Tomorrow marks the 40th anniversary of the formal of commencement of the War on Drugs. Richard Nixon sounded the opening volley on June 17, 1971:
America’s public enemy number one in the United States is drug abuse. In order to fight and defeat this enemy, it is necessary to wage a new, all-out offensive.
I have asked the Congress to provide the legislative authority and the funds to fuel this kind of an offensive. This will be a worldwide offensive dealing with the problems of sources of supply, as well as Americans who may be stationed abroad, wherever they are in the world. […]
The results are about what you would expect when a public health problem is transformed into a military campaign. Lots of causalities. Collateral damage. Rivers of red ink. And no victory in sight.
This is not to say that militarized prohibition hasn’t reduced drug supply at all. Black market suppliers of illegal drugs are forced to incur costs that wouldn’t exist in a legal market, including the cost of hiding drug merchandise, illicit transportation, payoffs to corrupt officials, and “security” costs. But it’s wrong to overstate these charges. Once a drug organization have crossed a certain threshold, the marginal cost of evading other cost-increasing government policies is virtually nonexistent: if you’re already smuggling narcotics, you’re not about to worry about minimum wage laws, FICA withholding, and OSHA regulations, right? This offsets some of the costs of operating underground.
Drug prohibition has had very modest effect in reducing consumption, with the results best summed up by data on the street price of illicit drugs:
Over the past 25 years in the United States, enforcement of drug prohibition has expanded dramatically. Over the same period, however, the trends in drug production and consumption have been essentially flat, and the real, purity-adjusted prices of both cocaine and heroin have more than halved…
Clearly, a substantial drug market exists, but it’s a black market that operates quite differently from a normal market. Increased violence (can’t use police to settle trade disputes!), diminished quality control, and increased corruption are among the distortions, but the figure atop this post highlights another effect of prohibition: the redistribution of income from government to criminals.
The table is drawn from Jeffrey Miron’s (kind of a crank, but also a Harvard professor) “The Budgetary Implications of Drug Prohibition.” The expenditure rows indicate the potential savings from law enforcement, judicial, and corrections budgets if various classes of drugs were legalized. The revenues are estimates of annual tax receipts if drugs were taxed at rates comparable to those on alcohol and tobacco.
To be clear, I don’t think the wholesale legalization of heroin is wise. I’m particularly allergic to the idea that we should consider these issues in terms of “rights,” especially when the use of hard drugs creates many negative externalities that are borne by society as a whole. But after 40 years of bloody conflict, we desperately need a rational reappraisal of drug policy that includes the opportunity costs of outright prohibition and considers harm reduction and decriminalization, alongside legalization as possible alternatives.
As Miron writes, “Whether drug legalization is a desirable policy depends on many factors other than the budgetary impacts discussed here. Rational debate about drug policy should nevertheless consider these budgetary effects.”