The Case Against Drug Prohibition
“These principles of economic law are fundamental. They cannot be resisted or ignored. Against their ultimate operation the mandates of laws and constitutions and the powers of government appear to be no more effective than the broom of King Canute against the tides of the sea… these laws cannot be destroyed by governments, but often in the course of human history governments have been destroyed by them.” – Harry Anderson
Introduction
Drug prohibition is one of the great evils of our time. It is well known that by outlawing the peaceful production and consumption of drugs, prohibition violates the right to self-ownership. But most people are unaware that prohibition violates economic law. Prohibition is just as useless as King Canute’s broom in the quotation above.
First, prohibition is self-defeating. Any increased enforcement of prohibition only causes greater incentives to produce drugs. Second, prohibition causes crime, by raising the price of drugs to extreme levels and leading addicts to commit crimes to afford their addiction. Third, corruption becomes rampant, as government officials are bribed by the enormous profits in the drug trade. Fourth, prohibition increases the potency of drugs, thus negating any decrease in supply. Increased potency as well as lower drug quality cause consumption-related deaths. Moreover, if prohibition of drugs is legitimate, why not prohibit bad foods, bad books, or bad posture? Finally, the solution to drug abuse is not aggressive violence, but voluntary cooperation. Governments that continue to enforce prohibition run the risk of being remembered by history as those governments destroyed by economic law.
Rights
Self-ownership means that people can use their body and their property however they please, provided they do not violate the rights of anyone else. From this it follows that it is perfectly legitimate to consume marijuana, cocaine, and heroin, and to engage in the production and exchange of these and all other drugs. Because the consumption and production of drugs are peaceful, voluntary, consensual actions, and have no victims, they cannot be classified as crimes. Of course, getting intoxicated on cocaine and murdering someone is criminal.
Drug prohibition makes it illegal to produce or consume certain drugs. That is, if the government police catch you doing these things, they will kidnap you and steal your property. But the right to consume and produce drugs is derived from the right to self-ownership. To the extent that the government prevents you from doing these things, it violates your right to self-ownership. So, it is actually the police, by initiating coercion against peaceful drug consumers and producers, who are the real criminals. Quite simply, drug prohibition means initiating violence against innocent people on a massive scale.
Economics
Prohibition is designed to curtail the production, exchange, and consumption of a good with the ultimate goal of extinguishing it. The government pursues this goal by making the production and consumption of certain drugs illegal. On the face of it, it seems clear that drug prohibition has failed. Illegal drugs are available just about everywhere, and the news is filled with stories of drug gangs and drug abuse. But this is not because the government has not invested enough in drug enforcement, or that the right people are not in charge. Rather, the failure of the war on drugs can be explained by one fact: prohibition is impossible.
Drugs will be produced so long as there is a demand for them. If the government outlaws legal drug production, then production will simply continue illegally in the black market. However, in the black market the risks of producing are much higher. Getting arrested, fined, having property confiscated, or going to jail are all risks of engaging in illegal drug production. Because of this increased risk, the supply of drugs will fall and the price will rise enormously. But with the increased price of drugs, the profits for producing drugs rise as well. And with vast profits, the incentives to produce also increase. Thus, prohibition can never work.
As drug enforcement increases and the price of drugs rises, the profits and hence incentives for producing drugs increase as well. The result is a vicious circle: increased drug enforcement increases the incentives to produce, which leads to more drug enforcement, and yet higher drug profits, etc. More vigorous efforts in drug enforcement actually lead to a stronger illicit drug industry. Any reduction in supply simply increases profits, and so the incentive to produce more.
Clearly, using prohibition to eliminate or reduce drug use is literally insane. Trying to solve a demand problem (drug use) by attacking the supply (prohibition) simply cannot work. As we will see later on when discussing voluntary, market solutions, the proper response is not to fight the alligators, but to drain the swamp: eliminate the profits that lead to drug production in the first place. This means allowing a free market in drug production.
As the price of drugs rises, users can easily shift consumption to substitutes, such as solvents, alcohol, prescription drugs, etc. These substitutes are readily available and cannot be prohibited without a dictatorial police state and martial law, and even then they could be provided by the black market. The use of substitutes further undermines the effects of prohibition on drug supply: if drug users cannot obtain marijuana, they can simply use solvents. Moreover, substitute drugs are often more dangerous than the original prohibited drug, giving us another reason to end prohibition.
One last reason why prohibition can never work is the economic calculation problem, as laid out by Mises. Because its resources are finite, the government will have to decide how much to spend on drug enforcement. But how can it determine this? How can politicians know how much funding they should take away from other projects? The answer is that they cannot. Without prices, the government has no way of rationally allocating resources. Thus, we can expect prohibition to be even more ineffective.
Crime
As we have seen, prohibition increases the prices of drugs. One unintended consequence is that drug addicts, with lower purchasing power, will be more likely to commit crimes to support their addiction. In short, because of the exorbitant price of drugs, addicts cannot afford their habit through honest work. Instead, they will turn to burglary, robbery, auto theft, etc. to obtain the funds to support their habits. Thus, drug prohibition indirectly leads to increased crime.
Prohibition also causes crime by forcing drug production into the black market, where the ordinary legal structure of the marketplace is missing. In a free market, the best producers are those who offer the best product at the lowest price. But under prohibition, the best producers are those who can avoid the risks of illegal production. The result is that violent gangs and cartels take over the production of drugs, while honest businessmen cannot compete. Thus, drugs become part of the criminal underworld, whereas under legalization they would be produced by reputable businesses, like prescription drugs are today.
Furthermore, in the black market gangs cannot resolve disputes using courts and police, but must take the law into their own hands. Disputes are resolved by gang wars rather than peaceful arbitration. Gangs must resort to violence to enforce contracts, maintain market share, or defend sales territory. The tragedy here is the innocent victims killed in turf battles, which are caused solely by prohibition. It is not the gangs, but the legislators of prohibition who are ultimately responsible for the innocent victim wars. Drug prohibition is responsible for the high murder rates in inner cities.
Again, this is because prohibition forces drug production into the black market where gangs and criminals thrive. If drugs were legalized, the risks of producing would vanish and the price would fall dramatically. The profits would also fall and drug gangs would be outcompeted by honest businessmen. There would be no drug gangs in a free market!
As Milton Friedman has written, prohibition actually causes a cartelization of the drug industry:
“See, if you look at the drug war from a purely economic point of view, the role of the government is to protect the drug cartel. That’s literally true…. What do I mean by that? In an ordinary free market–let’s take potatoes, beef, anything you want–there are thousands of importers and exporters. Anybody can go into the business. But it’s very hard for a small person to go into the drug importing business because our interdiction efforts essentially make it enormously costly. So, the only people who can survive in that business are these large Medellin cartel kind of people who have enough money so they can have fleets of airplanes, so they can have sophisticated methods, and so on. In addition to which, by keeping goods out and by arresting, let’s say, local marijuana growers, the government keeps the price of these products high. What more could a monopolist want? He’s got a government who makes it very hard for all his competitors and who keeps the price of his products high. It’s absolutely heaven.”
The effects of prohibition on crime can also be illustrated by alcohol prohibition in the 1920′s. Under prohibition, gangs and bootleggers took over alcohol production, and fought each other in the streets in turf battles. But today, under legalization, no one dies in the creation, manufacture, wholesaling, distribution, transportation, or retailing of alcohol. The entire industry is peaceful and nonviolent; the gangs have been outcompeted by honest businessmen. The same would be true of drug production under legalization.
The fact is, we must choose between two types of drug production: under prohibition, where criminals and gangs will produce drugs, and the industry will be surrounded by violence; or under legalization, where honest businessmen will peacefully supply drugs in drug stores and pharmacies.
Corruption
Prohibition greatly increases the price of drugs above the actual cost of production by dramatically increasing the risk of drug production. This means that entrepreneurs who can reduce the risk of production can increase profits. The primary means of reducing risk is bribing government officials. In other words, entrepreneurs have increased incentives to bribe judges, police, and politicians for protection against capture, prosecution, and incarceration. By increasing the risks of producing drugs, prohibition directly causes corruption.
Drug transactions are typically hundreds of times larger than a government official’s annual salary. Usually, politicians can take part in the massive profits just by looking the other way; they can secure even higher profits by participating directly in production or shipping, or by selective enforcement against competing drug producers. Corruption is directly related to the price of drugs. As drug enforcement increases, so does the risk, price, and profits of production, and accordingly the incentives for corruption. Increased prohibition leads to increased corruption.
Thus, corruption leads police officials to break the laws they are supposed to enforce. Corruption is another self-defeating factor of prohibition. The more prohibition is intensified, the greater the incentives for government agents to enter the drug trade and undermine prohibition. Under legalization, there would be no vast drug profits and hence no incentives for corruption.
Potency
Potency is the amount of deliverable drug per dose. Under prohibition, heavy, bulky drugs are easier to detect, and so are riskier to produce. To reduce risk, entrepreneurs will produce higher potency drugs, which are smaller and less likely to be detected. Also, punishments are accorded by weight. Clearly, prohibition creates incentives to produce low-mass, low-volume, high-potency drugs. Increased drug enforcement causes increased potency.
Like profits and corruption, potency is another self-defeating factor of prohibition. A smaller quantity of high potency drugs represents the same effective amount of the drug as a larger quantity of lower potency drugs. To the degree that increased enforcement causes higher potency, prohibition is effectively useless. In other words, the increase in potency makes up for any decrease in volume. Even though the supply of drugs may have fallen, an increase in potency means addicts are consuming the same effective amount of drugs.
The second effect is to increase the deaths caused by drug consumption. Given that potency will increase, the problem is that consumer knowledge on the black market is very poor. There is a much greater variability in potency, but consumers do not know this; drug purchases must be secret, and drug dealers do not list the ingredients on the side of the bottle. If an addict expects a drug to be X potency, when really it is 10X potency, the risks of overdosing are much higher.
Third, prohibition actually causes the Gateway Effect. As Friedman writes:
“The effect of criminalization, of making drugs criminal, is to drive people from mild drugs to strong drugs…. Marijuana is a very heavy, bulky substance and, therefore, it’s relatively easy to interdict. The warriors on drugs have been more successful interdicting marijuana than, let’s say, cocaine. So, marijuana prices have gone up, they’ve become harder to get. There’s been an incentive to grow more potent marijuana and people have been driven from marijuana to heroin, or cocaine, or crack.”
This can also be illustrated empirically: under prohibition, opium was replaced by morphine, and morphine was replaced by heroin; cocaine was replaced by crack; beer was replaced by spirits and moonshine; and today we have extremely potent combinations of narcotics, like speedball (cocaine and heroin) and moonshot (PCP and crack).
Under legalization, there would be no risk in producing drugs, and hence no need to increase the potency. In fact, the market would tend to lower the potency of drugs, through increased consumer and medical knowledge. For example, 50 years ago, it was common for people to smoke unfiltered cigarettes and drink whiskey; today, people smoke filtered, low-tar cigarettes and drink light beer. Legalization would counteract the Gateway Effect. Market forces would lead to consistent potency and increased consumer knowledge, thus reducing drug consumption deaths.
Drug Quality
Closely related to potency is drug quality. As we have seen, prohibition leads to variability in potency, and hence causes deaths by overdose. Also, the shady nature of the black market means that drugs will be of much lower quality than under free markets. For example, consumer knowledge of potency, quality, safety, etc. is reduced, as drug purchases must be kept secret. The market legal structure is absent; because courts are unavailable, producers are not legally liable as are pharmaceutical companies. Competition is obviously hampered in a black market, and product quality will decline. For these reasons, deaths from overdose, adulterated substances, impurities, etc. will be higher under prohibition.
Under legalization the quality of drugs will rise and drug consumption deaths will fall. Increased consumer knowledge and a functional legal structure would eliminate the uncertainty about drug quality that prevails under prohibition. Moreover, market competition will ensure a high standard of quality and safety: producers of adulterated or impure drugs could be sued, and would ultimately go out of business. The accountability to customers that characterizes a free market would make deaths from adulterated and dangerous drugs a thing of the past.
Other Adverse Effects
There are many other adverse effects of drug prohibition. For instance, sick drug users will avoid going to the hospital and seeking treatment for fear of being arrested. This fear leads to increased drug consumption deaths. Crack-addicted mothers will give birth to crack babies for the same reason. As Friedman writes: “Under current circumstances, a mother who is a crack addict and is carrying a baby is afraid to go the prenatal treatment because she turned herself into a criminal, she’s subject to being thrown in jail. Under legalized drugs, that inhibition would be off.”
Furthermore, drug prohibition has negative consequences for children. Minors are more likely to be brought into the drug trade as smugglers because the penalties are lower than for adults, and the enormous profits in drug dealing are much more appealing than working at a low-wage job. Prohibition encourages children to enter the drug trade, where they are more likely to consume drugs, join gangs, and become criminals.
Also, the high profits associated with prohibition greatly increase the incentive for drug pushing: dealers go to school yards and offer free samples to children in the hopes of ensnaring them in a life of addiction, just to gain a customer. On a free market, with vastly lower profits, such a marketing scheme would be wholly unprofitable. Drug pushing would become simply uneconomical.
Of course, prohibition negatively affects medical patients who must suffer disease and pain because they cannot legally be prescribed certain drugs. Furthermore, intravenous needles are also prohibited. Predictably, the resulting shortage leads drug users to share needles, which in turn causes deaths from contaminated needles. David Boaz (The Crisis of Drug Prohibition, p.3) estimates that 25% of AIDS cases are contracted by sharing intravenous needles. Legalization would eliminate this problem.
Finally, the opportunity cost of drug enforcement means that the police must dedicate less resources to preventing and solving real crimes. Funding the war on drugs must be at the expense of genuine police duties. And with fewer police officers safeguarding property and tracking non-drug criminals, crime will be less costly and more crimes will be committed. Friedman summed it up nicely:
“[Illegal drug production] does harm a great many other people, but primarily because it’s prohibited. There are an enormous number of innocent victims now. You’ve got the people whose purses are stolen, who are bashed over the head by people trying to get enough money for their next fix. You’ve got the people killed in the random drug wars. You’ve got the corruption of the legal establishment. You’ve got the innocent victims who are taxpayers who have to pay for more and more prisons, and more and more prisoners, and more and more police. You’ve got the rest of us who don’t get decent law enforcement because all the law enforcement officials are busy trying to do the impossible.”
Reductio ad Absurdum
Opium and morphine are certainly dangerous, habit-forming drugs. But once the principle is admitted that it is the duty of government to protect the individual against his own foolishness, no serious objections can be advanced against further encroachments. A good case could be made out in favor of the prohibition of alcohol and nicotine. And why limit the government’s benevolent providence to the protection of the individual’s body only? Is not the harm a man can inflict on his mind and soul even more disastrous than any bodily evils? Why not prevent him from reading bad books and seeing bad plays, from looking at bad paintings and statues and from hearing bad music? The mischief done by bad ideologies, surely, is much more pernicious, both for the individual and for the whole society, than that done by narcotic drugs.
These fears are not merely imaginary specters terrifying secluded doctrinaires. It is a fact that no paternal government, whether ancient or modern, ever shrank from regimenting its subjects’ minds, beliefs, and opinions. If one abolishes man’s freedom to determine his own consumption, one takes all freedoms away. The naive advocates of government interference with consumption delude themselves when they neglect what they disdainfully call the philosophical aspect of the problem. They unwittingly support the case of censorship, inquisition, religious intolerance, and the persecution of dissenters. (Mises, Human Action, 733-34)
The case for prohibiting drugs is exactly as strong and as weak as the case for prohibiting people from overeating. We all know that overeating causes more deaths than drugs do. If it’s in principle OK for the government to say you must not consume drugs because they’ll do you harm, why isn’t it all right to say you must not eat too much because you’ll do harm? Why isn’t it all right to say you must not try to go in for skydiving because you’re likely to die? Why isn’t it all right to say, “Oh, skiing, that’s no good, that’s a very dangerous sport, you’ll hurt yourself”? Where do you draw the line? – Friedman
Voluntary Market Solutions
Alternatives to prohibition include: government monopoly, government regulation, sin taxes, and complete legalization. However, only complete legalization is acceptable as a solution. The other three alternatives are only different from prohibition in degree, whereas legalization is different in kind. Monopoly, regulation, and sin taxes would still suffer from violating self-ownership, creating a black market, increasing crime and corruption, increasing potency and use of substitutes, and decreasing quality. They would still have the same negative effects as prohibition, but only to a lesser degree. Legalization, on the other hand, would restore individual rights, completely eliminate the black market, decrease crime and corruption, decrease potency and use of substitutes, and increase the quality and safety of drugs.
Legalization does not mean giving up on preventing drug abuse. Rather, it simply means not initiating violence against peaceful drug consumers and producers. Voluntary solutions to drug abuse include drug education, drug treatment centers, rehabilitation centers, self-help programs, family, friends, doctors, employers, help hot lines, non-profits, and civic organizations. Drug prohibition fails because it tries to solve a demand problem by addressing the supply. Market solutions are much more effective because they directly affect the demand for drugs. In the end, prohibition is just a shallow quick fix; like all quick fixes, it does not work. Market solutions address the root causes of drug abuse, and actually solve the problem.
Private institutions can enforce “private prohibitions”. Many people think that legalization means that people “would be smoking marijuana in McDonald’s, the school bus driver would be shooting up heroin, and airplane pilots would be snorting cocaine before takeoff.” (Thornton and Machan) However, private businesses have the right to prohibit drugs, just as they have the right to prohibit smoking cigarettes or not wearing shoes. Employers have the right and the incentive to prohibit drugs in their contracts with workers, mainly for safety reasons. Insurance companies also have a financial interest in discriminating against drug users, as addicts are likely to be liabilities. Drug users might be charged higher insurance premiums. Drug consumption under legalization will probably be similar to today: using drugs in public, in private businesses, while driving, etc. would not be allowed. People would use drugs in their own homes or under the supervision of a doctor.
Similarly, if private pharmacies were allowed to sell drugs to children, why wouldn’t they? Put simply, it would be business suicide. The horrible media coverage, loss of reputation, negligence lawsuits, attacks by drug education groups, etc. would virtually ensure that such business practices would lead straight to bankruptcy. Just as today children cannot rent cars, so too reputable businesses would not sell drugs to kids. But, remember that today, under prohibition, children are sold drugs, and that drug dealers suffer no bad consequences.
Seen in this light, the dichotomy between prohibition and legalization is a false one. The true dichotomy is between private prohibition and government prohibition. The former is more efficient because it is subject to market incentives, while the latter is inefficient because it uses bureaucratic incentives. Apart from efficiency, the main difference between the two is that a freed market would prohibit drugs only to the degree that the benefits outweigh the costs. Insurance companies, for example, to increase profits might stipulate that clients cannot use crack cocaine: crack users are more likely to be a liability to the company, so the benefits of prohibition outweigh the costs. Prohibiting marijuana, on the other hand, would lead to bankruptcy; marijuana is not a dangerous drug, hence the costs of prohibition outweigh the benefits. Thus, the market will prohibit drugs only to the extent that they are actually dangerous.
Prohibition hampers market solutions, primarily because it is too dangerous to seek treatment – admitting you have an addiction is much harder when you might go to jail for it. Under legalization, on the other hand, we will likely see a flourishing of drug treatment methods and technologies, as all barriers to helping addicts are removed.
Once the task of ending drug abuse is removed from the government’s jurisdiction and is recognized as the responsibility of the individual and the community, then real solutions can begin. Drug abuse will never be solved as long as we ignore the problem and try to sweep it under the carpet through prohibition. Legalization means facing problems in the light of day and taking responsibility for our own lives.
Objections
One common objection to legalization is that if we legalize drugs, the price will fall and people will consume more, creating a society of drugged out zombies. However, this is false. This reasoning assumes that prohibition, in raising prices, actually causes a fall in demand. But, as we have seen, prohibition’s effects on demand are negligible. It is true that the illegality and high prices of drugs deter some users, but there are other factors which counteract this.
First, the elasticity of demand for drugs is very low, because drugs are seen as necessities, rather than luxuries. Most drug users are unlikely to giver up their habit in the face of high prices. Second, some people become users due to the illegality of drugs, also known as the “Forbidden Fruit effect”. Because drugs are illegal, using them becomes a way to rebel against society and unjust laws. Third, because of lesser punishments for minors, children are more likely to enter the drug industry and become users themselves. Also, due to the high profits under prohibition, drug pushing is economical, and as a result children become drug addicts. Fourth, prohibition increases the potency of drugs, which makes up for any decrease in the quantity consumed; the real effective amount consumed remains the same. Finally, note that those users deterred by high prices may simply be substituting a different, non-prohibited drug. The use of substitutes means that at least some decrease in quantity consumed is nullified. And once we take into account the likely increase in market solutions under legalization, a strong case may be made that prohibition actually increases drug use, and that drug use would fall with legalization. (This applies to recreational drug use. “Legitimate” medicinal uses would likely experience a surge in demand, as patients currently using legal drugs switch to the newly-legal marijuana, cocaine, heroine, etc. Note that this is not an increase in demand, but just a substitution effect.)
A second objection is that drugs turn users into crazed, demonic lunatics hell-bent on committing crimes. However, this “reefer madness” objection is completely erroneous when applied to traditional opiates. There are three pieces of evidence which support legalization. First is the British experience with heroin legalization. Here confirmed addicts were administered the drug and were able to live largely normal lives. Second, the Chinese opium dens produced users who were lethargic and sedentary – the exact opposite of violent criminals. Third, physicians today have nearly full access to drugs at low prices, but do not exhibit any maniacal anti-social behavior. Thus, we can expect legalization to reduce crime associated with drug use, especially since drugs will be much safer and users can seek out the advice of doctors. (Block p. 693-94)
Conclusion: Benefits of Legalization over Prohibition
Prohibition violates the right to self-ownership.
Legalization protects that right.
Prohibition cannot work: by increasing the risks of producing drugs, it simultaneously increases the profits and hence incentives to produce. Moreover, prohibition is bound to be inefficient due to the socialist calculation problem. Prohibition is further undermined by corruption, increased potency, and substitute drugs.
Legalization and voluntary market solutions directly reduce the demand for drugs, and are much more effective in preventing drug abuse.
Prohibition causes crime: once by raising the price of drugs and leading addicts to commit crime to fund their habit, and twice by forcing gangs to settle disputes through turf battles and gang warfare, killing themselves and innocent bystanders.
Legalization introduces competition into the drug industry, vastly reducing profits and hence the price of drugs. Drug users can afford their habits on low-paying jobs, and drug gangs would be eliminated through competition from honest businessmen.
Prohibition leads entrepreneurs to produce less risky higher potency drugs. The resulting variability in potency increases the chances of overdosing. Prohibition causes users to switch to using legal substitutes, which may be more dangerous. The black market does not have the legal or competitive safeguards of a free market, leading to adulterated, impure, and unsafe drugs. These factors all lead to increased consumption-related deaths.
Legalization lowers the potency of drugs, increases the quality and safety of drugs, and increases consumer knowledge, thus decreasing consumption-related deaths.
Prohibition lures children into the drug trade, through lesser punishments for minors and drug pushing.
Legalization introduces competition, making it uneconomical to hire children and engage in drug pushing.
Clearly, prohibition has been an unmitigated disaster. Let us now implement the only sane solution: legalization.
