Vice Wars: Supply supports demand. Why do we continue to ineffectually attack supply rather than demand?

     Vices — desires that are considered unacceptable by society (or parts of society). Such vices include drugs (alcohol, opioids, tobacco, …) and personal interactions (prostitution, gambling, …)

     A basis of capitalism is the idea of supply and demand. Although the United States is an extremely strong proponent of capitalism (and, at present, unrestrained capitalism) this reality seems to be easily forgotten.

     As long as demand exists, people will find ways to meet it with supplies. As soon as the Eighteenth Amendment was passed in 2019 (and, later, with additional enforcement provided by the Volstead Act), groups and individuals started determining ways to continue to meet the demand for alcohol. Alas, there is a difference between illegal commerce and legal commerce. By definition, meeting the demand for something illegal is a criminal activity and, thus, requires weakening of, and removal of, any obstructions that might impede the delivery of supplies for that demand.

     In that period, the continued demand built up the strength of organized crime and filled their coffers. It also created holes in government and enforcement via corruption and, as often possible with humans and their weaknesses, blackmail and extortion. All in all, the period of Prohibition was one of the strongest supports of organized crime within the US (and, to an indirect degree, the rest of the world) in history. Yet it was all following the principles of capitalism.

     When the Twenty-First Amendment was passed in 1931, it was done as a reluctant admission that Prohibition not only didn’t work but was a huge impetus for crime and corruption. The “temperance” movement continued to exist (and still does to some extent) but the majority said “no more”.

• So, with that flagrant example of the inability to both support capitalism and, at the same time, fight against capitalism (but only in areas defined as unwanted — without removing the demand), the United States would surely have learned its lessons?

• It would admit that supply and demand can be manipulated but not eliminated?

• It would observe that making the supply illegal does not affect demand but only hurts the surrounding infrastructure by continuing the supply outside, and through, the law?

     No. It is rare for groups of humans to adequately remember, and learn, from history. We see that over and over and over.

     And now we see the consequences of the continued folly of this fight against capitalistic principles, Rather than increase efforts, and support, to REDUCE demand (which immediately reduces supply, prices, and competition) — we continue to fight the supply side. Although we have yet to see any evidence that current attacks are even associated with the supply-side of fentanyl trade, we know that it will not work against any potential fentanyl problems.

So, why does it continue? Attacking the supply side, in itself, increases profits.

• By making it more difficult to bring supply to the demand, the price goes up and the profits go up for the suppliers.

• It adds jobs to the economy — to attempt suppression of the supply.

• With the increased profits received by the suppliers, they can give back money to politicians and enforcement officials to keep anti-vice laws in effect and to create the supply line holes which are useful for their business. Also known as corruption and misdirection.

• The actions of “attacking the supply side” can be used as camouflage, or distractions, for other political, or economic, purposes. Such as the current attacks on (totally unproven) “fentanyl supply” from Venezuela.

• It can give the appearance that something is being done to reduce the amount of the vice (whatever vice it may be).

     Attacking the supply side creates great profits (and jobs within both enforcement and criminal production). The fact that these profits are counter-productive to reducing demand, and support corruption and crime, is “beside the point”.

To reduce vices, reduce demand. So simple, so hard.

[ NOTE: In cases where unwilling people are involved, there are laws about kidnapping, extortion, rape, blackmail, theft, battery, assault, and so forth ]

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Infotainment: When pandering to predetermined mindsets is more profitable than telling the truth

     When Rupert Murdoch started Fox News in 1996, his primary motivation was to produce a profit-creating entity. The Australian-born oligarch (current estimated wealth $23.6 billion) obtained U.S. citizenship to meet the legal requirements to purchase US media outlets. And that he did — his News Corp. is an umbrella organization that controls a lot of media companies — including Fox News, the Wall Street Journal and 800 companies in 50 countries.

     Profit, as stated earlier, is the prime motivator. Although one of the first to recognize that creation of media news could be manipulated to encourage certain viewers and advertisers to remain loyal — which stabilizes and increases profit margins, his stance has brought other large media organizations into the same viewpoint. Profit is to be enhanced by presenting what the viewers want to see/hear/read.

     Note that, although the tabloid journals (such as the National Enquirer) were present (and before that, “yellow journalism” — referring to the quick yellowing of the cheap paper used for printing of non-journalistic newspapers), Fox News was among the first to move the structure to broadcast media. It has since spread both to streaming as well as to studios theoretically “progressive” or “left”. It is further on the increase because the current Administration is penalizing, and forcing behavior, contrary to the First Amendment.

     This is the definition of infotainment used within this newsletter. Presenting entertainment as journalistic information is infotainment. If you do a search on the term, you will find that the term is also used within “infotainment systems” which indicates a system (such as a car dashboard system) which can present entertainment AND information (traffic, maps, real news, …) Infotainment, such as presented within Fox News, is a merged version of sometimes journalism and often self-created stories that will appeal to the audience and advertisers.

     Journalism is just too iffy. The news may reinforce the viewers preconceptions or it may counter them. Profits, and advertiser and consumer loyalty may vary. Undesirable. So, control the contents. If the real news would not appeal to the targeted audience, change it or invent new stories to supplant the true, but unappealing, news. And, if a particular set of stories seems to appeal to the targeted audience, then create more of them. Free publicity in the world of politics (anywhere, but particularly the US) is “gold” and likely was a primary reason for the outcome of the US Presidential race in 2016.

     Profit is the primary goal of infotainment. But selection of the targeted audience, and subsequent invention/manipulation of the information presented, is according to the desires of the owner(s). With journalism, as done following proper standards, the news is (or should be) free of bias (as much as humanly possible). This is not a goal of infotainment and the bias will be slanted (lightly or heavily) in the direction of the opinions of the owner(s) of the studio.

What are journalism’s standards? While there is not a single definitive list, they include:

• Truth/Accuracy: Journalists should ensure they report accurate information by verifying all research and facts, using reliable sources, attributing information, etc.

• Independence: Journalists should act independently of political, corporate, financial, or personal affiliations that could be considered conflicts of interest.

• Fairness/Impartiality: Journalists should consider every side in a story and present each piece of the story in a balanced, objective way.

• Humanity: Journalists should minimize harm by being aware of the impact their words and images could have on other people.

• Accountability: Journalists should hold themselves responsible; they should correct errors, listen to their audience, and provide solutions to any issues that may arise due to their reporting.

Note that “normalizing” is NOT a journalistic standard. Evil is evil. Stupid is stupid.

     An infotainment channel does not require adherence to any of these standards and, with media in the control of ultra-wealthy individuals and mega corporations, the larger conduits are less and less able to believed and followed. This leaves a dilemma for consumers who WANT journalistic standards to be followed. Much smaller, independent, sources are needed but judging the adherence to standards is then left to the individual. Many will SAY they adhere to such — not all do.

     I don’t have an answer — certainly not an easy answer. But, referring to an earlier newsletter/blog, it is necessary to “question everything”. Fact-check, check for references, consistency, occasional retractions (no one gets things right every time), language use. I continue to subscribe to one newsletter that proudly says “unbiased news you can trust” but the language that they use is highly biased leaving the rest of their reportage rather suspicious.

     We NEED journalistic standards. We need help in examining the world. It is exhausting attempting continuous checking. But, at the present, it’s what we have.

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Back to basics: Supply and demand

 

     The economic theory of capitalism has, as one of its basic aspects, the idea of supply and demand. This blog may be "old news" to many -- but not to others.

     The amount of product (supply) at a given price tries to reach a balance of demand and willingness/ability to pay. Under many conditions, this works as a self-maintaining mechanism. There are quite a few cases -- sometimes called "edge conditions" -- in which it does not work well. These cases include newly introduced products, pandemics, shortages, monopolies/cartels, and other cases where the balance gets thrown off rapidly.

     No company wants to sell a product below the cost needed to manufacture and provide. However, there are cases where this may be to their advantage. One is when demand has gone down so much (temporarily or permanently) that they have the cost of storing a large amount of inventory from which they don't expect a profitable return on investment. Another is as a "loss leader" -- making the price attractive to attract potential buyers of other, higher profit, items (often done by grocery stores). The final one mentioned here is that of forcing the competition to quit. A company with "deep pockets" (money available in reserve) can force their competitors to stop making competitive products. Usually this is legal but will often leave widespread bad feelings.

     Newly introduced products will require development, marketing, and promotion. The creator of the products hopes that these costs will be covered by eventual sales. But, at the beginning, they will likely need to sell below cost while building a market. When Honda introduced the higher-end Acura line, they priced the cars very close to that of their Honda line -- increasing the price as the brand-name recognition developed.

     Pandemics are special cases where both shortages and surplus can exist -- even at the same time. When most people stopped driving and stayed at home, the need for gasoline plummeted and the price of gas went down (not to the same extent). But fewer trucks on the road, and ships and trains moving product, and fewer people to staff the fields and factories can (and did) lead to shortages.

    Shortages indicate less supply than potential demand. In addition to pandemics, it can be part of a situation where production is reduced on purpose (oil, for example), because of disease (bird diseases causing reduction in chicken numbers), because of environmental problems (droughts, floods, unexpected hot or cold temperatures, ...), and deliberate reduction in cases where there is little competition (arson of facilities and other methods). There is usually no inherent requirement to raise prices when supplies are not enough to meet the demand. But, with only some product available to a larger set of potential consumers, how is the final market determined? By lottery (this does happen for certain products -- like the PS5, for example)?

     More often, the company increases the price. The higher the price, the fewer people want/are able to buy the product. At some price, those willing and able equal the amount of product. Record profits can be made and the supply and demand balance. For optional products, this works well. For required items (such as food), lower income people are greatly penalized. Note that, for longterm production shortages,  it is expected that other companies will start manufacturing (not true if it is caused by limited resources) and the competition will force prices back down as the supply increases.

      Monopolies and cartels allow companies to control the supply and price directly while eliminating (through agreements, buyouts, or less legal methods) competitive pressures. In the US, many laws were enacted following the Great Depression hoping to bring such under control.  A desire to increase or decrease such laws and the proactivity of enforcement of such laws depends upon current political vision. Other than those laws, business practices and prices are (in the US) controlled solely by the companies.

     In theory, the number of products at a particular price will (eventually) balance against the number of people willing and able to purchase at that price. But there are many detours around theory.

     

The Puritan effect: Why are U.S. jails so full?

     In the United States, our incarceration rate is number one among the larger countries (The Seychelles have a slightly higher rate but with many fewer people). So, why does the U.S. have so many people in prison? Are U.S citizens just natural crooks?

     And should we care? Well, the greater the number of people there are in jail, the fewer there are paying taxes and participating in constructive contributions to society. In addition, a person in jail costs the community/state/federal government from $70,000/year to $200,000/year. Personally, I would much prefer to use that kind of money on improving education, infrastructure, child care, and other public benefits. Remember that, even though there is no such thing as a "free lunch", we SHOULD be able to determine how our tax money is used.

     The reality is that the incarceration rate varies for all countries depending on various factors -- some of which fluctuate because of political and economic events. In the U.S., we had a very low rate of imprisonment in the 1930s and 1940s -- possibly because the U.S. economy could not support that many people in the prisons so it was primarily the violent offenders that remained there. In the 1960s, the U.S. had a "world average" of imprisonment and it has continued to rise until, today, it is about the highest in the world with around 700 people in prison for every 100,000 citizens. In contrast, Cuba has about 500, Russia has about 450, Costa Rica has about 350, and the United Kingdom has about 150.

     People are basically the same all around the world. Some are jerks. Some are criminals. Some are saints. Some are lazy. Some are hard-working. Some are poor. Some are rich. Some are smart. Some are not smart. And so forth. External aspects don't make much difference -- skin color, gender, religion, nationality, et cetera. There are some cultural influences on how important studying may be or how much physical activity is praised and rewarded but, at heart, everyone is in the same human pool.

     So, why does the U.S. presently have such a high prison rate? A large part of it has been the slide of income inequality as (true in every country) there are a higher percentage of poor people in prisons than there are of rich people (once again, NOT because poor people are more likely to be criminals). Keep in mind that a "crime" means that a law has been determined to have been broken. Thus, something may be a "crime" in one country, or by certain people, or at a certain time -- and NOT a "crime" in a different country, or when done by different people, or at a different time.

     But, specifically, there are a number of factors (not firmly listed in order -- but perhaps in order of most easily changed):

• For-profit Prisons. This makes absolutely no sense within a capitalistic society. Capitalism operates (loosely) on Supply and Demand as well as profit margins. In order to increase profits per inmate, a prison will work to reduce expenditures which is likely to increase the chance of the criminal coming back. Also, it is to their interest to INCREASE the number of criminals and they do this by heavily lobbying for increased sentences for a greater number of newly created "crimes". A profitable prison means a greater and greater number of criminals every year.
  
  
• The Pilgrim Effect and Vice Crimes. The Pilgrims were a small group of settlers within the United States -- very small in number in proportion to all of the other immigrants (all in the U.S. are immigrants -- even First Nation). But their effect on the national psyche is enormous. Or, at least, that is the way I refer to it.
  
  The Pilgrims felt that they should control how every individual behaved and thought on a daily and minute-to-minute basis. Politicians in the U.S. make use of this desire to control others by creating laws (and, when laws are created, so are crimes and criminals) that are aimed at the thoughts and behaviors of citizens THAT DO NOT AFFECT OTHERS. These are also called "vice" laws. There are lots of them -- and a huge difference between the U.S. and other countries in longer governed countries. Laws about drugs (including alcohol), gambling, sexual behavior, and so forth.
  
  One problem with these laws is they do NOT work. The "vices" continue to happen. Secondly, they do succeed in increasing the profits of those who are involved with these activities -- causing additional corruption and organized, highly profitable, criminal businesses both within and without the U.S. The U.S. attempted "Prohibition" of alcohol with the 18th Amendment. After giving the Mafia, and other organized crime, a huge boost in the U.S with attendant increases in murder and other violent crimes, the 21st Amendment reversed it but much of the damage to the country remained.
  
  A side-effect of "vice" laws and increasing their profit margins is that people who feel the need or desire for these substances/behaviors have a greater need for money to participate. This causes a multiplying effect when robberies, assaults, and other property crimes are done to be able to afford the law-enhanced prices.
  
  
• Income Inequality. There are a higher percentage of poor people in prison than there are of rich people. Some of this is similar to the predicament of Jean Valjean (Hugh Jackman in the recent movie version) in Les Miserables -- turning to crime to feed their families when they are desperate. By definition, the rich are almost never desperate except in non-economic situations.
  
  Secondly, most of the laws are written BY the rich and FOR the rich. In the federal government, most members are millionaires and it is unlikely to be coincidental that the longest sentences and greatest number of "crimes" are created for actions more likely to be done by the poor and the lightest sentences and fewest "crimes" are created for actions more likely to be done by the rich. The income discrepancy lessens as one moves down to state and local levels but still exists and makes a huge difference.
  
  
• Recidivism and Employment. When "Antman" gets out of prison for a non-violent, capital property crime he gets (with his high-tech degree) a service job from which he is fired once they find out he was convicted of a "felony". While this may be a bit out-of-place (high-tech people are less likely to be discriminated against) the general attitude, and situation, is NOT. It is as if a "felon" is given a lifetime sentence as they are forever actively prevented from being a positive economic or societal force. They may literally have "no choice" but to get sent back to being taken care of in jail.
  
  In addition to permanent economic retribution, ex-prisoners (especially from the for-profit prisons) may not have improved their ability to get a job (assuming anyone will let them have one) and be sent back to the same economic and societal environment that left them feeling that "crime" was their best option.
  
  
• Racism. J. Edgar Hoover, head of the FBI from 1935 to 1972, was a fervent racist and implemented dual-prong attacks to help keep blacks, in particular, from achieving greater opportunities. He instigated additional drug sales into poorer neighborhoods while, at the same time, blackmailing and pressuring Congress into passing laws making use of those same drugs to be a crime. What didn't use to be a crime -- now was. And what didn't use to be a problem in those neighborhoods -- now was.
  
  Prior to the various Civil Rights laws and, once again, since the Supreme Court decided (on June 25, 2013) to remove the ability to enforce many of those Civil Rights laws, many laws were put into place where they applied ONLY to people of certain definitions -- usually of certain skin colors or of more recent non-Anglo heritage.
  
  
• Unequal Enforcement. Related to income inequality in that there are different laws defined to be more likely oriented towards the rich as to the poor. However, even within the same category of laws, certain groups are favored over other groups. These groups include "whites", the rich, males, and other majority (or formerly majority)-oriented groups.
  
  A poor person may get 10 years of prison for a $10,000 theft. Meanwhile, a rich person may get 6 months probation for stealing $10 million from a group of people. The punishments are actually reverse proportionate. Discrepancies get even greater when corporate crime is committed, with no one actually getting punished at all (and only a mild discomfort when any fines are passed along to the employees and stockholders). This is a broken Justice System.
  
  Note that, in the United States, there is the notion of a "jury of our peers". This should mean that poor people should be judged by poor people and rich people judged by rich people -- but doesn't always quite mean that. However, poor people are more likely to be harsh with other poor people. I believe it is an attitude of "I had to struggle so hard to survive without having to commit crimes, how dare you take an easier route".
  
  
• Alternate Punishments. Of course, one method of reducing the number of people in prison is to have alternate punishments. It is possible to have periods of public work labor. It is possible to have a separate "withholding" of parts of a paycheck(s) to pay back damages or theft losses.
  
  The idea of alternate punishments is to address the damage(s) caused by the "crime" while retaining the ability for people to continue to contribute to society. This is normally only possible for non-violent crime. In some countries, prison is avoided by increasing the frequency of the death penalty -- which I don't recommend because it is so difficult (impossible) to correct mistakes (which do happen on a regular basis).
  

     In summation, the U.S. could quickly reduce the number of people in prison. Eliminate for-profit prisons. Eliminate laws that are about "crimes" that only affect the individual -- the "vice" crimes. AND make it retroactive such that all who have been convicted under such laws are released and their records eliminated. Make it a requirement to have a reason-produced court order to obtain criminal records of job applicants.
     Other aspects of imprisonment imply a direct change to culture and society that may end up taking many years -- but still are worthy of effort for change.

Spillover: When trickle-down meets the dam of unregulated income

     About three years ago, I wrote a blog about the "trickle-down" economic concept (Trickle Down Pyramid blog). In that blog, I talked about the difference between the advertised behavior of how the concept is supposed to behave and how it behaves in reality.

     However, at that time, I did NOT talk very much about how this split between concept and reality occurs. I will try to go into some of the aspects of how lack of regulation and proper progressive redistribution (whether via taxes or other method) makes this inevitable.

     Trickle-down seems to make sense (see the first distribution table from my earlier blog) as a concept. The idea is that you give resources (labor/money/etc.) to a set of people who can, and will, make use of it to increase productivity and the general welfare. In this process, they distribute the resources to a second "tier" of people who do the same thing by passing along to a third tier, and so forth. Thus, the resources are funnelled through the top of the pyramid and "trickle-down" to the rest of the population.

     This theory is not actually unique to capitalism. The same theory holds for many other economic philosophies. The differences lie in how the group is chosen to start the distribution and the rules of distribution. In the case of capitalism, the idea is that the people who have accumulated the most capital are the best at making use of the capital. In unregulated capitalism, these people are allowed to disperse the resources/labor/money as they see fit -- with the underlying expectation that, having previously used capital in such a manner to increase it, they are best qualified to continue to do so. Remember that money is only a symbol of resources -- so by increasing money supply they are, in theory, increasing the amount of resources (food/labor/clothing/health/etc.) I will use the world capital in the rest of this blog as a shorthand term for money/food/resources/clothing/health/etc.

     Looking at the above definition and reasoning, a number of potential problems are apparent. It is also true that, IF the person or group is competent and trying to distribute, and increase, resources that deviation from unregulated capitalism is not needed. Alas, that is very rarely the case (similar to the idea that an intelligent, benevolent, dictator can be the most effective and efficient -- but such people are very scarce and almost never succeed in continuing the system beyond the life of the original).

     The first potentially erroneous assumption is that the people who have accumulated the most capital are the best at making use of the capital. This is true only in the cases where they have demonstrated that they have these skills by starting with very little capital (perhaps only their own labor and ideas) and building it up by the proper use thereof.

     Note that, even in these cases, they are not using ONLY their own capital -- they are making use of lots of public capital (roads, energy supplies, education systems, health systems, safety systems, etc.) However, these people do demonstrate that they can make use of their own capital, in combination with public capital, to increase and accumulate. They do so with an inherited debt to the public for the contributions of the public capital.

     Can those who inherit capital have the skills? Yes -- but it is impossible to demonstrate or be certain of it. At the best, it is a different set of skills to those that are used from building up from initial levels. At the worst, it is a completely parasitic relationship -- where they are taking from the capital base and actually decreasing the distribution and use. It is "unearned" income and, arguably, undeserved. Possessing inherited capital does not indicate any ability to properly use it for the sake of the general population and should be limited as much as is possible within the system.

     The second potentially erroneous assumption is that they will make use of the capital (resources/money/labor/etc.) in a manner such that it will create MORE capital. This is the second aspect of "trickle-down". Capital has to move and be used. As in the previous blog, it cannot be held onto; it cannot be kept without circulation. Furthermore, it must be distributed to others who will ALSO be using it to create more capital. This is what creates the additional "tiers" which allow trickling to take effect.

    In summary, trickle-down runs into three specific problems. These problems are of inappropriate allocation and inheritance, retention, and lack of leveraged distribution.

     We will go into further detail as to how capital is properly distributed in another blog. However, if a group or individual is displaying a "lavish lifestyle" then it is NOT being properly distributed. As described in my blog of three years ago, the retention and personal use of excess income distorts and damages the economy.