by Karl Denninger, Market Ticker:

Let’s talk about the screamfest that is already starting, amplified in the media, about Trump’s budget and the cuts to Medicaid that are embodied in it.

Oh, cuts you say? Yes, cuts. See, Trump knows as do the other politicians that medical spending growing at 9% a year, which is the pattern over the last three decades, will bankrupt the United States. Congress pretends this “won’t happen” but I can tell you with utter certainty they are well-aware of it and in fact senate staffers admitted to me, in person, that they both were aware of it and intentionally ignoring it roughly five years ago.

What Trump is trying to do with his budget, and what the Republicans and Democrats eventually will do is toss the grenade to the States. Medicaid is the vehicle to do so; it is a federal and state joint program, so tossing off “block grants” to the states which are an effectively-fixed chunk of cash throws half the ticking bomb at them and thus blows up both federal and state budgets instead of just the federal side.

Isn’t that special?

You, for your part, will not and have not bombarded and demanded, under penalty of whatever action is necessary to enforce the demand, that both federal and state law enforcement go after the medical industry for practices that in any other business would land people in prison immediately. Specifically, refusal to quote a price, discriminating in price between like kind and quantity of purchase by a factor of 10, 100 or even 1,000% or more based on “what sort of insurance” someone has (or whether they have it at all), billing people for things they never consented to, billing people for events that didn’t happen or products that weren’t even used, allowing a doctor to call sticking his head into a room and saying “hi” as a “consultation” and billing that at several hundred dollars and more. You allow drug companies to take a drug that costs $500 for a year’s supply in other developed, first-world nations and charge $70,000 for it here instead of such an action being deemed an unlawful restraint of trade made illegal in laws that are over 100 years old resulting in indictments.

But there’s a second-level problem embedded in this budget and the screamfest which, unlike the above, hasn’t gotten a lot of digital ink from me — and that’s addiction.

Unlike some illnesses that cannot realistically be traced to someone’s deliberate acts addiction is nearly always the exact opposite. With notable exceptions (e.g. babies born addicted because their mother was a drug abuser) essentially everyone who has an addition obtained it voluntarily and we must as a society face the reality of how it happens and our part in it.

Let’s cut the crap eh? Before drug prohibition you could buy various highly addictive preparations over the counter; they were both cheap and plentiful. A small but material percentage of the population did just that and became addicted to them. Nearly all of said addicted persons were still productive members of society anyway despite being addicted to said drug.

Then we decided to change the paradigm. We decided that being addicted was an act of “moral turpitude” so severe that it was worth felony prison time to possess or distribute certain things to and among willing adults. We even tried to extend that to alcohol — with disastrous consequences.

In doing so and in refusing to repeal all of it when prohibition went away we built two economic industries that we now actively refuse to get rid of — prisons and gangs. For every person we throw in a prison on average there is $31,000 in economic activity that gets spread around various people, from cops to private firms to suppliers and similar. The anciliary economic activity, from the police forces to judges to courtrooms to bail bondsmen to lawyers, plus operating the prisons themselves adds up to tens of billions a year. Roughly half of that expense is due to drug laws and we could end them all tomorrow plus essentially all of the gang-related violence.

In addition an enormous percentage of property crime is committed by persons who are stealing things in order to buy drugs that they are addicted to. They only need to steal to buy the drugs because we made them 100 or more times as expensive as they would be if they were bought in a pharmacy over the counter. Were the latter to be the case even with very high tax rates an addict could easily panhandle for sufficient money to pay for his or her drug of choice.

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