The Classic Liberal Blog

This is a terrific article by Professor Walter Williams explaining the economics of the Drug War. Remember, we ignore the basic laws of economics at our own expense.

H/T - The Holy Cause (add this blog to your regular reading list)!

Drugs, Economics, and Liberty

By Walter Williams

Only a few people would dispute that narcotics can harm people, whether that harm is in the form of damage to the body, mental and physical dependency, or threats to social relationships. However, there is not nearly as much consensus as to what the correct public response to narcotics use and sales is. Ideas range from decriminalization to the current outright prohibition.

Let’s start by acknowledging that there is no question whatsoever that the sale and use of narcotics in our country could be virtually eliminated. It could be accomplished at a monetary cost far less than the hundreds of billions spent so far in the nation’s “war on drugs.” We could suspend habeas corpus and constitutional guarantees against unreasonable searches to more easily gather evidence on people who use or sell drugs. We could make those arrested bear the burden of proof of innocence and on conviction summarily execute them. Countries with far less wealth and far fewer police resources than ours have used that strategy to reduce drug use, and so could we. Thankfully, I think most Americans would, and should, recoil in disgust at that kind of drug-war strategy. So we have to examine less draconian measures. A few thoughts on the economics of drug trade might give us guidance.

There’s no mystery why people use mind-altering drugs: It makes them feel good, at least temporarily. That’s not only true of cocaine, heroin, and marijuana; it’s also true of mind-altering products like cigarettes, cigars, coffee, tea, wine, and whiskey. There’s considerable evidence that many people prefer their vices in a diluted form. Hence the popularity of filtered cigarettes, light beer, wine coolers, and mixed drinks. The same seems to be true, at least to some extent, about illicit drugs.

When what are seen as vices are legally prohibited, supply responses change people’s behavior. Imagine there’s a supplier of illegal marijuana. Government steps up its efforts to stop its supply by increasing interdiction efforts, along with stiffer fines and prison sentences. Which is easier to conceal and transport—a million dollars’ worth of marijuana or a million dollars’ worth of cocaine? Obviously, it’s cocaine because there is far less bulk per dollar of value. Thus one effect of prohibition is the tendency toward increased sales and use of more-concentrated forms of drugs that can include products such as crack cocaine, ice, and meth.

Another impact of prohibition is on prices. To supply the addiction needs of those who are not able to pay the prohibition-induced higher prices of cocaine, producers will seek to find cheaper substitutes such as crack. This is borne out by the fact that crack is far more popular among poorer addicts than wealthier ones.

Invitation to Make a Killing

Illegality, high prices, and high profits, coupled with greater government drug-interdiction efforts, also encourage entry by suppliers who are more ruthless and innovative, and who have a lower regard for civility and the law. Panty-waisted, petty, and otherwise law-abiding practitioners are ousted. In addition, since the courts are unavailable to enforce agreements made among traders, as in the case of legal transactions, disputes are more likely to be settled through violence.

Yet another supply response to prohibition, largely ignored in the drug debate, is the inevitable tendency toward corruption of public officials. Today’s drug trade, like the Prohibition liquor trade, could not flourish without official corruption.

Read the whole thing here: Drugs, Economics, and Liberty