Legalise it?
Posted by Ken Parish on Monday, December 13, 2010
Not so long ago economist Paul Frijters mused about drug legalisation here at Troppo.
It seems that Paul is an international trendsetter. Now economist elder statesman Gary Becker and the world’s most prolific judge/legal academic Richard Posner are musing on the same topic at their joint blog. Becker is unequivocally pro-legalisation though not especially analytical, while Posner attempts an economic analysis based on a recent paper by Miron and Waldock resulting in a couple of reservations and a proposed field study to resolve them:
Most important, the authors also do not consider the possible social benefits of prohibition. Prohibition reduces the consumption of mind-altering drugs. Of course there are mind-altering drugs that are not prohibited, and many of these are close substitutes. These include the numerous prescription drugs that have mind-altering effects very similar to those of the illegal drugs, and of course there is alcohol and cigarettes. Moreover, a tax on legalized drugs would raise the price to the consumer and thus moderate the effect of legalization on consumption. But if the tax is too high, it will result in reviving the illegal industry. And the authors probably underestimate the increased consumption that would result from a lower price or even the same price (brought about by a particularly stiff excise tax) because they don’t mention concerns with impurities and with the stigma of being a “drug addict” that are created by the prohibition and would be substantially reduced by its repeal.
The question would then be whether the external costs of increased consumption of mind-altering drugs would exceed the savings in law enforcement costs from legalization. It seems doubtful that marijuana consumption generates significant social costs, but legalizing it would generate only modest cost savings–$8.7 billion a year, according to the authors’ estimates. But cocaine, especially the crack form, along with heroin, ecstasy, LSD, methamphetamines, and perhaps others, may induce behavioral changes that cause social damage. Most leaders of black communities believe that rampant drug usage is highly destructive to their communities, and not only because of the gang activity that prohibition induces. Drug gangs would disappear with legalization and that would reduce the violence in those communities, but the effect might be more than offset by the effects of greater drug use.
Concern with the huge budget deficits of our federal, state, and local governments may gain the authors a more sympathetic reading than advocacy of repealing the drug laws usually does. From a budgetary standpoint, the authors are estimating an annual savings of almost $90 billion. But without an estimate of the social costs of increased drug usage, the path to repeal is blocked. It would a step in the right direction if the Justice Department would take the position that it will not enforce a federal drug law in any state that repeals its parallel prohibition of that drug; that way we might obtain experimental evidence of the social costs of illegal drugs.
NSW government criminologist Don Weatherburn addressed these questions in a recent address to the Medico-Legal Society of NSW. It’s relatively short anyway but I’ve extracted the most relevant passages over the fold:





