Absolutely, shutting down all the asylums was a huge mistake. I have a cousin who is a full blown paranoid schizophrenic, and he just makes life hell for everyone he knows. He isn't homeless, he's lucky enough to still have both his parents alive and he just lives in their basement at the age of 44, but I can't even imagine what dealing with that is actually like.
I'm pro death penalty but I'm also pro the insanity defense. Some people really do just need to be in a padded room. High-minded politicians inflicting them on the rest of society is complete madness.
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