Lawrence Kudlow - Lawrence Kudlow

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Lawrence Kudlow: Volume I

Lawrence Kudlow

Creators Publishing

Hermosa Beach, CA

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Enough Pot Happy Talk

January 4, 2014

There was way too much giddiness in the media about the first day of legal pot selling in Colorado. Instead of all the happy talk, I think it's time for some sober discussion and a strong dose of education about the addiction risks of smoking marijuana particularly among young people. It may start out as a party, but it often ends up as something much, much worse.

With the grace of God, I've been clean and sober for over 18 years a recovery experience that still has me going to a lot of 12-step meetings. And I hear time and again from young people coming into the rooms to get sober how pot smoking led to harder drugs such as cocaine and heroin. Now, this is anecdotal, and I am not an expert. And I will say that many people can control alcohol or pot or other drugs. But I am not one of them. And I am not alone.

Talk to virtually any professional drug counselor, and they will warn that pot is a gateway drug. Or listen to left-of-center columnist Ruth Marcus, who has gathered important professional evidence about the risks of pot.

Ms. Marcus reminds us that the American Medical Association recommended against legalization, stating, "Cannabis is a dangerous drug and as such is a public health concern." The AMA added that pot "is the most common illicit drug involved in drugged driving, particularly in drivers under the age of 21. Early cannabis use is related to later substance-use disorders."

The AMA also noted that "Heavy cannabis use in adolescence causes persistent impairments in neurocognitive performance and IQ, and use is associated with increased rates of anxiety, mood and psychotic-thought disorders."

I am indebted to Ruth Marcus for this information. She, by the way, thinks "widespread legalization is a bad idea, if an inevitable development."

Now, I didn't hear any of this coming from the media in its first day of reporting on legal pot sales. That's way too bad. The risks associated with pot use must be discussed frequently and soberly so that all can recognize the downside threats.

Of course, legalization will encourage greater use. In turn, that greater use increases the risk of addiction illness, a lack of growth as individuals and workers, and a more non-productive society.

Normally, I'm a free-choice guy. And I realize that I'm not going to be able to stop the legalization of pot. I can't control that. But I can raise some of these important issues.

Alcohol and drug addiction are huge problems in our society. And it's not easy to get clean and sober once the disease of addiction sets in. So many people search for that great initial high, and they keep searching until they get hooked. And if and when they get hooked, the costs and consequences are frequently catastrophic.

So no, I'm not going to completely oppose the legal sale of pot. But this experiment should be studied carefully before the rest of the country decides to go forward with it.

Most of all, the legalization of pot needs serious and sober discussion not simply giddy reporting.

Business Wants Growth, Growth, Growth

January 18, 2014

Growth, growth, growth is the new mantra of the venerable Business Roundtable, whose member companies generate annual revenues of more than $7 trillion while employing 16 million workers. In past years, the BRT has put out lengthy pamphlets proposing intricate solutions for budgets, entitlements, the environment, regulations, health care and more. But this year, the BRT has gone back to basic economic blocking and tackling by bluntly saying, "If we want to control the deficit, preserve key entitlement programs, educate our children and offer upward economic mobility for everyone, we have to get our economy growing faster."

Sounds like JFK. Or Ronald Reagan. Or Jack Kemp. A rising tide lifts all boats.

This was spelled out in a Wall Street Journal op-ed by Randall Stephenson, chairman and CEO of AT&T and the new head of the Business Roundtable. When I interviewed Stephenson this past week, he talked about the need for fiscal stability, tax reform, expanded trade and immigration reform. But he zeroed in on this key point: "And make no mistake, economic growth doesn't happen absent private investment.... Where there is investment a new factory or distribution facility being built, a new store about to open, new software being installed that is where new jobs are created."

Stephenson says that in today's recovery the slowest in the modern era going back to 1947 private capital investment has lagged badly. Not coincidentally, so has the jobs situation, with 92 million dropping out of the workforce altogether. A labor-participation rate of 62.8 percent and an employment-to-population rate of 58 percent are historic lows indicative of the anemic jobs recovery.

And I might add, with all these people not working, it's not unfair to suggest an unprecedented demoralization inside the U.S. economy.

Sure, you can find great exceptions to this. There's the energy boom, the rise in social media and advances in biotechnology. But the overall jobs picture is bleak. And that has a lot to do with the absence of private capital investment. In fact, long-term capital investment is probably the single-most powerful jobs creator. And these days, we're not getting much of it. This investment cycle is the worst since World War II.

Stephenson is pleased that the Murray-Ryan budget deal will avoid a government shutdown, thereby offering some fiscal predictability. But what he and the Business Roundtable are aiming at is the total reform of the American business tax structure, where marginal rates are the highest among developed countries. He also emphasizes the need to remove barriers to bringing overseas earnings back home.

Stephenson cites a study that shows a 1-percentage-point decrease in the average corporate tax rate would raise real U.S. GDP by about 0.5 percent within one year. And he concludes that "Any serious agenda for economic growth must begin with reforming taxes for all businesses large and small."

And somebody should look at Boston University professor Laurence Kotlikoff's proposal to abolish the corporate tax altogether. According to his model, while overall growth and investment would surge, higher wages would be the biggest beneficiary.

Trouble is, as I pointed out to Stephenson, President Obama is talking about inequality and income redistribution, not growth.

Instead of unleashing entrepreneurship, Obama harps on raising the minimum wage and extending unemployment assistance. Of course, increased investment that doubles the rate of job creation would make minimum-wage and unemployment-benefit discussions unnecessary.

Obama would also penalize corporations that hold profits overseas, rather than lower penalties, so this money would come home for private investment.

In fact, most of the Democratic Party has embarked on a path to punish success, not reward it, to enlarge the reach of government in business, rather than incentivize entrepreneurship. I call this the Sandinista wing of the Democratic Party. It's named after New York City mayor Bill de Blasio, who spent a goodly amount of time in Nicaragua and Cuba and is in full-fledged attack mode to punish successful earners and businesses by raising taxes of "fairness."

Fairness is not opportunity. But tell that to Massachusetts senator Elizabeth Warren, who also is arguing for punishments on business and banking. De Blasio and Warren are spewing forth the socialist doctrine of equality of results , rather than the capitalist model of equality of opportunity. They want income leveling and redistribution the opposite of growth.