigration rate to reach Canadian levels of prosperity.
Is there ever a time when immigration is not in the interest of the American folk, Doctor?
Maybe it's just a good idea. Getting other countries to send you their smartest, most motivated workers is very good for any country over the long run.
Posted by: Ian at Apr 4, 2009 5:16:13 AM
Just to play libertarian roulette. What are even less pleasant "victimless crimes" then these ones?
Suicide booths. pay 100 dollars to kill yourself. Also sell organs afterward to make more money.
Beastiality Prostitution (not victimless but neither is eating meat)
The right to pay fines rather then go to jail for all crimes (breton law had this)
Time to start using dominant assurance contracts?
Posted by: davidc at Apr 4, 2009 6:54:33 AM
What about squashing insects? Should the police concern themselves with children armed with magnifying glasses looking for ants?
Or should the state concern itself with protecting human rights, and leave the rest until it has reached perfection on its actual reason for existence?
Posted by: Alan Brown at Apr 4, 2009 7:23:16 AM
Hey, Tyler, how'd all that immigration to California work out? California has by far the highest percentage of immigrants, so California must have the highest bond rating in the country by now. And it must have practically no foreclosures because all those immigrants are making so much money that they can surely pay their mortgages. Right?
And the economy must be almost as swell in Florida, Arizona, and Nevada, because they have so many immigrants too.
I'm sure you'll soon be posting the latest economic statistics from high immigration states any day now. I can't wait to see the proof that your favorite social experiment is working out just keen.
Posted by: Steve Sailer at Apr 4, 2009 8:59:22 AM
How is the war on drugs working? Is it working as well as the war on "terror"?
Posted by: Mike C at Apr 4, 2009 9:34:57 AM
Would legalizing drugs really be a stimulous?
Wouldn't it really be contractionary on balance?
The drug dealers would no longer have to hire their own "soldiers" to protect themselves from competitors.
The government would no longer have to spend large sums trying to police it.
Offsetting this you would get a few more drug sales at probably a much lower price.
So on balance I suspect the impact would be to reduce economic activity.
What evidence do you have to support the argument that it would create extra activity?
Posted by: spencer at Apr 4, 2009 10:30:41 AM
Regarding immigration per capita, Sweden must be up there. A country of about 9.2 million, in 2007 they let in 95,750 immigrants and 102,000 in 2008. (They had similar numbers in previous years as well.) As a comparison, in 2007 the US State Department allowed 1,600 Iraqi refugees into the country while Sweden admitted about 18,600 Iraqi refugees.
Sweden now is also experiencing record emigration numbers, from native Swedes and non-Swedes alike.
Posted by: Hamedi at Apr 4, 2009 12:21:51 PM
Regarding immigration per capita, Sweden must be up there. A country of about 9.2 million, in 2007 they let in 95,750 immigrants and 102,000 in 2008. (They had similar numbers in previous years as well.) As a comparison, in 2007 the US State Department allowed 1,600 Iraqi refugees into the country while Sweden admitted about 18,600 Iraqi refugees.
Sweden now is also experiencing record emigration numbers, from native Swedes and non-Swedes alike.
I'm sure exchanging native Swedes with Sharia following, cousin marrying, gay killing, women beating followers of the Religion of Peace is a very good deal for Sweden.
Sweden will become beacon of the world any day now.
Posted by: Mick at Apr 4, 2009 1:10:23 PM
We already import more people than the rest of the world combined.
Not per capita. Not even close.
Non sequitur.
Are you a victim of American Lib Arts education or just dense?
Getting other countries to send you their smartest, most motivated workers is very good for any country over the long run.
Perhaps on your planet it works like this. On our planet in the USA immigrants are well behind the natives in virtually all socially positive measurements: they are less educated, make less money, use much, much more social services, pay way less taxes, etc.
But they are way ahead of natives in crimes committed and producing lots of children with, on average, lower IQ than natives.
How is that a good deal?
Posted by: Mick at Apr 4, 2009 1:18:34 PM
What evidence do you have to support the argument (ed. drug legalization) that it would create extra activity?
Tenured economists do not need no stinking evidence.
Good intentions and chutzpa beat your racist data.
Posted by: mik_infidel at Apr 4, 2009 1:23:24 PM
I'm always amused when the libertine (those that confuse ordered liberty with unlimited personal license and who are primarily responsible for the marginalization of libertarianism) element in libertarianism call for the legalization of prostitution. The reduction of sex into a benign commercial act between rational free agents works fine until you start to consider thinks like underage prostitutes (if only pimps were more compliant with minimum wage laws)
and sexually communicable diseases.
At that point, the libertine decides these objections can be solved by such markedly non-libertarian things as occupational licensure and a nice new regulator.
Oh well.
Posted by: Phil at Apr 4, 2009 2:38:17 PM
