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Letter to the Editor: The Feds, the States and the Controlled Substances Act

January 12, 2015 in Economics

By Roger Pilon

Roger Pilon

David B. Rivkin and Elizabeth Price Foley have risen to the defense of the attorneys general of Nebraska and Oklahoma, who complain about spillover enforcement costs from Colorado’s law legalizing marijuana and hence are asking the Supreme Court to declare that law unconstitutional (“Federal Antidrug Law Goes Up in Smoke,” op-ed, Dec. 29). Along the way they respond to conservative charges of “fair-weather federalism” by pointing to President Obama’s failure to enforce federal drug law in Colorado as the real problem. Yet the gravamen of their legal argument is that, under the Constitution’s Supremacy Clause, federal law trumps conflicting state law, so even when the president won’t enforce that law, states “may not pursue policies that undermine federal law,” as policies in Colorado and three other states allegedly now do.

Do they? How exactly is Colorado undermining federal law? Mr. Rivkin and Ms. Foley cite Colorado’s attorney general as saying that “his state is ‘becoming a major exporter of marijuana.’” He was doubtless speaking loosely there. After all, the state isn’t exporting marijuana. In essence, what the state has done is legalize the sale and use of marijuana — as if it had never made it illegal to begin with. Nothing requires a state to make marijuana illegal. Nor is the state doing anything to prohibit federal enforcement of federal prohibitions. It’s doubtful, therefore, that there is any conflict here for the Supreme Court to notice.

Roger Pilon is Vice President for Legal Affairs and Director of the Center for Constitutional Studies at the Cato Institute.

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Source: OP-EDS

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The Great Global Lie

January 12, 2015 in Economics

By Richard W. Rahn

Richard W. Rahn

Grand Cayman, Cayman Islands — Cayman is prosperous, in part, because of a great global lie, which causes many big rich nations to pursue bad economic policies. The global lie is that the developed countries have too little government, rather than too much.

That lie causes countries to tax themselves far above the level that would maximize the general welfare and job creation. That lie causes governments to spend money on many nonproductive activities and to spend money far less efficiently than the private sector for the same activity. Finally, that lie causes governments to regulate excessively and often in a destructive manner. The simple and obvious empirical fact that most developing and developed countries with smaller government sectors have grown faster in recent decades than those countries with big government sectors is ignored both by the politicians and many in the media.

The Economist magazine is just out with its annual lists of economic forecasts for the major developed countries. It makes for depressing reading. The euro area (including Germany, France, Italy and Spain) and Japan had less than 1 percent growth in 2014, and are forecast to average only about 1 percent growth in 2015, which is little more than stagnation. Britain and the United States are doing the best — having growth of about 2.9 percent for Britain and 2.3 percent for the United States in 2014 — with a forecast of approximately 3 percent growth for both in 2015. These numbers are all well below the averages for the great prosperity that lasted for the 25-year period from 1983 to 2007. The unemployment rate for the eurozone at the end of this past year was 11.5 percent (depression levels).

Offshore financial centers owe their prosperity to tax transparency, not tax evasion.”

The political classes in these countries, rather than taking responsibility for their own misguided policies, look for scapegoats. Their favorite scapegoats are high-growth countries with low tax rates on savings and investment. They blame offshore financial centers like Cayman, Hong Kong, Bermuda, and even mid-sized countries like Switzerland for engaging in “unfair tax competition.”

Critics of Cayman and other offshore financial centers call them “tax havens,” ignoring the fact that they all have many taxes, particularly on consumption — which is good tax policy — rather than on productive labor and capital — which is bad tax policy. The statist political actors in the high-tax jurisdictions will not …read more

Source: OP-EDS