War on Drugs: An economic analysis

March 19, 2015 | By | Reply More

The War on Drugs is terrible for taxpayers and users, because it treats a medical problem as though it were a criminal problem, filling our expensive prisons with millions of non-violent persons, and making violent persons out of non-violent persons. Yet we carry on with this “war.” This article by Benjamin Powell focuses on an economic analysis of the “War,” discussing the many other counterproductive aspects of the war. Here is an excerpt:

Prohibition also creates more problems for non-users. Because it increases the cost for addicts to support their habit, many resort to stealing in order to get their needed high. In a study of the U.S. drug war on Latin America, economist David R. Henderson estimated that if the same mark-ups applied to cocaine as to coffee, which would be roughly accurate with cocaine legalization, then cocaine’s price in the United States would fall by about 97%.[12] If cocaine and other narcotics lost the price premium caused by the drug war, few, if any, addicts would need to resort to crime to afford their habit.

On the supply side of the market, the drug business is violent precisely because it is illegal. Illegal businesses can’t settle disputes in court, so they do so through violence. If drugs were legalized, drug suppliers could settle disputes by turning to courts and arbitrators. One reason that large dealer networks and organized crime outcompete smaller dealers is that they can partially provide their own internal dispute resolution.

When alcohol was prohibited in the early twentieth century, violent criminal gangs catered to the nation’s thirst for alcohol. When Prohibition ended, normal businesses returned to the market and violence subsided.

Economist Jeffery Miron found that both alcohol prohibition and drug prohibition enforcement efforts have increased the homicide rate in the United States. He estimates that the homicide rate is 25-75 percent higher due to prohibition.[13] In short, the violence associated with drugs, both by users to support their habit and by gangs supplying the drugs, is a product of prohibition rather than a rationale for prohibition.

These costs, taken together with the above supply and demand analysis, indicate that the very concerns that animate drug prohibitionists—the harm to users and the violence in society—should cause them to oppose drug prohibition.

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Category: Drug laws

About the Author ()

Erich Vieth is an attorney focusing on consumer law litigation and appellate practice. He is also a working musician and a writer, having founded Dangerous Intersection in 2006. Erich lives in the Shaw Neighborhood of St. Louis, Missouri, where he lives half-time with his two extraordinary daughters.

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