Economics of the Drug War

Saturday 13 July 2013 - Filed under Uncategorized

A breakdown of the drug war from an economic perspective.

The late Nobel Laureate James Buchanan was known to say, “Economics puts limits on people’s utopias.” Unfortunately, the advocates of the U.S. government’s war on drugs have failed to appreciate the economics underlying the drug war that makes their utopian vision impossible to achieve through drug prohibition.
Although the Obama administration has softened the rhetoric of prior administrations by talking about treatment rather than an “enforcement-centric ‘war on drugs’ approach,”1 enforcement budgets remain large and penalties for distribution severe. As for legalization, the administration claims that “drug legalization also runs counter to a public health and safety approach to drug policy. The more Americans use drugs, the higher the health, safety, productivity, and criminal justice costs we all have to bear.”2

Regarding violence, in a recent speech in Mexico, President Obama stated, “Much of the root cause of violence that’s been happening here in Mexico… is the demand for illegal drugs in the United States.”3 However, Mr. Obama failed to specify whether the cause of the violence is drugs per se or the fact that drugs are illegal.

Economics is a science of means and ends. Thus, the question for economics is whether the means—drug prohibition—is effective in promoting the ends of greater health, safety, and productivity, as well as lower violence and criminal justice costs.

And the conclusion is exactly what you’d expect it to be.

The U.S. government’s policy of drug prohibition, like alcohol prohibition before it, is a failure—and not one that can be corrected by a mere tweaking of current policy. The economic analysis of fighting a supply-side drug war predicts that the war will enhance drug suppliers’ revenues, enabling them to continuously ratchet up their efforts to supply drugs in response to greater enforcement. The result is a drug war that escalates in cost and violence.

Furthermore, the secondary consequences of prohibition are perverse. The drug war causes drugs to be more potent and their quality less predictable than if drugs were legal, leaving the remaining users at greater risk and, in the face of higher prices, more likely to commit crimes to support their habit.

There is only one moral path in drug policy: legalization. It maximizes personal liberty and erases virtually every negative side effect of the drugs themselves, while completely eviscerating ALL of the side effects of prohibition itself which are, by far, the most harmful aspects in the war on drugs.

2013-07-13  »  madlibertarianguy