Subj: UK: Opinion: The economic case for drugs



Date: Sun, 15 Aug, 1999



Source: The Observer, UK







ubject: The economic case for drugs

Legalisation would cut crime and save money, argues Jeffrey 

Miron



America spends  at least $20 billion (UKP13 billion) a year 

on drug enforcement, and arrests more than one million 

people a year on drug charges. Yet, according to standard 

economic analysis and existing evidence, drug legalisation 

would be a far superior policy to drug prohibition.



Drug prohibition does not eliminate drug markets or drug 

use; it simply moves them underground. Prohibition raises 

some costs of doing business for drug suppliers, and it 

probably reduces demand by some consumers.



But substantial drug consumption persists even in the most 

repressive prohibition regimes. Data in the US suggests that 

more than 30 per cent of the population aged 12 and over has 

used marijuana, and more than 10 per cent has used cocaine. 

Violation of prohibition is widespread.



Prohibition increases violence, because buyers and sellers 

of drugs cannot use the official justice system to resolve 

disputes. Prohibition also plays a key role in non-violent 

kinds of crime, by diverting criminal justice resources from 

the deterrence of non-drug crime. It facilitates the 

corruption of police, judges and politicians, partly because 

huge profits are at stake, partly because the legal channels 

of influence are not available.



The homicide rate rose rapidly in America after 1910, when 

many states adopted drug and alcohol prohibition laws, and 

it rose through World War I and during the 1920s as efforts 

to enforce alcohol prohibition increased, but then fell 

dramatically after Prohibition's repeal in 1934. In the late 

1960s, homicide again increased dramatically and stayed at 

historically high levels throughout the 1970s and 1980s, 

coinciding with a drastic increase in drug law enforcement.



Prohibition also means diminished health. In a black market, 

the drug users face a heightened uncertainty concerning the 

quality and purity of the drugs they purchase, plus an 

incentive to consume drugs using methods, such as injection, 

that are unhealthy but give the biggest bang for the buck.



During alcohol Prohibition in the US, deaths due to 

alcoholism rose relative to other proxies for alcohol 

consumption, presumably because consumption of adulterated 

alcohol increased.



On top of these deleterious effects, using prohibition to 

deter drug consumption means society cannot levy taxes on 

sales of drugs or collect income taxes from those working in 

the drug trade. This means drug suppliers and drug users - 

persons deliberately breaking society's rules - gain at the 

expense of taxpayers generally.



The beneficial tax and expenditure effects of legalisation 

help explain why this policy is preferable to 

decriminalisation - under which small-scale possession and 

purchase are permitted but production and sale are still 

outlawed - since decriminalisation by itself does little to 

convert the untaxed black market for drugs into a legal, 

taxable one.



The budgetary implications of legalisation are likely to be 

substantial; estimates for the US suggest increased tax 

revenues of at least $3 billion a year, and perhaps as much 

as $17 billion. Combined with the elimination of expenditure 

for enforcement, this implies a net improvement in the 

budget of at least $23 billion a year.



Jeffrey Miron is chairman of the Department of Economics at 

Boston University.