Time to end our unwinnable drug war

Benjamin Powell Senior Fellow, Independent Institute
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The number of annual drug-related deaths in Mexico quadrupled from 2,300 in 2007 to 11,000 in 2010, largely as a result of the Mexican government’s stepped-up enforcement efforts. Those efforts have also increased the number of drug-related deaths in neighboring Guatemala, where many Mexican drug cartels have sought refuge from the Mexican police. Now, the leaders of both countries are saying that the only way to end the violence is to legalize drugs.

But, as Vice President Joe Biden declared during his recent visit to Mexico, the Obama administration remains staunchly opposed to drug legalization. He should be listening to his Mexican and Guatemalan counterparts. Ending the drug war would not only reduce the amount of violence in Latin America, it would reduce the amount of violence in the United States.

The drug business is violent precisely because it is illegal. Since illegal businesses can’t settle disputes in court, they settle disputes through violence. If drugs were legalized, drug suppliers could settle disputes by turning to courts and arbitrators. Drug prohibition also sets up an unnecessary conflict between drug suppliers and the police departments who are tasked with shutting them down. Legalizing drugs would end this conflict — and the violence that results from it.

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.

Biden says he sympathizes with the Latin American leaders who support drug legalization, but he argues that “on examination you realize there are more problems with legalization than with non-legalization.” He says that drug legalization would require the creation of a costly new bureaucracy to oversee the newly legal drug market. He says he’s also concerned that drug legalization would cause a spike in drug addiction.

But even if legalizing drugs requires setting up a costly new bureaucracy, drug legalization would almost certainly save taxpayers billions of dollars a year, because legalizing drugs would mean scrapping the government’s $44 billion annual drug enforcement budget and raising an estimated $33 billion in annual tax revenue.

The net effect of legalization on drug addiction is unclear. It might cause some people to try drugs who otherwise wouldn’t. But there are also some people who are attracted to the mystique around drugs that drug prohibition creates.

If legalization does increase drug consumption, at least the drugs that people consume will be safer than the drugs they consume today. In order to minimize the risk of detection, suppliers make drugs as small and light as possible. At the same time, suppliers want to supply as much narcotic as possible. This means that the drugs they produce are often extremely potent. Economist Mark Thornton has found that increased federal expenditures on interdiction explain 93 percent of the increase in marijuana’s potency in recent decades. Likewise, during Prohibition booze became more alcoholic.

Illegality also makes product quality more variable. When drugs are sold on the black market, there can be no name brand attached to them. Thus, the reputation of a supply chain isn’t damaged when a dealer sells a bad dose. Plus, consumers can’t sue drug suppliers for producing dangerous products. In a legal market, drug suppliers would be pressured to supply quality products and would face economic and legal consequences if they didn’t.

The economics of the drug market make the supply-side war currently being waged in the United States and Mexico unwinnable. High prices don’t deter addicts from demanding more drugs, because they’re addicts. As a result, each “victory” that decreases the supply of drugs ends up pushing up prices and increasing revenue for drug dealers and cartels. The dealers and cartels use that money to corrupt more officials and buy more weapons to fight back, making any future decreases in supply harder to achieve.

The violence in Mexico and the United States is the result of a vicious cycle whereby dealers and cartels only increase their resolve and violent activity with every advance that authorities make in drug enforcement. With Mexico on the verge of legalizing drugs, perhaps it’s time for the U.S. to seriously consider the benefits of a legal drug market as well.

Benjamin Powell is an associate professor of economics at Suffolk University in Boston and a senior fellow with the Independent Institute.