Cannabis Cronies

Cannabis Cronies

Strike it rich in Ohio

Conspiracy Theorist

By Mark Luedtke

Publication date: 041817

People literally kill to become part of the exclusive marijuana producers’ cartel. That’s because marijuana producers rapidly become obscenely rich. Of course there’s a risk because marijuana is banned. Drug kingpins risk being murdered by competing producers. They risk being murdered by cops, and cops are often competitors. Drug kingpins also risk being thrown in jail.

Except for a few. Out of 11.6 million Ohioans, twelve cronies will win the Ohio medical marijuana lottery. Ohio rulers have created their own marijuana cartel and bestowed kingpin status on them. They bestowed minor kingpin status on twelve other smaller producers.  Marijuana Times reports, “The larger growers (Level 1) will need a total of $200,000 to get a license under the proposed rules, while the smaller growers (Level 2) will only need $20,000. Besides the money, potential licensed growers will also need to prove they have enough capital funding, quality assurance and security plans, and that they test their product through a qualified lab.”

Large growers can utilize up to 25,000 square feet, small growers only up to 3,000. Because Ohio legalized medical marijuana as long as it’s produced by these cartel members, these kingpins don’t have to worry about being murdered or arrested for producing drugs. It’s hard to imagine a sweeter deal, and all you have to do to get it is pay the right rulers enough money, legally and probably not so legally, year after year. If you’re not rich and politically connected, you need not apply.

This marijuana production is supposed to be for medicinal use, but rulers heavily restrict access to it. “The Ohio medical marijuana program itself is rather restrictive, with only 21 qualifying conditions, no legal smoking and no home growing allowed, which means only a small percentage of those who could benefit from medical cannabis will be able to get it legally when the program is finally up and running,” the Times continues.

And the rules don’t stop with growers. Columbus’s News-Herald notes, “Officials from three state offices charged with developing the program are still finalizing rules for cultivators, processors, testing labs, dispensaries, patients, caregivers and doctors.”

That’s a lot of regulations to ensure pot money ends up in rulers’ wallets.

Despite the regulations, legalizing marijuana is a baby step in the right direction, but the failure to legalize home growers and smoking is a major problem. This law can’t be confused with allowing freedom. Cincinnati.com explains, “Here's the big sticking point for many marijuana advocates: Under this law, it's still illegal to smoke marijuana – even if you buy it out of state. Vaporizers, edibles and oils are OK. It goes without saying: Recreational use of marijuana also is still illegal under this law.”

No enjoyment allowed, and every Ohioan but rulers and cronies is denied the opportunity to profit.

Government’s coercive control of the marijuana market guarantees corruption will still run rampant. The Washington Post reports the Drug Enforcement Agency (DEA) continues to target marijuana users. “... marijuana remains illegal for all purposes under federal law, a policy the DEA emphatically reiterated this past summer. To that end, the DEA devoted 22 pages of its Drug Threat Assessment to pot — considerably more real estate than it devoted to, say, prescription painkillers (16 pages), which kill more than 14,000 people per year.”

But the Post also reports some good news. “However, the DEA makes the interesting claim, not present in last year's Threat Assessment, that ‘media attention’ to marijuana issues is making it more difficult to enforce marijuana laws and prosecute people who violate them. The agency also appears to blame the media for spreading inaccurate information about the legality and effects of marijuana use,” the Post wrote.

Anything that makes it harder for the DEA to prey on Americans is a good thing. But regardless of the DEA’s complaints, state rulers want the new revenue stream, so partial legalization and looting will continue.

Legalized marijuana draws rich, crony investors. Cannabiz.media reports, “In Maryland, 144 companies submitted applications for 15 marijuana cultivator licenses earlier this year, and the long list of diverse investors behind those applications might surprise you. In total, more than 950 people were listed as working for or investing in the companies that applied for these licenses. The list includes business executives, politicians, lawyers, lobbyists, government leaders, law enforcement professionals, and military leaders.”

And bankers. No surprise at all.

Originally published in the Dayton City Paper.

Ohio Bans Plywood for Foreclosures

Ohio Bans Plywood for Foreclosures

Crony capitalist strikes it rich

Conspiracy Theorist

By Mark Luedtke

Publication date 021417

The Dayton Daily News recently published an article detailing how crony socialism enables rulers to strike it rich at the expense of everybody else. The article reads like an advertisement for Community Blight Solutions’ SecureView products.

“Clear boarding products are shatter- and tamper-proof, preventing vandalism, trespassing, squatting and other crimes in vacant properties, said [the founder and chairman of Community Blight Solutions Robert] Klein, who advocated for House Bill 463. Clear boards allow police and property owners to see inside buildings to make sure no intruders or other trouble is inside,” gushes the DDN. “Most notably, clear boards tend to be indistinguishable from windows and glass doors, meaning they don’t publicize that a property is empty as plywood does, Klein said.”

The DDN wants you to believe SecureView products are a panacea for blight, as if blight is caused by plywood, not a broken economy. Critics of the plan say… I don’t know what they say. As usual the DDN presents no counter to its propaganda.

But there’s a catch. “Clear boarding products are more expensive than plywood. A 48-by-96-inch SecureView window cover runs about $115 per sheet. A SecureView security door costs about $395.”

That’s over ten times the cost of plywood. It’s nearly 40 times the cost of a plywood sheet for a door. Klein and his partners struck the mother lode.

Of course he lobbied for this ban on plywood. We tend to speak of lobbying as if it was a legitimate, although often abused, activity. It isn’t legitimate. Lobbying is the purchase of government’s illegitimate power of coercion. Politicians sell that power to the highest bidder constrained by their ability to get re-elected. This is how politicians get rich fast and their rich cronies become super-rich faster.

Ohio is the first state to pass such a law. Klein must have successfully purchased a lot of votes.

But the DDN wants us to believe politicians care about taxpayers. “The law won’t affect Springfield or other municipalities that board up abandoned structures, Springfield Planning, Zoning and Code Administrator Stephen Thompson said. He believes the new requirements might improve blight in neighborhoods,” it wrote. “‘I would hope so but it’s hard to tell what the real impact of something like this will be,’ Thompson said.”

The law only applies to mortgage lenders. There’s not many of them so their votes aren’t important. They can be preyed upon to fund a plan advertised to fight blight.

But Thompson really knows what the impact of this law will be. While some mortgage lenders will pay the exorbitant additional cost to board up houses, making Klein super-rich, many will forego boarding up properties at all. More foreclosed houses will be used as crack houses and by squatters. Blight will increase. The additional costs will put marginal mortgage lenders out of business, hurting the economy, and they’ll be taken over by bigger companies, funneling more wealth into the hands of the few.

We’ll eventually read about these supposedly unintended consequences. They aren’t unintended. These consequences benefit rulers. They give them excuses to further interfere in the economy, making themselves and their cronies richer again.

The DDN inadvertently notes another way taxpayers are harmed by this legislation. “Fannie Mae, one of two massive U.S. government-backed agencies to buy and guarantee mortgages, was an early adopter of clear board alternatives,” it reported. “The housing finance giant started using polycarbonate coverings in 2013 to maintain its post-foreclosure properties in a handful of states, including Ohio. By the end of 2014, Fannie Mae had implemented clear boarding across all of its markets.”

Fannie Mae was created by Congress and is backed by taxpayers. Taxpayers bailed out Fannie Mae and Freddie Mac in 2008. Taxpayers will have to bail them and their clear board products out again soon.

But rulers declare the cost is worth it. Jake Williamson, vice president of Fannie Mae’s distressed assessment fulfillment division, told the DDN, “We feel the product is a bit safer and more secure than plywood.’”

A bit safer sounds worth paying ten times or 40 times more.

This article exposes the anatomy of legalized crony corruption that goes on every day in government halls in plain sight. Rulers think of taxpayers as an unlimited supply of wealth. They milk us like cows for every pet project that makes them and their cronies richer and us poorer, and like cows, we let it happen. Then we’re outraged when the negative consequences become obvious.

Originally published in the Dayton City Paper.

Thou Shalt Not Share

Thou Shalt Not Share

But the sharing economy is winning

Conspiracy Theorist

By Mark Luedtke

Publication date: 120616

Taxi companies have declared war. In a handful of years, Uber and its ridesharing model went from nothing to the most valuable startup in history. Two and a half years ago, Uber was worth $18.2 billion. The New York Times valued Uber at $62.5 billion in December of 2015. Clearly this valuation is a product of the bubble, but there’s no arguing with Uber’s stratospheric growth.

There’s a reason for this. Uber is superior to taxi companies. That’s because taxi companies are organized and cartelized by governments. Uber’s cars tend to be cleaner, the drivers friendlier, and the service more reliable. So for government-controlled taxi companies, there’s only one thing to do: get governments worldwide to use their power of coercion to degrade and shut down the competition, harming consumers in the process.

That plan is working well in Europe. The Stack reports, “Global ride-sharing crusader Uber, which rarely passes a day without skirmish in one of its target markets worldwide, has had a particularly tough 24 hours, as France fines it for running an ‘illegal taxi service’ and German courts uphold a protested ban on running an ‘unlicensed’ service.”

Germany, France, Spain and Italy have banned Uber. France also prosecuted and fined Uber executives. But in the European Union (EU), unelected continental bureaucrats have the final say. Fortune informs, “Uber will seek to convince Europe’s top court next week that it is a digital service, not a transport company, in a case that could determine whether app-based startups should be exempt from strict laws meant for regular companies.”

That difference is at the heart of all of Uber’s legal battles which it’s also fighting all over the US. The facts are not important in any of these cases. Neither are Uber’s social benefits, like reducing drunk driving. The only thing that matters is who pays rulers the most so rulings favor the most politically-connected party which has been the taxi companies. Uber recently figured that out and responded in kind. Now it’s winning those battles at least in the US. “The success [in Colorado], says Justin Kintz, Uber’s head of public policy for North America, is ‘a tale as old as time—it’s the power of the people,’” writes Bloomberg. “It’s also a tale about the power of backroom lobbying. Although Uber promotes itself as a great disrupter, it’s quickly mastered the old art of political influence. Over the past year, Uber built one of the largest and most successful lobbying forces in the country, with a presence in almost every statehouse. It has 250 lobbyists and 29 lobbying firms registered in capitols around the nation, at least a third more than Wal-Mart Stores. That doesn’t count municipal lobbyists.”

This illustrates how rulers drag businesses into the parasitic political economy. Rulers forced Uber to waste resources fighting coercive attacks from government that could have been used to improve the quality of life of consumers.

So far, Uber has managed to avoid being banned by major US cities except Austin, Tx. Dayton’s taxi drivers want Dayton’s rulers to do the same.

Government doesn’t just target Uber. It targets all sharing apps including Uber’s competitors and home-sharing. Home-sharing app Airbnb is under attack because it threatens the politically connected hotel companies. The Mises Institute relates, “Late last week, Governor Cuomo signed legislation which made his position on the sharing economy painfully clear to New York City residents. Capitulating to the whims of the traditional hotel industry, Cuomo made history by adopting the nation’s strictest home-sharing regulations, essentially banning the home-sharing industry from operating within city limits.”

Similarly, the Federal Aviation Administration (FAA) shut down flight-sharing apps. Government is about protecting the status quo from improvement by shutting down innovative competitors to politically-connected businesses. That’s why Massachusetts taxes ride-sharing to fund taxis.

Despite losing numerous regulatory battles, ride-sharing companies are clearly winning the war. Uber facilitated its billionth ride last December. Like the word google entered common lexicon as a specialized substitute for the word search, the word uber has already entered common lexicon as an alternative to the word taxi, and it’s done so more rapidly.

And Uber continues to innovate. It added technology to compete with buses. Lack of regulations in Pittsburgh convinced Uber to use the city to test its self-driving fleet. Its self-driving truck recently delivered 2,000 cases of beer.

We would live in a Jetsons’ world if we would just get government out of our way.

Originally published in the Dayton City Paper.

Oops, They Did It Again

Oops, They Did It Again

Dayton’s rulers squander other people’s money

Conspiracy Theorist

By Mark Luedtke

Publication date: 112916

For anybody who exposes the petty and not so petty, but legal, graft that permeates government at all levels, Dayton’s rulers are the gift that keeps on giving. The Dayton Daily News reports on the latest development of its former property. “The city of Dayton will spend $294,500 to finish demolishing and cleaning up a downtown property that formerly housed the Dayton Daily News operations, in the hope of setting the stage for its redevelopment,” Cornelius Frolik recently wrote.

That might sound like good news for people who’ve driven past that eyesore for years, but it’s just another cover for armed robbery. Dayton’s greedy rulers aren’t spending their own money to clean up the property. They’re stealing money from taxpayers at the point of the government’s gun and using that money to clean up the property. This is Dayton’s super-mafia at its most transparent.

The big winner is Bladecutters Inc., the company rulers hired to clean up the property. A cynical person might wonder why a lawn care company got a contract to clean up a bunch of concrete. Enriching rulers and cronies, not providing services, is the function of government. This is a naked transfer of wealth from Dayton’s poor and middle class taxpayers to the wealthy owners of Bladecutters with Dayton’s rulers taking their cut. You have to pay to do business in their town or you end up wearing shiny bracelets with chains.

It’s instructive to recall how this boondoggle began. “An $18 million student housing complex is planned for downtown Dayton at the site of the former Dayton Daily News building and adjacent property, Cox Media Group Ohio announced Wednesday,” the DDN cooed in April, 2013. “Cox Media Group Ohio said it plans to sell the property to the nonprofit United Housing and Community Services Corporation of California, which would partner with Missouri-based Student Suites to build the 350-bed facility just a few blocks from Sinclair Community College.”

The project was a giveaway to already subsidized Sinclair. The DDN continued its propaganda, “‘This takes a block that has been neglected to a shameful extent and really gives it new life,’ said City Commissioner Matt Joseph. ‘Having residents there, having investment there … you’ve seen it before where a little bit of investment in one place really starts something.”

It continued, “‘The market is unquestionably there,’ [Dayton’s director of cronyism] Sorrell said. ‘The market studies that have been done over the years have shown a huge demand for student housing. … This project of 350 beds just scratches the surface of the demand.”

So much for socialist analysis and plans.

This project was shady from the beginning, but the DDN, which hilariously claims to hold government accountable, presented no skepticism or critical analysis of the plan. Cox donated $1 million, Dayton’s rulers donated $1 million of taxpayers’ money, and $13.5 million was to be financed through tax-exempt bonds. The developers only had to put up $2.5 million. No bankers would fund this deal because of the risk. Sweetheart deals like this are available only from governments to cronies.

Despite $1.2 million spent by city government, the project never got off the ground. “Sinclair Community College students this month were supposed to move into a 350-bed housing complex near campus that Dayton officials hoped would be a cornerstone of downtown revitalization,” admitted the DDN in August 2014. “But federal rules and financing problems have delayed the $18 million Student Suites project on Fourth Street, and the site sits empty, except for debris and a few idle pieces of construction equipment.”

The project is still stalled. Rulers are supposed to be smarter, wiser and more benevolent than the rest of us, that’s why they wield government’s power of coercion against us, but the pros from Dayton aren’t so smart after all.

Imagine you worked in the private sector, you were tasked with developing some property, and the project stalled for three and a half years despite you spending over $1 million. You’d be out of a job and rightly so. The marketplace doesn’t tolerate incompetence on that scale.

Government not only tolerates such incompetence it rewards it. During this debacle voters voted to make the temporary part of Dayton’s income tax permanent then voted to increase the income tax. They’d have been better off shooting themselves in the foot. Now Dayton’s rulers will squander more taxdollars by lining their own pockets and those of their cronies.

Never trust socialists or their propagandists.

Originally published in the Dayton City Paper.

Downtown Dayton Housing Insanity

Downtown Dayton Housing Insanity

Conspiracy Theorist

by Mark Luedtke

publication date: 122314

With apologies to The Who: Meet the new housing bubble. Same as the old housing bubble, but worse. In September, 2013, the most expensive home in Manhattan cost $130 million. By May, 2014, somebody paid $147 million for a New York mansion. Similar bubbles are expanding from London to Australia. Prices for housing for the rich have skyrocketed around the world.

Dayton hasn’t escaped the insanity. The Dayton Daily News reports, “Charlie Simms, president of Charles Simms Development, said his company is negotiating to purchase a parking lot on the southeast corner of Sears and Second streets to make room for the new townhouses near the Second Street Market. The development, which if built according to current plans, will feature 22-townhomes that will be sold for between $180,000 and $210,000, Simms said.”

Simms’s company developed three other downtown residential developments at Patterson Square, Rubicon Square and Patterson Place.

You don’t have to be an economist to recognize something is grossly wrong here. Not two blocks west from two of Simms’s developments, half of downtown Dayton real estate sits empty. Retail fronts are empty. Except on show nights, after 5:00pm, the city looks like a graveyard. The entire region is overbuilt. Taxpayers in Miami County have been forced to pay for the destruction of 80 properties since 2009.  Yet Simms is making money building expensive, new housing. This begs the question of how.

The DDN continues, “Simms told the Dayton Daily News in August that there remained a strong demand for urban living and that could result in the remaining townhomes and condos from his Rubicon Square and Patterson Place developments to be sold out by late this year or early 2015.”

Rubicon Square, completed a year and half ago by Miami Valley Hospital, hasn’t sold out, so demand cannot be as strong as Simms would have us believe.

Clearly market forces are not behind the development of housing downtown by Simms or at the Water Street development.  What Simms calls demand isn’t real demand. It isn’t market-driven. It’s bubble-money demand, and these projects are being supplied by bubble-money too. Blame the Federal Reserve (Fed) for this distortion of markets. Dayton is experiencing a textbook example of a housing bubble, the same as the rest of the world. As every central bank in the world legally counterfeits money in lockstep, bubbles are being blown worldwide, including this housing bubble in Dayton. The same is happening in the entire region.

Because the Fed is holding interest rates at zero, projects that wouldn’t be profitable in an honest market - one with real interest rates - appear profitable while the interest rates are held artificially low. This allows Simms and other political cronies to borrow money at zero interest and divert capital - building materials and labor - away from productive projects to fund their wealth-destroying projects.

The Austrian School of Economics calls this malinvestment. The result of these projects is the waste of resources that doesn’t become apparent until the bust hits. When the bust hits, the malinvestments become apparent: the empty, decrepit factories, shopping centers, retail spaces, houses and other decrepit properties we see everywhere in Dayton. Dayton is littered with the malinvestments of the past.  Simms and others building housing downtown are creating malinvestments of the present, soon to be exposed.

Local rulers make the problem worse with subsidies because it’s still hard for many developers to get loans. The DDN explains, “Instead, developers have to package tax credits, grants and loans, a process that is time consuming. Which is where the city and/or Citywide can step in.” Citywide is funded in part by the city.

Our rulers are stealing our money to fund malinvestment by their cronies, making them richer, us poorer and saddling the city with new, soon-to-be decrepit, underutilized and abandoned buildings like the eyesore parking garage on the river by Riverscape. They’re not only stealing our money. They’re stealing resources from us that, if we had a free market, would be employed to benefit everybody.

Our rulers make every day Christmas for their rich cronies. Dayton Mayor Whaley said of Simms, “Charlie was the first one in. They’ve been successful in that model, so we want to continue that model.” In other words, more subsidies for her good crony Simms.

But even the good times for the rich must end. Eventually interest rates rise and malinvestments become exposed. While still keeping interest rates at zero, the Fed recently ended its unprecedented Quantitative Easing (QE) program in which it counterfeited up to $85 billion a month. Former Reagan budget director David Stockman warns low oil prices are on the verge of exposing malinvestments made in the fracking business, popping a bubble he believes to be bigger than the housing bubble.

The regular rich are about to get slammed the way poor and middle class people already have been. Politicians and plutocrats will own pretty much everything in our new feudal society. If you think wealth disparity is bad now, wait until government’s institutionalized thieves steal everything.

Originally published in the Dayton City Paper.

Congratulations, It’s a Parking Garage

I bet if you were free to build anything you wanted on a prime piece of Dayton real estate, say the intersection of Patterson Blvd. and the Great Miami River, you would build a business that would attract lots of people from all over to make lots of money. This location overlooking the Mad River merging with the Great Miami, overlooking the fountains, cries out for a thriving business that would bring people downtown every day. One of the last things you would build is a parking garage because that would squander one of the most beautiful locations in Dayton.

But Dayton’s rulers think they’re smarter than everybody else, so they’re putting a parking garage there. Instead of a thriving business where people could sit on a patio and enjoy Dayton’s most valuable natural resource and natural beauty, they’re building a parking garage that nobody will enjoy and will create virtually no wealth. It will just be another centrally planned eyesore along the river.

Maybe I’m being too harsh. At least they’re not putting a school there. They already put a school on the other side of the river. At least they’re not putting a park there. They put a wealth-destroying park across the street and across the river too. At least they’re not putting a firehouse there. They put a firehouse at Main Street overlooking the river; squandering another beautiful location.

This parking garage will serve residents and employees of PNC bank in Crawford Hoyings’ Water Street Redevelopment partially paid for by money stolen from taxpayers. Dayton’s rulers are very generous at giving money stolen from taxpayers to their rich cronies. The Dayton Daily News, parroting Dayton’s rulers, calls this Filling a need in downtown Dayton. Maybe they haven’t noticed half the commercial and residential space downtown is empty. All this building will do is take the riverfront away from the people of Dayton. Because of its central plan, it will attract few to visit, let alone move downtown. Our rulers tell us people are moving downtown, but they’re only moving because they are stealing money from taxpayers and using that money to subsidize their rent, making everybody but the recipients and themselves poorer. Oddly, our rulers and their media propagandists never report that as downtown becomes more impoverished every year.

In a related story, Dayton’s rulers will start their centrally planned Riverscape River Run whitewater project on the Great Miami River this year. The $4 million project is supposed to attract people downtown, as if a thirty-second whitewater ride with a view of Dayton’s scenic parking garage, school and firehouse is any attraction. At least the parks are pretty. Since there’s little to do downtown because our rulers bankrupted all the businesses, anybody who does show up will zip in and out of town without spending a dime. This is another waste of money, but at least it was raised voluntarily.

In contrast, the NBA finals featured images of the beautiful San Antonio Riverwalk. The San Antonio River, a creek by Ohio standards, teems with thriving businesses. Hoards of people visit and spend money there all day, every day, creating wealth that benefits everybody. It attracts tourists from around the world.

Dayton could be even better. If Dayton’s rulers freed the river, entrepreneurs would invest their own money and transform it into a world-class attraction and wealth-creation district in no time, but our rulers couldn’t profit off money stolen from taxpayers that way. They aren’t stupid. They’re using their power to legally steal to greedily advance their personal economic interests. They’ll make lots of money from the perfectly legal kickbacks they receive from these plutocrat enrichment projects.

Theft of wealth and central planning by Dayton’s rulers are the problem, not the solution to Dayton’s economic woes.