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Baltimore's Catastrophe

Guess what? Paying for idleness destroys people...
"TRUMP backs death penalty for drug dealers," was a headline in the news, writes Bill Bonner in his Diary of a Rogue Economist, reporting from his ranch in Gualfin, Argentina.
Liberals will howl and whine. But the death penalty may be underrated. It has been used against enemy soldiers, religious heretics, political opponents, bankers, dissidents, revolutionaries, kings and queens, reformers, farmers, and witches.
In every case, it was successful.
And now, illegal drugs are killing thousands of people every year, say the papers. Legal drugs are killing thousands more, but they don't mention it.
If we just increase the penalties on the illegals, goes the logic, the dealers will go into law or politics and leave the market to the serious drug professionals at Novartis and Sanofi.
"Drugs have become a big problem here, too," said Sergio, a friend from Salta, when describing how the local culture of the Argentine Andes has changed.
"People here used to be strong and self-reliant, with close families that helped each other. They had to. The land is tough. The climate is rough. And they got no help from anyone. They planted crops. They raised animals. They made pots out of clay. They wove sweaters, blankets, and ponchos. They knew how to survive out here.
"But now, the young people don't know how to do anything. They just get money from the government. It's not much, but it's enough to live on up here. Or to buy drugs. And the worst thing is they get the money per person. So the young women don't get married anymore. They just have children."
For a moment, we had a flashback to Baltimore. Down here in the cordillera, we are a long way from Baltimore's slums. But human nature is the same. So is the way government turns nice places into sh*tholes.
Baltimore, west of Eutaw Street, is a wide expanse of modest houses built in the 19th and early 20th centuries, to offer comfortable, fairly spacious, airy, and light homes to the city's proletariat.
The ubiquitous white marble steps became an icon of Baltimore itself; it was a ritual of city life for housewives to scrub them clean; sloshing the wash water over them was as sacred a ritual as the city ever knew.
But there are hardly any clean marble steps in West Baltimore today. And hardly any housewives. And hardly any husbands. And hardly any working people, either.
Whole neighborhoods have turned into semi-abandoned slums, with boarded-up and/or burnt-out houses, and trash piled up in alleys and vacant lots.
As for the people who remain, they are like survivors of a catastrophic War of the Worlds, living amongst the ruins like rats, barely literate, barely numerate, and barely civilized.
A child born here cannot even expect to collect Social Security; he will live only as long as someone in famine-plagued North Korea. His living conditions will be worse than those in Nigeria. The poor kid has been born in a sh*thole.
Racists will say: "Well, what do you expect? That's the way those people are."
But those people weren't that way before 1965.
Between 1940 and 1960, the black poverty rate had been nearly cut in half. Blacks were gaining ground on whites – with a steady increase in black professionals and a doubling of income for blacks in skilled trades.
The streets of West Baltimore were relatively safe, inhabited by families with two parents. In the 1880s, more than three-quarters of black families had both parents present.
As recently as 1950, black women were more likely to be married than white women, and only 9% of black children lived in single-parent homes.
Today, everyone knows that Baltimore slums are hellholes of drugs, crime, and poverty. But how did they get that way?
Simple. The feds undermined the two most fundamental win-win deals that make civilization and family.
Win-win deals aren't necessarily easy. If you want to earn a living, you have to get up in the morning, dress properly, say please and thank you, and often do things you'd rather not do.
You might prefer to sit in the shade drinking a beer, but the work world has its own plans, its own schedule, and its own rules.
Likewise, if you want to get married, you have to bring something to the table...and make compromises. The woman doesn't want the man smoking in the house. He doesn't like the color pink. He snores. She whines.
And yet, marriage has proven to be such a big win-win that it is universally present – in every civilized culture we've heard of.
It's not hard to imagine why. Keeping a house. Raising children. Earning a living. Dealing with life's challenges – it's not easy, even with two people on the job.
Ideally, each party to the marriage brings something the other lacks. One earns money. The other is a good housekeeper. One can do math. The other does words. One is daring. The other is timid. One spends. One saves. Together, they succeed.
As Senator Patrick Moynihan noted in his landmark report in 1965, the disintegration of the family leads to the destruction of the whole community.
But, intentionally or accidentally, federal War on Poverty programs – begun that same year – went to work on the family with torches and pliers. Its Aid to Families with Dependent Children program only gave money to women if "no man was in the house." The Cato Institute elaborates:
"For the next few decades, means-tested welfare programs such as food stamps, public housing, Medicaid, day care, and Temporary Assistance to Needy Families penalized marriage. A mother generally received far more money from welfare if she was single rather than married. Once she took a husband, her benefits were instantly reduced by roughly 10 to 20%."
" adds that 'such a system encourages surreptitious cohabitation,' where 'many low-income parents will cohabit without reporting it to the government so that their benefits won't be cut.' These couples 'avoid marriage because marriage would result in a substantial loss of income for the family'."
People are neither always good, nor always bad...always subject to influence.
When the War on Poverty was announced, the out-of-wedlock birthrate was only 3% for the nation and 24% for blacks. Today, three out of four black people are born to unmarried women.
Crime rates rose. Poverty increased. Marriage creates stable win-win families. If you want to avoid being poor, and going to jail, say the experts, get married and stay married.
But the feds didn't stop there. They also undermined work. In a broad sense, the whole welfare system encouraged people not to work.
"You get what you pay for," said Milton Friedman. The welfare system paid for idleness; it got plenty.
Minimum wage laws also knocked the lowest rung off the employment ladder. You couldn't hire people whose skills made them worth less than the statutory minimum.
By the '70s, the schools were also failing, as the communities fell apart. This left young blacks with very low skill levels, few role models, and no way to get a win-win deal in the world of work.
Various studies have put the resulting loss of employment for unskilled blacks as high as 21% (in New York). Richard Burkhauser concluded in 2000 that minimum wages "significantly reduce the employment of the most vulnerable groups...young black adults and teenagers..."
Not satisfied with the destruction thus wrought, the feds went further.
In 1971, the Nixon administration announced a "War on Drugs". Since drug use was already heavily concentrated in the black communities, the body count in West Baltimore was bound to be high.
Many of the people shot dead in Baltimore today, for example, are victims of the drug war. And nationwide, about a million people a year are locked up for drug offenses – mostly trivial ones.
These people then have criminal records, further alienating them from the win-win worlds of work and marriage.
And now, the President of the United States has turned into a world improver. He has a plan. He wants to make dealing drugs a capital offense.
The occupation will become more hazardous. But this will make the price of drugs go up, fattening profit margins for those who stay in the business.
And what kind of person will continue to deal drugs in the face of the death penalty?
Let us guess...the hardened criminal, the desperado with nothing more to lose, and the seasoned crony with fixer friends in high places.
We can't see into the future better than anyone else. But most likely, escalating the drug war will bring more Mexico-style killings – with pitched battles between rival dealers and fights-to-the-death between dealers facing the guillotine and cops looking for battlefield glory.
But since it is the holy season of Lent, we will put on our positive, problem-solving, civic-minded O's cap and offer a real solution. The plan is elegantly simple, breathtakingly easy...and will never be implemented:
Get the feds out. No welfare. No minimum wages. No food stamps. No disability. No taxes. No regulations. No politics. No votes. No public schools. No public policies.
No war on poverty. No war on drugs. Just minimal police protection for people and their property. Otherwise, leave the poor people alone.
In short, give peace a chance.
And we will make a modest prediction. Within 10 years, West Baltimore would be the most dynamic, most prosperous urban area in the country.

New York Times best-selling finance author Bill Bonner founded The Agora, a worldwide community for private researchers and publishers, in 1979. Financial analysts within the group exposed and predicted some of the world's biggest shifts since, starting with the fall of the Soviet Union back in the late 1980s, to the collapse of the Dot Com (2000) and then mortgage finance (2008) bubbles, and the election of President Trump (2016). Sharing his personal thoughts and opinions each day from 1999 in the globally successful Daily Reckoning and then his Diary of a Rogue Economist, Bonner now makes his views and ideas available alongside analysis from a small hand-picked team of specialists through Bonner Private Research.

See full archive of Bill Bonner articles

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