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It’s Time to Legalize Drugs (continued)

I’ve seen a number of new thoughts pro and con since I blogged that drugs should be legalized.

Fred Wilson would like to see the Democratic Party come out in favor of legalizing drugs as “an example of social pragmatism (and fiscal responsibility)”.  I’d like to see the Republican Party take the same position both because legalization would be a great way to cut terrorists off from their funding and, more importantly, because it’s the right thing to do.  I think both Fred and I are going to be disappointed.  Legalization is one of those political issues which can easily be fatal if espoused.  It is at least as dangerous as talking about the need for restraint in Social Security and that subject is known as the “third rail of American politics” for good reason.  Maybe a gutsy second term President will tackle this some day.

However, the Libertarian Party, in accord with their principals and with nothing to lose, does make legalization a key issue.  They point out that the issue is really “re-legalization.”  According to their online brochure, drugs were legal before 1914 and cocaine was found in the original Coca Cola recipe.  They also say that the first anti-drug laws were racist “to prevent Chinese laborers from using opium and to prevent blacks and Hispanics from using cocaine and marijuana.”

Another Libertarian Party document makes effective use of government sources to support the proposition that income from illegal drugs fuels terrorist movements.  They point to government sponsored http://www.theantidrug.com which says “Drugs form an important part of the financial infrastructure of terror networks. Twelve of the 28 listed terror organizations identified by the U.S. State Department in October 2001 traffic in drugs.”  [nb. I verified that this quote is on the site and that the site is government sponsored.]  They also quote House Speaker Hastert (R-IL) as saying: "The illegal drug trade is the financial engine that fuels many terrorist organizations around the world, including Osama bin Laden."  [nb. I didn’t verify this one.]  I doubt if Hastert would like the logical conclusions the Libertarians and I draw from this statement.

There is a lot of discussion about what drugs should cost if legalized.  Fred Wilson and Albert Wenger both point to the brilliant Becker-Posner Blog which contains four posts on drug legalization that are very worth reading.  Becker estimates the marginal elasticity of drug prices at .5.  That means that a 10% increase in price would reduce consumption by 5% and a 10% decrease would increase consumption by 5%.  He argues that the War on Drugs is a partially successful attempt to raise prices and reduce consumption.  The problem is that the “extra” profits go to bad guys instead of government (which might or might not be a bad guy).  He points out that we could raise the price of legal drugs to any point that we want to discourage consumption up to the point where legal drugs are substantially more expensive than illegal ones at which point the drug cartels reappear.  However, Becker and Posner also point out that the street price is only part of the price: the high risk of dealing with dealers, quality issues, and the danger of incarceration are all part of the real price of illegal drugs.  Legal and unadulterated drugs would still be much cheaper over all even if they had the same street price as illegal drugs.

I’m a cynic on the pricing discussion.  We have the example of tobacco and alcohol to tell us that taxes will be imposed very efficiently to take prices up to just below where smuggling will get to be a serious problem.  Governments are better at maximizing excise tax revenue than they are with income-based taxes.  And sin taxes are so tempting! 

The takeaway is that the street price of legal drugs (tax included) will probably be somewhat higher than the current street price of the same drugs but the total price will be just a little lower.  So the cartels go out of business and bin Laden needs to find another source of funds.  But usage goes up somewhat because the real price is lower and there is elasticity.  Higher usage isn’t a good thing but we have to face that it is a probable consequence of legalization.  Somewhat offsetting is that we should be able to do a better job of keeping drugs away from children when the trade is in the open and we will reduce the significant collateral damage that illegal drugs cause because they are illegal – turf wars, dangerous impurities, and the funding of terror.

A long article in The City Journal by Theodore Dalrymple is the best summary of anti-legalization arguments I’ve seen.  It is worth reading if you think this debate is important.  Both sides really do need to be heard.

Among other arguments, Dalrymple says:

  1. Even legal drugs cause crime because many substances like crack cocaine cause violent paranoid behavior.
  2. Saying the War on Drugs has been lost  because there are still drugs is like saying that the war on bank robbers has been lost so we ought to abandon it. He didn’t mention the War on Terror but he was writing pre-9/11.
  3. He has anecdotal evidence that the elasticity is actually higher than one – even with alcohol (but he doesn’t recommend a new prohibition on alcohol).
  4. Amsterdam, where drug access is easy, is squalid and crime-ridden.  Actually, I like Amsterdam but it is reasonable to suspect that the place with the most liberal drug policy will attract (not necessarily create) a high proportion of drug users.  It is not, I think, a good example of what would happen if drugs were re-legalized for adults in the huge United States.

There have been more news stories recently about the drug trade in Afghanistan.  US Forces are targeting it, presumably because it supports terrorists.  The Afghan government is cooperating to help deny this revenue to the remnants of the Taliban and various freelance warlords – and probably also to please their patrons from Europe and North America.  I think this is a sad and probably unproductive diversion.  We should follow the advice Speaker Hastert didn’t give and re-legalize drugs for adults.

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Comments

Rubin

Michael Parekh quotes Dalrymple. Here are my counters

1. The negative impact of addictive substances affect the community
- That's mainly because drugs are illegal. Illegality encourages irresponsible use.

2. Legalization would likely push the criminal marketing activities to kids.
- Why has he put in a qualifier "likely" there (is he not convinced by his own arguments?) and what evidence does he have? Do today's kids engage in widespread criminal marketing of alcohol? I find this "reason" crazy.

3. Generally speaking, people have lousy self-control, on matters of indulgence.
- This 3rd one is the key prohibitionist argument. This anti-humanist attitude, that everyone else has lousy self-control and that we're all just one step away from behaving like the kids in "Lord of the Flies", sums up the drug prohibitionist case. Note how prohibitionists always leave themselves out of the equation: it's everyone else who's the problem for them.

One huge problem with prohibition is that it encourages the use of two extremely dangerous drugs: booze and tobacco and makes it impossible for society to come up with safer alternatives! Read this debate on the impossibility of designing a safer alternative to alcohol: http://www.sharemation.com/Rubin/alcohol/index.html - while the prohibitionist mindset rules policy.

One thing prohibitionists refuse to consider is that if cannabis was legalised we'd see a decrease in boozing and, consequently, much less harm to society.

I doubt that we will ever see legalisation, in the sense that we have it for cigarettes and booze. It's possible that we may get some kind of controlled drug market where the harms caused by prohibition are considerably reduced, but that would imply a drug policy organized along the principle of harm reduction. The current prohibition policy is organized along the lines of a moral war. There's a 3rd way between moronic prohibition and idealist legalization; it will only happen when prohibition is completely discredited.

Michael Parekh

Well, having now fully read the City of Journal article by Theodore Dalrymple. I think it makes a much more convincing argument against legalization than the takeaway bullets above implied.

He discusses both philosophical and pragmatic arguments against legalization, and I must admit, he had me by the end of the Philosophical discussion. The pragmatic arguments are even more compelling to consider.

There are many good points pro and con in this debate.
But my three takeaways from the Dalryumple article leave me at con on this issue:

1. The negative impact of addictive substances don't just affect the individual, but his/her family, community and employer.
2. Legalization would likely push the criminal marketing activities to kids who will presumably still be restricted from buying legalized drugs, much like alcohol and cigarettes today.
3. Generally speaking, people have lousy self-control, on matters of indulgence. Cheaper, legal drugs would make more people try and get hooked on them. (aka the price elasticity argument above)

Will continue to study the debate, but this feels like a non-starter to me.

Michael Parekh

great series of posts and discussions...bravo Tom.

I've year to read the full City Journal article, but can't help reacting to the four takeaway points summarized on the anti-legalization side:

1. Even legal drugs cause crime because many substances like crack cocaine cause violent paranoid behavior.
RESPONSE: Non-argument because the resulting behavior would exist in either reality (legalized or not)

2. Saying the War on Drugs has been lost because there are still drugs is like saying that the war on bank robbers has been lost so we ought to abandon it. He didn’t mention the War on Terror but he was writing pre-9/11.

RESPONSE: apples and oranges in terms of costs to lives and economies...also bank robberies are been far more effectively curtailed by cooperation between authorities and industry.

3. He has anecdotal evidence that the elasticity is actually higher than one – even with alcohol (but he doesn’t recommend a new prohibition on alcohol).
RESPONSE: Need empirical data.

4. Amsterdam, where drug access is easy, is squalid and crime-ridden. Actually, I like Amsterdam but it is reasonable to suspect that the place with the most liberal drug policy will attract (not necessarily create) a high proportion of drug users. It is not, I think, a good example of what would happen if drugs were re-legalized for adults in the huge United States.

RESPOSNE: Amsterdam is a destination site because of legalized prostitution...not sure if the "squalid" and "crime-ridden" charge holds for the country.

Look forward to learning more from the article.

Thanks.

Alex Rowland

Tom, I think you’re right that drugs need to be legalized, but the political environment necessary for such a logical step will not exist for many years (probably decades).

I’ve had several exasperating conversations with relatively open-minded friends that always seem to revolve around the issue of the price elasticity of drugs. They all seem to believe that legalization will essentially drive demand up, not just because prices will decline, but also because it will be so much easier to acquire your “fix.” While the exact price elasticity is obviously very difficult to nail down, I believe that you hit the nail on the head when you describe the fundamental flaw in this theory, the non-monetary costs of these transactions. I disagree that drugs would need to be priced at some point lower than street price to discourage the cartels from remaining in the market. I don’t see any moonshine or home grown tobacco being consumed at any of my friend’s houses. The fact is, consumers would be willing to pay a considerable premium over street prices if this price premium guaranteed them safe and easy access, consistent quality, and freedom from prosecution.

As for Dalrymple’s observations, they are also deeply flawed.

1. The question is not whether drugs can be eliminated entirely to stop this “paranoid behavior.” This is a pipe dream. The question is how we can minimize drug use and the collateral damage of drug use in society. Proponents of drug legalization would never argue that drugs don’t cause people to do bad things occasionally; they’re just arguing that criminalization has proven an ineffective tool in combating said use.
2. Drug use and bank robberies are fundamentally different crimes. One has a clear victim (the user), the other has many victims (the FDIC/taxpayers, bank customers, etc.) To compare the war on drugs to law enforcement’s efforts to combat bank robbery is akin to comparing the war on obesity with law enforcement’s efforts to stop homicides. Do we want people to stop eating to the point of obesity? Yes. Do these people’s habits result in higher health care premiums for the rest of us? Yes. Would we consider criminalizing the sale and consumption of fatty foods? Never. This is all about drawing a moral line, not about the logic of the position. The War on Drugs is a War on Immorality, not on criminal behavior.
3. Even if the price elasticity is higher than one, the non-monetary costs of drug transactions far outweigh the monetary costs to the consumer. Just look at legal vs. illegal downloads of music. In this case the non-monetary costs are orders of magnitude lower than in the case of illegal drugs, and yet millions of people are beginning to purchase these same songs they could acquire for free elsewhere. And we are still early on in the process. It might take 10 years, but you can be confident that while illegal downloads will never disappear, tools such as iTunes (which provide safe and easy access, consistent quality, and freedom from prosecution), will become most consumer’s primary method of acquiring music. I would expect the ratio of illegal to legal drug purchases to follow an analogous curve.
4. Amsterdam is a terrible example. Anyone that’s been to Amsterdam knows that it’s not the locals who are the primary users of drugs and prostitution, it’s tourists. I think it would be valid to assume that many of these tourists come to Amsterdam with the specific intention of having a crazy few days and nights. Judging the success of drug legalization by the actions of an island of legalization in a sea of illegality is unreasonable. (Besides, prostitution is legal and tightly regulated. This has resulted in the lowest transmission rates of STDs and a safe work environment for Amsterdam’s prostitutes. I think this is evidence of the success that legalization and regulation can have on an industry that many would consider immoral, and one that should also be legalized in the U.S.)

The fact is, legalizing and regulating the sale and use of narcotics is the only sensible solution. With alcohol prohibition we have seen a clear example of what effect the criminalization of a morally questionable habit can have on underlying criminal networks (a huge boost) and overall consumption (negligible). It still amazes me that the moral issue will trump pragmatism at most every turn, especially with the Al Capone’s of the world being rapidly replaced by the Bin Laden’s.

(Sorry for the long post, you just got me fired up.)

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