Will Pot And Hookers Help Rescue California And Nevada From The Bush Economic Miracle?

Morning in Vegas: end of the hooker shift

Jim Gibbons, Nevada's Republican Governor took the "No Tax Increases" pledge before being elected and would rather ask already underpaid teachers to take a 6% pay cut and to lop over one-third of the support Nevada gives higher education off the state budget than go back on his pledge. Problem is, of course, the mortgage crisis, which hit Nevada's once booming housing market harder almost any other state, combined with a rapidly drying up tourist market-- both part of Bush's Republican Economic Miracle-- has left Nevada with nearly a $2 billion budget deficit this year. California, which also has a dunderheaded Republican governor, has a far worse crisis-- an $11.2 billion deficit-- headed towards $20 billion. Both states, though, have opportunities, unorthodox ones, to plug the financial holes and stimulate their economies. In Nevada's case it's prostitution and in California's it's marijuana. The question in both states is whether or not there is the political will to go for it. Both states have legislatures controlled by the Democratic Party so at least there's a chance, no matter how slim.

Nevada should be easy. Prostitution is already legal and taxed, right? Well... kinda/sorta. It's only legal (and taxed) in counties with fewer than 400,000 people, so not in Las Vegas or Reno, the places with the tourists. Oh, there's plenty of prostitution in both cities, but it's illegal and untaxed. And even in the places where it is taxed, the state, for some arcane, hypocritical, self-defeating, later-day puritanical reason (also Latter Day reason) doesn't tax prostitution. The legal prostitution business brings in around $50 million a year. The brothels have actually volunteered to pay their fair share of state taxes too. But the state is standoffish and-- at least the governor-- feels cutting teachers' salaries is a better idea.

Even the Democrats aren't free of hypocrisy, many afraid to embrace the one-eyed aunt in the squeaky rocker up in the attic. The rational solution would be to legalize prostitution across the state and close the budget deficit-- not to mention boost the tourist trade-- by taxing it like any other normal business. In fact, they could also legalize male prostitution at the same time, something else that isn't legal. Las Vegas' mayor, Oscar Goodman, is a big advocate of legalizing brothels in the city and says most tourists already think prostitution is legal statewide anyway,

“They tell me we’re missing tens of million of dollars that could be used for the school system, to keep jail guards employed, to provide mental health services,” Mr. Goodman said.

“I also believe that by regulating and controlling this business, we could make it much safer for the customers as well as the prostitutes. We kid ourselves and we’re very disingenuous if we pretend that there isn’t rampant prostitution now that is unsafe for which we get no tax revenue.”

Northern California gold rush

California has a tougher row to hoe-- but, potentially, a far more lucrative one. Like prostitution in Nevada, marijuana is kinda/sorta legal in California. Medical marijuana is a prescription away from anyone who wants it enough to find a doctor who is willing to write one. But the state's cowardly politicians don't seem to have the will to jump to the next step and legalize the gigantic marijuana industry in the state.

California NORML estimates that a legal market for marijuana could yield the state $1.5 - $2.5 billion. A basic $1 per joint excise tax would yield about $1 billion to the state, while the state would save over $150 million in enforcement costs for arrests, prosecutions and prison. Additional benefits would accrue from sales taxes and spinoff industries. Total retail sales of marijuana would be on the order of $3-$5 billion, with total economic impact of $8-$13 billion including spinoff industries such as coffeehouses, tourism, and industrial hemp.

...California NORML's analysis of the benefits of marijuana legalization are as follows:
• An excise tax of $1 per half-gram joint of marijuana would raise about $1 billion per year, as much as the current excise tax on cigarettes.
• Retail sales on the legal market would range from $3 - $5 billion, generating another $250 - 400 million in sales taxes.
• Legalization would save over $156 million in law enforcement costs for arrest, prosecution, trial and imprisonment of marijuana offenders. Intrusive CAMP helicopter surveillance would also be eliminated.
• Based on experience with the cigarette tax, total revenues of $1.5 - $2.5 billion might be realized.
• Based on experience with the wine industry, the total economic activity generated by legal marijuana could be nearly three times as great as retail sales, around $8 - $13 billion. Amsterdam-style coffeehouses would generate jobs and tourism. If the marijuana industry were just one-third the size of the wine industry, it would generate 50,000 jobs and $1.4 billion in wages, along with additional income and business tax revenues for the state.
• Industrial hemp could also become a major business, comparable to the $3.4 billion cotton industry in California.

I'd say the chances of any of this getting into Obama's Stimulus Package--regardless of how beneficial it would be to turning around California's catastrophic economic situation-- are pretty much zero. And this president admits he "inhaled... frequently; that was the point." Hypocritical Puritanism is still strong, even in California. But with a flood of foreclosures and a steadily accelerating unemployment rate shaping up for 2009 is it too much to ask our leaders to stretch a little, even to stretch outside of the traditional comfort zones we've created for ourselves? Maybe. After all, if they can't even make good on promises they've made for actions that have proven effective-- like re-strengthened the labor movement that has been devastated by Republican political operatives over the past 2 decades-- how can we expect anything really innovative. I mean, watch these guys and then keep in mind all the excuses we're hearing now about not offending Big Business, the Chamber of Commerce and the new Post-Partisan Order that is a figment of certain peoples' imaginations.