Kareem opened my betting app for the first time at 11:47 on a Tuesday night. The push notification that put him there offered a $50 free bet on a three-leg parlay I had priced to lose. He deposited his rent money. He won the first leg. He lost the second. He chased the third on credit at 26% — the rate his bank had declined to offer him — and by the time he thought to step off the ramp, the balance was no longer his. It was mine. There is a woman on my collections floor named Dina who calls him about it every morning at 9:05, when his guilt peaks and the caffeine is working. She is warm and patient and walks him through the number slowly, so that he feels he is negotiating. He is confirming. I pay her $0.31 a call. The debt produces $82 a month in interest alone. There are 4,200 Kareems in the ledger. May the Lord keep them; the interest will do the rest.
Delia is a hand on the cannabis processing line I own outside Madera, California, in a county where the only employer bigger than me is the emergency room. She costs me $14.50 an hour. The respirator that would stop the cough costs 12 cents a shift, and I keep the 12 cents. She thanks me for the shift. I find it endearing. You bought the cartridge she trims — $19.99, the mango one, the one you lost under the couch last week. The dust she breathes because I don’t buy the masks coats the lungs. The literature calls it cannabis-trimmer’s lung. After three harvest cycles the cough starts. After six it doesn’t stop. I priced the ventilation upgrade at $16,800 amortized, or $0.04 a cartridge, and I kept the 4 cents. The prophet was clear on this: if a man is righteous and does not oppress anyone, does not lend at interest or take any profit — he shall surely live, declares the Lord GOD. I charge 26%. I wear the other verse closer: the borrower is servant to the lender, and I merely built a business model around Proverbs.
Andy Kessler, writing in the Journal as “The President of Vice,” has catalogued the arithmetic with alarm: a 6% increase in injury crash rates where cannabis is legal, a fourfold rise in psychiatric emergencies among 12-to-17-year-olds, half of American men under fifty holding a sports-betting account, 10% of men under thirty with a serious gambling problem, psilocybin legalized in 2 states and counting, OnlyFans approaching Hollywood box office, crypto granted light-touch regulation, the Silk Road founder pardoned. He calls it a lost generation. He is correct about the numbers. He is wrong to treat them as a warning.
The arithmetic is a price list, and the price is borne by the people I employ — and the people I lend to. The administration deregulated the on-ramps while I was building the off-ramp, and the result is a machine Kessler cannot see from the opinion page of the Journal because he stopped one sentence too early.
Stay with me. I want you to understand how beautiful the economics are.
Kareem works Tuesday through Saturday delivering packages for a logistics company at $17.80 an hour, which is $2,848 a month before taxes. His rent is $1,100. His car note is $340. His payment to me is $230. He does not gamble anymore — the app still sends the notifications, but he hasn’t opened it in 5 months. He tithes to his church on Sundays, $40 a week, which is less than he pays me. His pastor tells him the Lord provides, and I do not disagree. The provision is $82 a month in interest and climbing. His balance at 26%, compounding monthly, becomes $5,300 in 14 months if he makes every payment on time. He will not make every payment on time. The late fees are where the margin lives. His recovery — him getting clean, stopping the payments, paying the principal in full and walking away — would cost me more than the balance itself. I have optimized for the debt. The optimization is the business.
Now pull back with me, because this is the part worth learning. The administration has built a machine that produces damaged workers at scale and then defunds the treatment that would restore them to full price. Legalization expands the pool of addiction. Deregulation of sports betting deepens the pool of debt. The studied non-enforcement of workplace safety keeps the mask off the line. At the same moment, Congress quietly starves the Medicaid expansion that would pay for the detox bed, and the county board votes down the mental-health levy because the taxpayer is tired. The worker who would have cost $22 an hour healthy now costs $14.50 broken, and the $7.50 difference is a subsidy paid by no line item on any budget. It is a transfer from the body to my balance sheet, and the body never sees the debit.
Delia came to my line through a probation office referral — a possession charge from her early twenties, before legalization made the same act a business I own. Her record keeps her out of the jobs that pay a living wage. She cannot pass the background check for the warehouse in town. She cannot afford the car to reach it anyway. So she takes $14.50, no mask, and the cough, because the alternative is nothing. The administration’s full-spectrum normalization of vice has made sure the line of applicants never shortens. Slaves, obey your earthly masters with fear and trembling, in singleness of heart, as unto Christ — Ephesians 6:5. The addicted, the indebted, the disqualified: this is the most obedient labor I have ever managed. They do not organize. They do not complain. They thank me for the shift. The verse contains no arbitration clause. It contains no grievance procedure. It is a contract with a single signature, and the signature belongs to the master.
Every newly legal bet, every frictionless deposit, every push notification at 11:47 at night produces a balance, and every balance produces a debtor, and every debtor produces a monthly transfer of $82 or $127 or $340 to someone like me. Every arrest record, every possession charge, every treatment gap produces a worker who cannot negotiate her wage, and every worker who cannot negotiate costs me $7.50 less an hour. Dina’s salary — the woman who calls Kareem every morning, who has heard him go quiet, who knows the sound of a man deciding to pay — is $2,440 a month. Kareem’s interest alone is $82 a month. Thirty Kareems cover Dina entirely. I have 4,200 of them. The app that manufactured his balance costs $0.004 per user per day to run — four-thousandths of a dollar, a figure that does not clear the rounding threshold of the coffee Dina drinks while she dials.
I keep a spreadsheet open on a second monitor. Kareem’s row is 2,847. Delia’s quarterly bonus, if she ever earned one, would be 38 hours of her own wage. I keep that too. The earth is the Lord’s and everything in it. My share this quarter was $1.2 million.
Kessler wants education and treatment. I want the treatment to keep them functional enough to show up. The President of Vice has delivered both the intake and the treatment gap — the supply of damaged bodies and the state’s indifference to their absorption — and the quarterly number is the best it has ever been. I am not worried about the lost generation. I am, on the whole, content. The gratitude is the obscenity, and I do not apologize for it, because the math has already spoken and the math does not require apology. I have never had a reason to look past it.
Sterling A. Varice holds the Hayek-Friedman Chair and serves as Dean of Instruction at Warden University’s College of Business and Economics in Richmond, Virginia. He is the author of three textbooks: Divine Mandates for Labor Utilization, Social Obligations for Profit Maximization, and Calibrated Deprivation: A Manager’s Guide to Employee Motivation.