Wednesday, 28 March 2012

Guns and Drugs from Washington to The Wire




By Robert E. Wright for Augustana College’s chapter of Phi
Alpha Theta, 28 March 2012.


Strangely enough, I became an
historian of the Early Republic in order to better understand current public
policy debates. Politicians and pundits have long been pretty good at putting
words into the mouth’s of the Founding Fathers. I don’t think that all our
policy decisions need to be based on the thought of the Founders but when they
are, they should be based on plausible historical interpretations.


After having studied the thoughts and
deeds of numerous Founders for almost two decades now, I’ve concluded that
sometimes the words that policy wonks put into the Founders’ mouths ring true. But
too often they are a load of specious bull puckey. One particularly laughable
claim is that the Founders believed that roads should be forever free. Some
Founders favored local government roads but realized that even those had to be
paid for, with labor and materials if not cash. Other Founders -- including George
Clinton and Philip Schuyler of New York, Fisher Ames and Henry Knox of
Massachusetts, and Stephen Girard and George Logan of Pennsylvania -- chartered
for-profit turnpike companies that built long distance roads and then charged
tolls to travel them.


Speaking of early corporations, the
majority opinion in Citizens United
is pure bunk that should undermine any remaining confidence in SCOTUS as it is
currently constituted. To a man, the Founders would have shuddered at the
thought of business corporations influencing American political processes and
explicitly said so on numerous occasions. See my forthcoming book Corporation Nation for details. The
Founders considered corporations a quote unquote person only analogically. For
them, corporations were economic entities endowed with several privileges not
accorded to traditional business partnerships. For example, corporations enjoyed
perpetual succession, or in other words the right to change owners without having
to dissolve the enterprise, and the right to sue and be sued in name of the
corporation, rather than in the names of their often numerous owners. But to
grant corporations civil rights like freedom of speech would have been viewed
as preposterous because corporations were created by the government, initially literally
by statute. Natural people, by contrast, were the creators of government under John
Locke’s widely held theory of governance.


And of course there can be no doubt
that the Founders would oppose Bank of America, Citibank, Goldman Sachs, JP
Morgan Chase, Wells Fargo, and the other megabanks that fomented the financial
crisis of 2008. Not only don’t I exclude Alexander Hamilton from that claim, I
assert that he would lead the charge against them, not because they are banks,
which would be sufficient justification for Thomas Jefferson and many of his
followers, but because they threaten the government’s ability to repay its
debts as promised. Hamilton would also stress how horrifically inefficient they
are, while Jefferson would point to their uncanny ability to influence public
policies in their favor.


The Founders’ views on the political
dangers posed by banks and other corporations remained widespread throughout
the 19th century and into the twentieth. In 1906, New York governor
Frank W. Higgins told the New York Times:
quote Political contributions by business corporations are illegal and ultra
vires. ... The practice is morally as well as legally wrong. ... I recommend
that the making of political payments by corporations be made a penal offense.
Unquote. Ultra vires, by the way, was a legal doctrine that allowed the
dissolution of companies that overstepped the very clear boundaries placed on
their activities in their corporate charters.


I’ve also done a little work on the
Second Amendment and here the progress over the last decade or so has been
palpable. Historian and peace scholar Michael Bahleel [Bellesiles]
inadvertently helped gun right’s scholars like myself by publishing a book
called Arming America that claimed
that the Founding Fathers owned few guns and most of the weapons they did own were
broken and unwanted. Let me repeat that: Bahleel claimed that the Founding
Fathers owned few guns and most of their weapons were broken and unwanted. It
turns out that Bahleel engaged in some very shady practices to quote unquote
prove his thesis. So shady, in fact, that it cost him his job at Emory University.
The flurry of research that went into debunking his outrageous claims, however,
greatly strengthened our understanding of the Second Amendment and that played
a big role in recent advances in gun rights, tentative though they are.


Discussions of gun rights often turn
into debates about drug policies because illicit drugs and gun violence are
intimately linked. Some discussants claim that the Founders would support the
suppression of marijuana, heroin, and cocaine while others have portrayed the
Founders as literal potheads. The latter view is apparently due to the fact
that some of the Founders grew hemp for industrial purposes and most drank
copious quantities of alcohol on a daily basis. So they must have toked up,
right? Somebody with the screen name of capital letter D actually wrote on one
blog and I quote: Our country was basically started by Marijuana. I have to
repeat that. According to D, which I hope was his or her grade in history
class, Our country was basically started by Marijuana.


The former view, that the Founders
would support the so-called War on Drugs, appears to rest on the conviction
that the Founders were good Christians – and don’t even get me started on that
claim -- and as good Christians would never do drugs, because drugs are bad, mmmm… kay. Again I quote: I think Jefferson
or George Washington would have rather strongly discouraged you from growing
marijuana and their techniques with dealing with it would have been rather more
violent than our current government. Unquote That comes right out of the mouth
of a former history professor you may have heard of … Newt Gingrich. I did not
attend the New Hampshire town meeting in January where he said it because I had
to teach interim … but I have seen a video of the event that does not appear to
have been doctored or edited in any way. Unlike the videos on Finding Bigfoot, it was not grainy or
jumpy and the sound was good, at least when Newt was speaking. Finding Bigfoot airs on Animal Planet, a rival of The
History Channel, which produced a show in which an historian, the curator of
the Hemp Museum, swears that the Founders were hooked on the chronic.


That unassailable tertiary source to
the contrary notwithstanding, it is a little silly to argue that the Founders
had strong views on marijuana, much less crack or meth. Perhaps the easiest way
to establish that point is to read a newspaper article that I discovered in the
20 May 1803 Charleston Courier while
working at the American Antiquarian Society about 15 years ago. I call it
“Bowls, Bongs, and Blunts But Not Quite Brownies” but the original title was
“Intoxicating Quality of Hemp.” Listen carefully:


     HEMP is cultivated
in the plains of upper Egypt, but it is not spun into thread as in Europe,
although it might probably answer for that purpose. It is, nevertheless, a
plant very much in use. For want of intoxicating liquors, the Arabs and
Egyptians compose from it different preparations, which throw them into a sort
of pleasing inebreity, a state of reverie


that inspires gaiety and occasions agreeable dreams. This
kind of annihilation of the faculty of thinking, this kind of slumber of the


soul, bears no resemblance to the intoxication produced by
wine or strong liquors, and the French language affords no terms by which it
can


be expressed. The Arabs give the name of keif to this
voluptuous vacuity of mind, this sort of fascinating stupor.


     The preparation
most in use from this hemp is made by pounding the fruits with their membranous
capsules; the paste resulting there from is baked, with honey, pepper, and
nutmeg, and this sweetmeat is then swallowed in pieces of the size of a nut.
The poor, who sooth their misery by the stupefaction produced by hemp, content
themselves with bruising the capsules of the seeds in water, and eating the
paste. The Egyptians also eat the capsules without any preparation, and they likewise
mix them with tobacco for smoking. At other times they reduce only the capsules
and pistils to a fine powder, and throw away the seeds. This powder they mix
with an equal quantity of tobacco, and smoke the mixture in a sort of pipe, a
very simple, but coarse imitation of the Persian pipe. It is nothing more than
the shell of a cocoanut hollowed and filled with water, through which a pungent
and intoxicating smoke is inhaled. This manner of smoking is one of the most
ordinary pastimes of the women in the southern part of Egypt.


     As well these
preparations, as well as the parts of the plant that serve to make them, are
known under the Arabic name of haschish which properly signifies herb, or plant
of plants. The haschisch, the consumption of which is very considerable, is to
be met with in all the markets. When it is meant to designate the plant itself,
unconnected with its virtues and its use, it is called [illegible].


     Although the hemp
of Egypt has much resemblance to ours, it, nevertheless, differs from it in
some characters which appear to constitute a particular species. On an
attentive comparison of this hemp with that of Europe, it may be remarked, that
its stalk is not near so


high; that it acquires in thickness what it wants in height;
that the port or habit of the plant is rather that of a shrub, the stem of
which is frequently more than two inches in circumference, with numerous and alternate
branches adorning it down to the very root. Its leaves are also not so narrow,
and less dentated or toothed. The whole plant exhales a stronger smell, and its
fruitification is smaller, and at the same time more numerous than in the
European species.


What this source tells me is that
early Americans were not conversant with the quote unquote intoxicating quality
of hemp or the editor would have not used up valuable space in his newspaper to
describe it in such detail. Contrast the article with the treatment of America’s
current drug culture on three popular and critically acclaimed television
programs, AMC’s Breaking Bad, HBO’s The Wire, and Showtime’s Weeds.


In Weeds, which is initially set in suburban southern California but
later ranges throughout the West before landing in Manhattan, seemingly
everyone knows about marijuana. All the major characters smoke or eat it and
know how to score it. Or they deal it, sometimes by the dime bag and sometimes
by the kilo. A few even know how to grow the stuff, inside, outside, in vans,
bathtubs, the backrooms of front businesses, in ditches, and even in national
parks. The main character, erstwhile suburban housewife and mother Nancy
Botwin, initially has qualms about selling it to kids but eventually will sell
a potent form of hash that she makes in her employer’s commercial clothes dryer
to anyone with the cash. She does draw the line, however, at harder drugs like
black tar heroin and will not brook involuntary prostitution. But the message
of the show is that weed is cool even if it turns you into jailbait and your
son into a cold blooded murderer.


Walter White, a former high school
chemistry teacher, has no qualms about manufacturing and selling
methamphetamine, so long as it meets his high standards and he gets a cut of
the proceeds. In Breaking Bad, meth
is not quite as ubiquitous as pot in Weeds
but the unmistakable conclusion, for viewers today and presumably 200 years
hence, is that early Third Millennium America had a pretty pronounced illicit drug
culture. Nobody has to be told what drugs are, how to use them, or even what
they cost in the street. While both Weeds
and Breaking Bad become a little far
fetched at times, nobody seriously questions the main premise that middle class
Americans can become drug kingpins if they get cancer or their spouses die
suddenly, apparently without life insurance. Weeds and Breaking are
dark comedies to be sure but clearly millions of Americans find that premise
amusing … and maybe even alluring, as several bored housewives admit to Nancy in
Weeds. Interestingly, about a dozen
college professors have been caught distributing illegal drugs in the last few
years, though alas none here at Augustana. … To my knowledge.


Although it contains numerous
humorous scenes, The Wire is a much
more serious show that reveals just how deeply heroin and cocaine have
permeated our society, from addicts like Bubbles, Johnny Weeks, and Sherrod to
Baltimore’s political power structure, especially in the form of corrupt
politician Clay likes to say Shiiiiiiiiiiiiit Davis. The series, which ran for
5 seasons in the mid-20 aughts, was so realistic that several real life drug
gangs actually began to use some of the distribution and communication
techniques it detailed. Two centuries hence, historians will use The Wire to outline America’s urban drug
culture much the way they currently use the 1931 flick The Public Enemy or the 1922 and 1924 novels Babbitt and The Great Gatsby
to unmask some of the intricacies of Prohibition.


The city of Baltimore felt compelled
to officially blast The Wire, the
realism of which threatened to cut into its tourism trade. The Port of
Baltimore doesn’t attract as many ships as it used to and the water still
smells a little funky, but it is pretty to look at and it’s treated enough so
it doesn’t kill the sea critters in Baltimore’s amazing National Aquarium or
the dinner patrons in nearby Lil Italy … at least not immediately. The Wire’s depiction of the drug
infested areas of the city, some within Glock range of the Inner Harbor tourist
zone, were just too accurate, a conclusion that I draw from personal experience
having again visited the outskirts of some of the drug neighborhoods while
attending a conference and conducting some research in Balmer last fall.


I think it safe to say that the
Founders would not like modern Baltimore but that would not necessarily equate
into a policy stance on drugs as other issues were rather more salient two
centuries ago. In fact, I’m pretty sure that Jefferson, Madison, and Monroe, if
not Washington himself, would point to modern Baltimore as evidence for the
necessity of slavery, a fallacious conclusion to be sure but an irresistible
one for anyone with a material interest in the peculiar institution. Calhoun,
who came a little later of course, certainly would have used conditions in today’s
Baltimore to advance a pro-slavery,
anti-tariff, and anti-urbanization agenda because, heck, he used the condition
of the Baltimore of his time to support those views.


On the other hand, every Founding
Father would see that the promises laid out in the preamble of the Constitution
were not being met in a city devoid of justice, domestic tranquility, or the
blessings of liberty. And The Wire’s
message about political corruption would have surely further aroused the
Founders’ against the Citizens United
decision because it shows so clearly how money corrupts absolutely. But a pro-
or anti- drug message? I just don’t see it because drug use was not very high
on the Founder’s agenda. Americans would of course eventually remonstrate
against the abuse, some even the use, of tobacco, alcohol, and later opium. But
the Founders were pretty quiet on the issue. That might have been because they
were civil libertarians content to allow people to make their own life choices,
as Ron Paul might argue, but it could also be that they simply had no widespread
experience with addiction to substances other than tobacco, alcohol, sugar, and
caffeine. If members of the Founding generation weren’t consuming pot, coke, or
heroin, how could the Founders have held a view about their legality, at least
one that we are bound to respect? I say that when it comes to drug policy, we
allow the Founders to remain fast asleep, dutifully pointing their muskets and
cannon at large corporations, especially inefficient, political system corrupting
megabanks.




Thank you!

Thursday, 22 March 2012

GROUND RENTS: ANCIENT I/O MORTGAGES THAT STAVED OFF FORECLOSURES DURING THE DEPRESSION




In Philadelphia, Baltimore, and their respective suburbs, some homeowners still
pay "ground rents." The term, which dates from the eighteenth
century, is a misnomer as the payments represent interest on renewable 99-year
or perpetual mortgages. Although the creation of new ground rents fell out of
favor before World War II, ground rents and other types of long-term,
interest-only mortgages have much to recommend them and are widely credited
with making Philadelphia the "city of homes" and Baltimore the
"city of home owners."



In the eighteenth and nineteenth centuries, lenders found in ground rents a
secure, readily salable (liquid) long-term asset that generally yielded between
five and six percent. Defaults were rare because loan to value ratios (LTV) were
conservative, typically in the neighborhood of 50 percent, and the interest due
any given quarter or year was negligible compared to the value of the real
estate, providing borrowers with strong incentives to make payments. Moreover,
in case of default, lenders could lawfully enter the home and seize and sell
any personal property found at the address. Rarely was it necessary to
repossess the real estate to keep an account current.



Homeowners liked ground rents because the contracts kept their housing payments
relatively low and eliminated the refinancing risks that periodically crushed
those whose mortgages fell due when interest rates were high, mortgage renewals
were unavailable, or housing prices were plummeting, as during the Great
Depression. Ground rents were extinguished when a homeowner bought his contract
from the investor holding it. When market interest rates were relatively high,
the contracts could be purchased cheaply. When they were relatively low, the
contracts were dear. The key was that homeowners could decide if and when to
purchase the contract, allowing them to ride out financial storms rather than
be sunk by them. "It is worthwhile noting," wrote legal scholar Frank
Kaufman in 1940, "that relatively few ground rent defaults occurred during
the recent depression. In fact," he continued, "Baltimore has seen
less of the foreclosure evil than have other large cities in which only
ordinary mortgages are used."



That raises the question of whether widespread use of ground rents could have mitigated
the crisis of 2007-8. They might have, even if the average ground rent LTV had
increased to 100 percent and the contracts were securitized as mortgages were.
Ground rents would have decreased borrower opportunism (moral hazard) by making
it easier for lenders to force homeowners who continued to reside in their
houses to keep their accounts current and, in the case of walkaways, to
foreclose on the property. In addition, as interest rates fell following the
crisis, the value of ground rents would have increased, offsetting to some
degree losses realized on the sale of foreclosed properties. The vicious cycle
witnessed since 2007 -- decreased home prices and liquidity leading to defaults
that decrease home prices and housing market liquidity yet further, triggering
yet more defaults -- may have been stopped sooner or even prevented in the
first place. We will never know for sure, of course, but regulators should
consider allowing some modern experimentation with these hoary instruments of
home finance.

Tuesday, 20 March 2012

no excuses (kawasaki disease)

I hate afternoon naps because each and every time I take one, I wake up feeling bad or nursing a headache.

A lot of thoughts are running through my head but my emotions wouldn't connect, making them seem like a million miles away. But I don't want the day to end without me capturing some of those thoughts and getting in touch with my current feelings... some sort of breather, an outlet.

Last Friday, our son's pediatrician finally (though awfully belatedly) confirmed that he has kawasaki disease. What's worse is that, his sickness is pass the so-called "golden period" of detection and medication of 10 days. The first questions to my and my husband's minds were: "what kind of pediatrician would fail to diagnose the disease even though the idea was already brought up by another doctor? and what kind of parents are we to 'allow' the doctor not to diagnose our son properly and not to have asked for more tests to be done, not to have been more observant? why didn't we resort to a more in-depth research in google and made our own 'diagnosis'?"

I've always known I was not the best mother. I am an absentee mommy. I thought motherly love (ie. lots of hugs and kisses), best intentions and financial support were enough to protect and help my son grow up. In real life, motherhood is much much more than that. I don't have the answers though on how I could be better at this. I feel that I already wasted too much time and opportunities to make things right as a mother. My son is almost three. Can I still make it up to him?

I would soon be back to work and realistically speaking, I would soon be so absorbed in my job that I would soon forget my resolve to be a better mother. It's a cycle I can't seem to break. I need help so badly. For underprivileged moms like me, we can only do so much. Still, I should give it a try. No ifs, no buts.

Monday, 19 March 2012

Budgeting Household Chores

Spring is here in two hours. Spring cleaning officially starts in two hours. Do you share a household with others? Do those of the household not share an equal level of desire to maintain an orderly and clean environment?

Whether a husband and wife or roommates, sharing this responsibility can be a challenging task. How do you peaceful resolve the differences? One option: the envelope. How much would it cost to have a cleaning service come in weekly and keep the home in a 'guest-ready' state?

Each of you contribute proportionally to the envelope. Each of you record your contribution to the clean environment for the past week. If the effort has been equally shared then divide the contents of envelope equally back to all of you. Somewhat lopsided? You get that percentage of the envelope that equates to your percentage of exerted work. No one worked at it - you have the budget collected to hire out.

Either way, the "envelope" method helps for everyone to feel fair about how much effort they contribute and the household stays orderly. Budgeting the work and budgeting the pay helps everyone feel compensated for extra effort and the house stays organized. Try this one at home and let us know how it plays out. 

Friday, 9 March 2012

15% for All

We filed our taxes this week. The picture on the wall of our tax preparer’s office included the quote: “When the first 1% income tax rate was being debated in 1913, a U.S. Senator opposed to it stated, "If they get away with 1% today, some day it may be raised to as high as 5%!" How lovely would it be today to be capped at 5%? We would even be excited to cap at a certain ex-governor’s 15% if fairly distributed to all tax payers, whether their earnings were by way of nursing a patient bedside or from long-term capital gains.

We know that paying taxes is our legal obligation. And we believe it is a social responsibility to pay taxes to support the common good – our roads, street lights, schools, libraries, fire fighters, and so on. But it is a bit painful to see all in one lump sum the amount of our ‘giving’ to the government for the past year.

In the words of Scottish whisky distiller Lord Thomas R. Dewar (1864–1930) “The only thing that hurts more than paying an income tax is not having to pay an income tax.” Even though the unemployment rate is moving in the right direction, there are still too many unemployed and underemployed and we know we should be grateful that we have income for which to tax. But darn, how fun would it be if the tax rate would be capped at 15% for all?