Discourse on the great recession

Discourse on the great recession 

If a collection of people were to begin a conversation with the following, “we are going to make society wholly dependent on a collection of abstractions”; it is a certainty that it would draw a skeptical response. It is the case, however, that our society is wholly dependent on a collection of abstractions – abstract representations of the human endeavour.  The first tier of which is fiat currency, since Brentonwoods – a meeting of financiers – the entire world has been dependent on debased currency, with the greatest dependence on the US$ as the world reserve currency.

If one contemplates trade absent currency of any kind, one arrives at a barter society – the exchange between individuals of goods and services; the public sentiment or the “castle of the mind” can wreak no havoc in the barter society because there is no opportunity for the migration of value beyond barter, so the actions of people immediately proximal are the sole determinant of the volume of trade or the “Domestic Product”. There are no bubbles to burst, there is no means to create them. The barter society of course is very limiting, precisely because there is no opportunity for the migration or accumulation of value beyond immediate barter, nor is there any real means to remunerate an offering of greater value with greater reward. The barter society offers stability the cost is stasis.

It becomes necessary to mobilize value and to accumulate value to facilitate the human endeavour, in the face of this reality people seek compact and readily transferable sources of value, gold for example. The most cogent example of currency is the clay tablets used in early society to represent a share of a collective grain holding, people would take the tablet to the central granary to retrieve a portion of their share of the stored grain. At times people would circumvent the granary and trade the tablet for a good or service – the tablet was a currency based on grain – an abstract representation of a given person’s grain holding or share. It is easy to see the effect of making more clay tablets, the tablet's value relative to the grain would diminish. With gold-based currency the only opportunity for a “devalued” currency is to find more gold, a phenomenon that happened in the mid-1800s when there were large discoveries of gold and the resulting gold inflations.

The currencies we all rely on now have no base, money is created now at the swipe of a credit card, there is no limitation on the amount of money that can be created or the rate it can be created, fiat currency is only functional due to the belief of value – here the “castle of the mind” can wreak havoc. When a collective optimism exists – people begin to buy more, so more currency is created, as currency is created it spurs demand, and it then takes more dollars to purchase a given good or service – both because people are demanding more and because there is no limit on the dollars to be had – this fuels an inflationary feedback loop where optimism reaffirms optimism in the collective “castle of the mind”. Of course, optimism always runs its course, and when the collective “castle of the mind” contracts much of the money previously created is unsupported as values contract, as values contract pessimism grows and the feedback loop is now in the opposite direction. It is the mix of the first tier of abstraction – fiat currency – and the second tier of abstraction, the ability to readily contract credit, which fuels the currency cycle that often has a massive effect on the economy at large.    

To put boundaries on this phenomenon one either has to limit money or its availability – we have in large measure chosen to limit availability; this is achieved by central bankers exercising judgment on the level of the interest rate on money lent from the central bank to banks and the interest rate of money lent between banks.

The challenge has been that the complexity of any given economy precludes the ability to intervene at an appropriate time to prevent damaging outcomes of the cycle and this reality is exacerbated by foreign exchange of money and other global influences. Regardless of any given domestic interest rate, money can be borrowed in another jurisdiction for an attractive rate.

Central banks look at the forest in assessing when to raise or lower interest rates; secular inflation has little play in the decision process. It was the housing sector in the US which was running an inflation rate in excess of 20% in some cases and all the resultant lending complex that started the crisis of confidence. The US Central back had a low rate of inflation indicated by low percent growth in the Consumer Price Index (CPI), a CPI that was suppressed by a long and sustained influx of “cheap goods” provisioned by the escalation in the Chinese manufacturing capacity. This coupled with the Japanese government’s near-zero interest rate in the face of a lagging economy and the resulting yen foreign exchange (yen carry trade) muffling the effect of any US rate increases resulted in a ready stream of credit to fuel the housing sector. This was further exacerbated by tacit understanding that via Freddy Mac and Fanny May the US government was in effect underwriting the credit binge in the housing sector.

It is important to stop here to contemplate the key point of discourse, in observing the first tier of abstraction, fiat currency – one can see from the above discourse that just a single tier of abstraction fuels violent cyclicality, and one can see the complexity in managing and understanding the effects of actions taken in the realm of just currency. Our financial system is a complex of several tiers of abstraction, and with each tier of abstraction comes, to varying degree, instability. In the financial world, the increasing tiers of abstraction are referred to as “financial deepening”. In 1985 the abstract representation of the economy had a value about on par with the “real economy”, by 2006 the abstract representations of the economy had increased dramatically – some estimated up to 365 times the “real economy”. Of course, it was impossible to know due to opaque trading systems and the nature of the financial instruments themselves.

A complete discussion relating to the various financial instruments and the individual effects on the whole issue is beyond the scope of this introductory document, the point here is that abstraction, especially layered abstraction is a source of instability. Abstraction is a product of the human mind and they grow and contract with all the volatility one would expect of a mob out to grab what they can and then to get out of the market to stop from losing what they have. I make this assertion with comfort, as John Kenneth Galbraith made the same one in his book on the cause of the great depression. The inclination to create an ever more complex and layered financial complex is growing; we need to be mindful of the outcomes that ensue. Further comment will offer support for some optimism however, optimism lies in the communications capacity of humanity and the push for transparency in trading systems.

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For Discourse on Specific Causal Elements 

Cycles

Real Estate Lending

Trading Systems

Leverage

Oil Price

The Real Economy & The Financial Economy - Harmonics

CMHC – Help New Entrants GOOD - Finance Speculation - STUPID

The CMHC’s present role, at its base, is to insure mortgages, as such, it is an excellent addition to the real estate lending complex. The concept of the government underwriting a mortgage to assist Canadians to purchase “a” home is an outstanding one. Many Canadians have the good fortune when they decide to purchase a home to simply pay outright, call on parents to cover the cost or to provide the down payment or in some way facilitate access to owning a home.

There are many Canadians, deserving Canadians, that toil in a marginal state – unable to buy a home because their monthly commitments preclude saving a down payment of 25% ( the typical amount for uninsured mortgages) – this is known as the “renter’s trap”. The CMHC’s ability to underwrite mortgages so that people can enter the housing market with only a 5% down payment is much needed in many cases.

If one believes property rights are the keystone of a market-based economy, as I do, then one must also believe that there is a right to accumulate property. If you’re interested in promoting capitalism, there needs to be access to capital or a means to extract capital from the deployment of self in the marketplace. The purchase of a home and its eventual complete ownership offer a mechanism for people to capitalize their efforts, and then to redeploy that capital beyond shelter to other ventures in society at large.

The difference in living standard between Canada and the western world, and the emerging second and third worlds is attributable, firstly, to simple and clearly defined property rights, and secondly, to the ability for the masses to access property and related capital benefits. In Canada the fruits of the beneficial effects of home ownership are prominent, aside from the direct benefit of industry activity, there is the secondary benefit of people being able to actuate more effectively in the market due to capital retention and accumulation.

What the CMHC should avoid doing is financing speculation. The residential housing market is a temptress for a government; its ability to generate “growth” or to stimulate the economy and its most immediate attachment to national industry tends to move government beyond the mere provider of housing opportunity for the unsupported housing entrant, to an institution seeking “spin-off” with blind abandon. The government then needs to be, the sober player in the market, as opposed to the accelerant. The government should the remain in the business of supporting the purchase of a single home, it should avoid underwriting mortgages on second, third … investment properties. The shoe box condo market looks pretty good when you can lever it up from 5%, the challenge is that when the market takes an upward thrust the ability to leaver brings people into the market at a high velocity and bubbles not only form and burst, but they form big.  

At the core of most financial downturns or economic calamities, one often finds a real estate bubble to blame. The “mob mentality” to "get in now while it is going up" generates a circumstance where there are carpenters building houses for carpenters – the quintessential building boom. The key determinants in the residential real estate market, employment and credit cost and availability, need to inform the market on as tight of a feedback loop as possible, the largest disasters – the last financial crisis in large part – are often a product of government involvement in the housing market. Fanny May and Freddy Mac in the United States, in many ways, underwrote the most irresponsible lending binge in history; we need to be wiser in Canada.

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Forest Policy Reform – British Columbia

Letter to the Forestry Minister:

Some reform has taken place since this letter was sent, but more is needed. 

Over the course of my lifetime, I have worked in the forest industry, interfaced with it while involved in the tourism industry and gained some insight into its administrative side via participation at the Kamloops LRMP. This exposure has formed a perspective I think is worthwhile, and may be of use to you in some way.

As Minister of Forests you’ve inherited a policy framework that has been forged over fifty years, by what I refer to as the Unholy Trilogy – big business, big labour and big government. Political pragmatism in relating to the two primary special interest groups has created an industry that has perhaps underserved British Columbia, or left potential un-accessed. The weak US market and resulting waning of the forest industry presently may offer a juncture where many of the interests that may have inhibited reform in the past, are now muted – companies gone or contracting and labour expectations reduced due to the stark realities presently facing the industry. The areas wanting attention from my perspective are tenure reform, bug kill utilization and non-United States market development.

When one examines the forest industry, a glaring aspect that comes to view is the present domination by Volume tenure allotted to companies and then loosely tied to production facilities. The present policy has; failed to facilitate “the support of communities expected” in any real way, failed to facilitate the most effective use of timber assets, siloed lumbering functionalities in a manner I believe to be undesirable, and perhaps, most importantly, generated a log market that offends our best customer. A transition to an area-based, long-term tenure format may address these issues.

I envisage area-based tenure taking a form similar in nature to our present Woodlot tenure or Tree Farm tenure, existing completely separate and distinct from milling facilities (the actions of individuals may include milling activities but policy considerations would have milling separate and distinct). Tenure size would be moderate, perhaps in the order of an average annual timber volume accretion, in the context of long run sustainable yield, sufficient to generate net revenues in the order of $500,000 annually for proprietorship (based on historical data). The term of tenure (tree farming rights) would be ad infinitum, facilitating the future trade of tenure or perhaps intergenerational transfer. The industry would then be supported by an open log market that would immerge in much the same fashion as the cattle industry or other markets have. Government revenues would be garnered from the initial sale of these long-term harvesting rights and then a royalty structure at the point of log sale. There are many issues that arise in designing tenure to meet the best interests of British Columbia, such as the nature of ownership of these tenure units, while these issues are extensive they are outside the scope of this communication. This brief outline of the created tenure type will, hopefully, serve to provide context and support to the points made with respect to tenure reform.       

Forest companies in the past have been able to secure the rights to harvest a given volume of timber; where, when and how has been at the discretion of the Ministry of Forest (MOF), and this right seems to be let often on the bases of a milling facility requiring timber. By observation, often the milling facility is closed, as production is concentrated to a more productive facility somewhere else or as the result of some other dynamic. Again by observation, the Forest company retains the volume, often at the expense of local industry. This rationalization of action may be necessary to garner maximum efficiency under present industry conditions; however, the premise for the company’s garnering the tenure is no longer valid. This reality is unconducive to healthy public perception of government action and is breeding resentment, as evidenced by press coverage often referencing this occurrence in local media. An area-based tenure format would extend to proprietors' long-term tenure based solely on harvesting and sale of timber to a free market. While area-based tenure may fail to guarantee the logs will be milled locally, area-based tenure and the related open log market will guarantee the opportunity for them to be milled locally. Additionally, the premise for tenure will always hold policy integrity as a policy is executed, allaying the valid public perception that local trees are unduly being milled in other regions. The pure physicality of the circumstance will extend the advantage to local purchasers due to transportation advantage and local association.

The development of area-based tenure, with tenure being focused on harvesting and growing trees, serves to fracture the tree farming tenure ownership from the milling function. This is desirable, as it extends greater influence to the tree farming process in the logging industry as a whole, by bringing “business” focus to tree-farming process. Presently, the logging function is performed under contract to an entity absent long term interest for a specific area of operation and then the silviculture function is performed by another contractor who is overseen by the government; the government of course being largely isolated from incentives associated with long term ownership and most certainly absent any real attachment to a profit motive. The management of resources by “macro” entities, as is now the case, results in the siloing of activities in a manner that is both unnatural and unproductive. The present circumstance is analogous to the government owning all the farmland and functioning as the monolithic manager of agricultural lands; the person milking the cows with no attachment to the cow’s long-term health or wellbeing. The present circumstance then is absent the incentives that drive success generally in other sectors of the economy; the ownership and interest in the profitable utilization of an asset. By designing the tenure in a manner that integrates the management perspective, resources will ultimately become better utilized. The tenure structure that provides an incentive to proprietorship by integrating the profit motive with the full spectrum of tree farming activity, silviculture to logging in the context of long-term ownership and appropriate logging practices, will surely result in better outcomes over time.                           

A by-product of broad-based “proprietorship focused” tenure will be an emergence of an open log market and a Royalty system for government revenues. This means of government interface with resources and revenues is commonplace and widely accepted by governments the world over. Our present mode of governance over the province’s timber resources is both an anomaly and an irritant to the United States. While I am uninformed as to the exact cost or benefits of our present stumpage system relative to an open market system, our industry’s reluctance to embrace new and more agreeable operational modalities indicates to me the industry may be deriving benefit that is structurally related to the stumpage system. If this is the case, this is distorting industry participant conduct and very likely resulting in timber trading at prices that are different than if the prices were determined by market forces alone.     

The utilization of bug kill is critical and time sensitive as dead standing timber falls in value. The solutions of chipping and burning wood, and similar strategies seems to concede a lot of value to the present market circumstance, as cutting and milling the wood (the highest and best use) is presently hampered by a temporary market conditions. There is an apparent roll for government here to intercede by becoming the “purchaser of last resort”. The government could simply purchase lumber milled from bug killed stands at a per thousand price that offers companies an adequate return to provide an incentive to harvest, and mill at a fast enough rate to ensure the timber is utilized before it reaches a point of decay that will only allow burning or just leaving it to rot. The government would then acquire a large inventory of milled lumber to hold and to sell later as market conditions improve. While this is “capital” intensive, over time it offers a net positive revenue opportunity for the government. This action is justified in the context of managing a disaster. Potentially, lumber that has found existence under this type of policy could be used to seed new markets. While I process some ideological encumbrance to measures of this nature, given this circumstance it seems prudent. Additionally, the British Columbia government could promote this policy to the public and the federal government as a stimulus measure. In all, while quite a strong intervention, it seems to warrant consideration.             

One last point, regarding the forest industry, with respect to our efforts to diversify markets for our lumber products. While I realize that it is in the interest and is the responsibility of the industry to find markets, the US market has been so dominant for so long, that apathy amongst industry participants has precluded the aggressive pursuit of other markets. Our present situation, with the industry effectively in a state of collapse, is a product of the absence of strong leadership in this regard. British Columbia is grossly underperforming in non-US markets as regions like Scandinavia take market share, as has been reported they have in Japan. This criticism is toward the generalized culture, as opposed to the present government – which I view favourably and support. Substantive investment in market diversification is justified.

I hoped to offer a less “industrialized” perspective than you’re apt to be exposed to as Minister of Forests, a perspective I can proudly state has found its origins in being a farmer’s son and the desire to produce a societal circumstance well-populated with independent people – well-designed forestry tenure reform offers the opportunity to create such a circumstance. Thank you for your consideration of the contents of this letter and I hope the election outcome gives you some extended tenure!

Agricultural Land Commission - Largest land expropriation in Canadian history

ALR - Largest land expropriation in Canadian history

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The incursion by government in to the domain of private property, and its use and administration challenges one who holds private property rights dear. In Canada, and specifically in British Columbia where in 1972 the then NDP government in effect expropriated agricultural land in British Columbia for “preservation” as a perceived public good. Perhaps the best example of the lack of consideration in Canada for private property rights is their absence in the Charter of Rights and freedoms, Canadian’s are essentially absent any constitutional protection of private property – we do have a large breath of common law to support property rights; but our ownership or management choice of property can be legislated away, as was demonstrated by the advent of the Agricultural Land Commission (ALC). Had property rights been in place, as a right held by Canadians, the government would have had to properly compensate landowners for the reduction in opportunity that accrued to the owners as a result of the ALC’s creation. Farmers were never properly compensated, the legislation has never served to stave off development of choice farmland, agricultural land holds a massive “speculative development premium”, agricultural land trades at values that far exceed economically viable operations and the other goals of the legislation have only partly been satisfied.

The ALC’s actions, having failed to some degree to effect an overall benefit to agriculture, still frustrates the supply of land of only “marginal” value as farm land, in retarding the supply of said lands, the ACL has put significant upward pressure on land development for housing, this situation is acute in the lower mainland. This reality is exacerbated by the fact the most of BC is crownland and the government seems intent on hording it, rather than releasing in a responsible way to effect a more livable circumstance for the lower and middle income strata.

There are circumstances where the government is warranted in offering direction for private land use, but parameters must be set, people need to be reimbursed. Perhaps key agricultural land is such a case. Please read below, a letter sent in 2006 to the Agriculture Minister. Most of my critique offered then is still valid – action is needed.      

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Neil E. Thomson

 nthomson2@yahoo.ca

September 22, 2006

Honourable 

Minister of Agriculture and Lands

PO Box 9043

Stn Prov. Govt.

Victoria BC

V8W 9E2

Dear Sir,

RE: The Agricultural Land Commission Reform

This letter is in response to your and other’s discourse on the Bill Good show and the Forever Farmland submission paper authored by Charles Campbell for the David Suzuki Foundation.

Property Rights

Recent discourse around this issue is lacking advocacy for land owner’s interests. On the Bill Good show you stated that, upon a properties exclusion from ALR the owners become “instant millionaires.” The presumption being that the owner in enjoying a windfall through a zoning change being bestowed on them by the government. The fact is that farmland owners are being impaired from exercising their right to manage personal property in the most profitable way. Your tone seemed to support the tone of the David Suzuki Foundation’s submission paper that opportunity is being extended to land owners upon exclusion from the ALR, when in fact opportunity is being regained, or that ownership is being allowed to do what property rights should allow them to do. 

The right to manage property by ownership in response to market opportunity is the keystone of a market based society. Proper deference to this paradigm was withheld when this legislation initially was imposed on the farmland owners of British Columbia, and has continued to be ignored over the ALR’s thirty plus year history.

One needs to recognize that market influences often impose Faustian actions that run contrary to the greater good, and perhaps agricultural land use and development is such a case. While the need to preserve farmland is certainly a value I share with many, the actual need to preserve farm land is very abstract and subjective. It is difficult to provide supported argument for preservation of farmland outside what may have “naturally” occurred in response to market forces.

In a case such as the ALR, especially where a compelling state interest is very difficult to demonstrate, property rights should be respected by reimbursing ownership for opportunities forgone. When the government put this legislation into place in 1972 they erased large portions of people’s net worth with what amounted to an act of expropriation.  

Had the government given deference to property rights when this legislation was put in place, many of the negative effects of the ALR would have been reduced. The proper treatment of farmland owners of the day would have given the government the latitude to strengthen lands retention by the ALC and may have greatly reduced the speculative values on farmland today.

ALR and Valuation of Farmland

The present application of the ALR legislation has set up a dynamic where speculation is still viable, so land prices escalate in response to their potential value for development, while at the same time the ALR is restricting supply of land for development. The past application of the ALR legislation may have driven farmland prices higher than if the ALR legislation was absent.

The only way to assure that Farmland prices reflect farming’s ability to be viable is to have lands inclusion in the ALR permanent and the contemplation of development non existent. As a society we ascribe values to land for any number of reasons, we protect parks etc.. We manage parks in the absence of consideration of the removal of Park status and we can do the same for agricultural land.

Permanent Inclusion in the ALR

Permanent inclusion in the ALR requires recognition that government is expropriating opportunity from farmland owners and retribution needs to be made to present ownership for opportunities forgone. The commitment to permanence with proper deference to property rights, would force government to be thorough in their assessment of land type and quantity to be included in the ALR.

Clearly Defined Purpose, Criteria for Inclusion and Inventory

There needs to be a clearly defined purpose for inclusion and a set of criteria for inclusion that supports that purpose. Preserving farmland is a very broad or vague mandate and a confused execution has emerged as a result of the existing vagueness. What is the farmland being preserved for? How much preserved farmland is enough? What quality requires preservation? What are the complete set of values we are seeking to protect?

Inclusion in the ALR should be criteria driven. The establishment of clear criteria for inclusion provides for a less politically charged environment and provides the “market” with a stable setting for planning and development.

Presently there is a trading process which allows agricultural land outside the ALR to be “traded “ to allow the development of land inside the ALR. This fact in of itself illustrates that there is more work to be done on inventory or presumably these “non ALR agricultural lands” would have been included in the ALR at the inception of the ALC. A complete inventory of presently available agricultural land needs to be developed.

The interests underpinning the societal desire to preserve farmland are diverse. A process needs to be initiated that draws out the values that exist in the public body around farmland and informs them of the cost of preserving farmland. It is my opinion that a broad array of values are at play exceeding just securing food production, to values including aesthetics of the countryside and preservation of the family farm. The existing legislation and its enactment seem to be falling short on responding to the diversity of values that exist.

Regressive Assessment of ALR Legislation

The legislation needs to be considered in the context of where would we be today in the absence of the ALR? What do other jurisdictions look like without a ALR? This assessment would provide valuable information for the future management of the ALR and its management regime.

Facilitation of Diverse Land Use

  

The government has taken steps in the past to contribute to the viability of agriculture by offering opportunities for diversifying farm operations. The woodlot program is a case in point. The farming community should have access to tourism opportunities enhanced. Complementary Tourism enterprises come with a small environment and land use footprint, and offer opportunity for higher margins than can be garnered from most agricultural enterprises.

The case of Golf courses has been raised by many as a “non agricultural” activity and inappropriate for ALR Lands. This is a case in point, where the legislation needs to offer direction. A Golf course is an activity that allows for economically viable non-destructive use of the land, until such time as a future agricultural venture offers a better opportunity. That is to say the land is “readily” reclaimable or “held in reserve” for agriculture. A golf course is every bit as agricultural as a turf farm or a Christmas tree farm.

Forever Farmland – David Suzuki foundation - Recommendations

The recommendations submitted to you are generally acceptable. The recommendations do need to be sensitised to property rights. In the ambit of land use management, the various planning forums need to find interoperability. Criteria and objectives can be derived from public consultation through the full management spectrum, the application of criteria and objectives should be held to the local forums.  

Conclusion

I am compelled to support measures that protect farmland. The protection of farmland satisfies two primary concerns for me; firstly the assurance of the ability to be regionally self-sufficient in traditional food production, and secondly the desire to preserve the beauty of British Columbia’s countryside.

Thank you for giving consideration to the contents of this letter in your deliberations.

Sincerely,

Neil E. Thomson

CC:      Claude Richmond, Minister of Employment and Income Assistance

            Kevin Krueger, MLA Kamloops – North Thompson 

            Ann Rowan, Director of Sustainability – David Suzuki Foundation

Law, Legislation and Liberty - Free Heroine - Drug Policy

This was sent to the Conservative Party in response to a bulletin circulated via email. I felt compelled to respond to some comments. Progressive Conservatism or Compassionate Conservatism or Middle of the Road Liberalism really is Canada's Political home - we are, in the main, an educated and open-minded lot.  

RE: Conservative Party Emailed Update: September 21, 2013 – Free Heroine

Let me premise comments by saying that I have supported your government, and specifically Steven Harper’s leadership, for some time. My support is born of the conservative planks of accountability, prudent fiscal conduct and greater provincial control. Some inroads have been made on these fronts, but more is left to do. May I say that abolishing mandatory gun registration was a most welcome event in Canada?

I am concerned, however, that a government that holds accountability as a paramount concern, has failed to examine the effects of past drug policy or is simply choosing to ignore the facts in an effort to through red meat at the base. This sort of inflammatory rhetoric in no way serves to inform the rational discourse on the subject, it serves to support old biases.

I want to end up in a place where drugs are no longer ravaging youth’s health and science, as opposed to emotion and unsubstantiated dogma determine action. The conventional approach to criminalization and punishment started some hundred years ago with what amounted to the “war on drugs” approach, there are more varieties of drugs used and a greater volume of drugs used today than 100 years ago – and the challenge is growing. WE HAVE FAILED – IT IS TIME TO REGROUP AND REDIRECT.

With respect to your comments peculiar to free heroine; addiction is a disease – it may be a disease that is a product of poor choices, but a disease nonetheless. It costs an addict approximately $200 / day to support their addiction, most steal to support themselves, and stolen goods when fenced to the market capture about 10% of the face value of goods – this translates into a $2000 / day in crime! Worse, the addiction drives extreme behaviour, as people become more desperate they tend to become more violent. The judicial processes have a difficult time managing the volume and we end up with a “revolving door” court system, where breaking & entering in effect becomes a misdemeanour. When you examine these realities rationally and set aside the desire to punish, the benefit of the provision of heroin to addicts to society becomes clear; a benefit because fewer people are subjected to violence, addicts come into the ambit of caregivers, police & courts are free to focus on reducing violent crime and it is just cheaper.  

Switzerland and other jurisdictions have enjoyed success with these sorts of programs. When an addict is brought into treatment, you have a marginalized, jobless – often criminal – human being with heroin addiction.  As time progresses, you have a non-criminal, healthier human being with heroin addiction. Now less marginalized and healthier, and because heroin when properly administered leaves people highly functional, you now have someone able to contribute to society and pay for their own supervised treatment. Perhaps now, with all the other social challenges in hand, they are better able to work their way out of addiction. The old methadone treatment programs or the really old cold turkey treatments have extremely high failure rates and are in some cases punishing in their execution.

It is safe to assume, that addicts represent the lion’s share of the revenue stream for the peddlers of heroin. The totality of our present approach constrains the supply of heroin – constrained supply always translates into the increased price for the product. Heroin is the ideal product, with highly inelastic demand, the dealers know this; they know the value of a customer. In a circumstance where heroin has a very high value, the incentive to garner users is very high; our present modality of approach is failing to recognize this fundamental economic reality and our young people are paying the price. With the government, “treating” heroin users, the income stream dries up for the dealers and with it the desire to sell heroin and to mutilate the lives of, what are most often, vulnerable young people.

It is tempting when seeing the brutality visited on the affected, to respond with brutality, or at least with brute force; we have to begin to work smart, to use what we know about the economy and apply science to that task, and paradoxically, to set “morality” to the side to get a moral outcome.

From a political perspective, your government needs to remember Canada is in the majority a “progressive” nation, stray too far away from companionate conservatism and you do so at your pearl. More effort on accountability, more effort on fiscal responsibility, more effort on constraining the growth of government and more work on reducing the red tape that makes government the world’s biggest transaction cost.  No little girl ever dreamed of being a heroin addict prostitute, no little boy ever dreamed of being a heroin addict thief – they've arrived there by a combination of circumstance and poor direction, no one ever chooses to ruin the life of friends and family and their own – compassion is warranted here and a new path is needed. This is a humanitarian concern, partisanism has no place here, what works has a place here -  let people work to find solutions, make policy AND TRACK THE RESULTS, government needs to manage based on solid data as opposed to rhetoric.     

  

For more discourse on drug policy please see my blog – http://nthomson2.blogspot.ca

Security Challenges

PLEASE NOTE: I have had security challenges, subtle changes have be made to my work on occasion – I am working to rectify the situation. Should you witness anything untoward or require clarification do contact me. THANK YOU.