Davidson Unplugged. August 14, Crony Capitalism at Work

Transcription

1 Davidson Unplugged August 14, 2016 Crony Capitalism at Work Hey, everyone. It's Charles Del Valle here, and I'd like to welcome you to another Davidson Unplugged. As always, I have James Dale Davidson on the line. How's it going today? It's great! Life is good. But it's also particularly interesting as somebody who's something of a history buff. I think we're in a rare moment in the world where we can see history unfolding in front of us with the kind of visibility that is usually lacking. And what I'm thinking about is part of the numerous displays of crony-capitalist conniving which are unveiled for us, perhaps unwillingly. But still, if we just look at the news, we can see things that you normally have to dig into history books to learn about. For example, I've been a think student of the free market for many years, and I think that it has great benefits to society. Not to mention the fact that it's an expression of freedom, so you should be able to open a business and sell whatever you want to sell, provided it isn't a current criminal service, like kidnapping or murdering people for hire. And there was an economist/historian whose name is Fernand Braudel. He was a Frenchman quite brilliant man who lived in Brazil for a long time, and he was the founder of the University of São Paulo, so quite an Page 1 of 8

2 interesting character. He wrote a book in which he said that you have to understand society as being composed of layers of activity. You have the market where people are buying and selling, more or less freely, and in the small business sector, most companies aren't really in the market. They live and die by their abilities to make money in the market. But above that, Braudel said, in French, you have the anti-marché which is the antimarket. And we see the antimarket in some of its grim details more clearly than usually because of some things that are in the news. One of them is the Hillary Clinton scandal, which comes back to a number of issues. One of them has to do with her receiving vast sums of money into the Clinton Foundation as apparent quid pro quos for political actions that she took as Secretary of State including one which involved the apparent trade of 20% of the U.S. uranium stockpile to a Russian company in exchange for $143 million of contributions. That's a considerable education in what Donald Trump is talking about, in terms of a broken system. And if you look further back in history, you see the beginnings of this totally deformed health care system we have. It can be traced to the early part of the last century and something called the Flexner Commission, which was funded by and pushed by the Rockefellers, who were interested in pharmaceutical products. One of the things they managed to do is close down about half the medical schools in the United States, in particular the ones that were not in the new realm of medicine that involved pharmaceutical disbursements rather than other methods of treating disease. And if you look back earlier in this country's history, in the century before to the very end of the 18th century, a well-known man named George Washington, whose face you can see on the dollar bill, was the first president of the United States Page 2 of 8

3 and the richest man in the United States. Forbes estimates that his fortune, in today's terms, was about half a billion, which was a lot of money for those times. So he could clearly have afforded any treatment that he wanted. But I used to live in Alexandria, and I've walked many times past the pharmacy that George Washington used, which is still there as a museum of pharmacy. It's an 18th-century pharmacy. And it's filled up with herbs that were used by the physicians of the 18th century to try to coax people's bodies back to health. But they also believed in this old-fashioned humor hypothesis, which you know is part of the vitalistic tradition still used in Chinese medicine. They think of elements air, earth, fire, water, wood and these were connected to different characteristics. One of the characteristics was heat, and blood was associated with heat. So when people had high fevers, they decided to drain off the extra heat by bleeding them which made sense within the paradigm of the old medicine, but it didn't necessarily help your system any if you were clinging to life to have somebody drain all the blood out of your body. And that's what happened to George Washington: He was bled to death, even though he was the richest man in the United States, because that was the best care that they could come up with. Nobody knew any better. But then, by the early part of the 20th century, there were all sorts of different competing medical schools the homeopathic, the allopathic, as it's now called, which are the ones who use the pharmaceutical products so much. And the pharmaceutical companies wanted to do away with the homeopaths because they were not prescribing their products. The FDA was an exercise in crony capitalism to deform the market for health care. And we see a similar kind of crony-capitalist conniving going on now, with efforts to prevent marijuana from Page 3 of 8

4 being legally used as a medical treatment or as a simple recreational drug. And if you look carefully I mean, you know details of this. And I suppose we need to indicate a prejudice that, Charles, you and I are both involved as investors in medical marijuana, and I happen to believe it's a very beneficial therapy for lots of things. I mean, it's been shown that medical marijuana actually does kill tumors and is also a great painrelieving remedy. And nobody, to my knowledge, has ever died of an overdose with medical marijuana, whereas tens of thousands of people have died of opioid overdoses. And so the pharmaceutical companies don't want this competition on the market because it would reduce the sale of opioids dramatically. And also, I imagine the alcohol lobby doesn't favor it either. Yeah, it's a really interesting dynamic. I've heard a lot of stories over the last year from people who actually use this medically. We have someone who has intracranial brain pressure and she's been using cannabis oil to relieve symptoms of her brain pressure, and a doctor told her she was supposed to have died about a decade ago. But instead, she started using this oil against the advice of her doctor, and it started actually relieving her pressure. It also started helping with her diabetes, and she ended up losing 100 pounds in the process of using this and she's still alive today. She says that she's gotten three different timelines from her doctors of when she was supposed to die, and she has surpassed all of them. She says it's because she's been using cannabis oil. And I don't doubt it. There is a story of a child who suffers a certain type of seizure, and they've been without a seizure for over 250 days because they've been using cannabis oil. Let me interrupt and say that, when you say without a seizure, you're talking about an unfortunate child with childhood epilepsy who is having grand mal seizures Page 4 of 8

5 two or three times a day. And his main activity was so scrambled by all these horrible seizures that he couldn't even speak. So it was a huge relief to have these seizures stopped, and the pharmaceutical products didn't work at all. And I've heard stories, too, of people who had gone through some surgery and were prescribed oxycodone or OxyContin, and then became addicted to it. And they tried to break that addiction multiple times, and really, what actually ended up helping them completely stop the addiction was cannabis. And you see this in studies. When they go through the states that have legalized cannabis, they find that prescription use of opioids has fallen because people just don't need it as much. They'd rather not use it; they know how addictive it is. And so there's a lot of evidence here that shows that there is a medical use for cannabis, and of course, the DEA just recently released the statement that they still find absolutely no medical use for cannabis whatsoever. And so, because of that, they think that it's just as dangerous as heroin. And it is one of the most absurd things that you'll ever hear, but of course this is happening. It s because you've got two big industries pushing the DEA to do this. It brings to mind a very trenchant comment that was made by Upton Sinclair in a book in which he wrote explaining how he lost his campaign for the governorship of California. He said: "Nothing is so difficult as persuading a man of a truth when his paycheck depends on not understanding it." Oh, you bet. That is certainly true. You know you have the drug companies that are against it for one, and then you have the alcohol industry that's against it. The DNC s that were released and hacked actually showed the alcohol lobby being the main people who were Page 5 of 8

6 pushing for things like Breathalyzers for cannabis use and restrictions for cannabis use. Because they know that there's a chance that people may choose to do that instead of drink, and suddenly, they may see their profits dwindle. So in this case, we have two big industries trying to protect their profit base. And quite honestly, I'm actually somewhat glad that they didn't reschedule cannabis because I think it should be completely descheduled. If they reschedule it, there's this chance that the way that they do it because the devil's in the details with these things they may decide to give big pharma the keys to all the research and then cut everybody else out of the picture. So I'd rather see more states legalize and watch the legal business and the medical business become a stronger force, so that they can start fighting back against these other two powerful businesses and try and ensure that most people can actually benefit from this. Because as of right now, in the medical states, a lot of people can benefit from it. But if people have to go in to the doctor, get a prescription, pay God knows what for an overpriced pill that is synthetic, a lot less people are going to benefit. Really, the only industry that stands to benefit from that is big pharma. So it's an interesting dynamic, and it's one that we've got to follow very closely. But it really does show right in action the effects of crony capitalism, what they can do to just upstarting billion dollar industries, essentially, and you can be sure this is going on in other places, not just the cannabis industry. You've written before about how crony capitalism is deeply, deeply entrenched in the sugar industry. Yes, that's another thing that's sort of interesting to think about as we consider this: the fact that we have a lot of development of the economy in terms of these companies that are coming up and becoming unicorns, Page 6 of 8

7 as they're called. It's shooting rapidly up from nowhere. Most of them don't require much capital investment, and they're not moving raw materials. They're only processing data, so they can develop, consequently, very, very quickly. They don't require huge buildups. All you need is basically a server someplace in an airconditioned spot, and they can grow up to have as Facebook has billions of customers, an unbelievable thought. I mean, if you're starting a company even if you were Henry Ford starting in your garage to build up to the point where you had billions of customers probably still hasn't happened. Many, many millions this company has, but not billions. So that's one of the good things about the sort of compression of innovation into these low-energydependent channels, where they're not using a lot of raw materials and things. They're not making a lot of money for a lot of people, but they're making a tremendous amount of money for a few people. And they can do this because the crony capitalists don't have time to get wound up to use the system to destroy them. You know, the landline telephone companies would have destroyed cellphones if they'd seen them coming, but who knew? You know, back in the day, when Steve Jobs first put out the ipad, I had been working in a company. We devised an idea for a similar product, and I was working with a man named Carl Page, whose brother Larry Page is a big cheese in Google. And Carl was one of the founders of Google, so he had a deep pocket, but we were just a little too slow. But I don't think that the Ma Bell companies had an idea what we're up, to or how easy it would be to turn an ipad into an iphone. If they had, they would have thought of some reason to stop it. They would have hired some crooked researcher to say that it caused brain cancer to have a cell phone and banned them for health reasons or something. They would have done something if they had known it, but it's too late to put Page 7 of 8

8 the genie back in the bottle now. But on the other hand, when you've got these big stable status-quo interests of the kind who are backing Hillary Clinton, it's not a big surprise that the Clintons left the White House broke and now they're worth hundreds of millions. It's the best government you can get: You can pay for it if you can afford it. So here we are, another light shown on a wicked world. That's right. Well, I'm sure we'll have more things to illuminate as the weeks progress. It seems this market is crazy and the world we live in's a bit crazy, yet interesting all at the same time. So with that said, Jim, I want to thank you so much for joining us today, and we'll talk again soon. All the best. Bye now. Page 8 of 8