The Failure of the War on Drugs-BECKER

Every American president since Nixon has engaged in a �war� on illegal drugs: cocaine, heroin, hashish, and the like. And every president without exception has lost this war. The explanation lies not in a lack of effort- indeed, I believe there has been too much effort- but rather in a basic property of the demand for drugs, and the effects of trying to reduce consumption of a good like drugs by punishing persons involved in its trade. The war on drugs is fought by trying to apprehend producers and distributors of drugs, and then to punish them rather severely if convicted. The expected punishment raises the price that suppliers of drugs need to receive in order for them to be willing to take the considerable risks involved in the drug trade. The higher price discourages purchase and consumption of illegal drugs, as with legal goods and services. The harder the war is fought, the greater the expected punishment, the higher is the street price of drugs, and generally the smaller is the consumption of drugs. Those suppliers who are caught and punished do not do very well, which is the typical result for the many small fry involved in distributing drugs. On the other hand, those who manage to avoid punishment- sometimes through bribes and other corrupting behavior-often make large profits because the price is raised so high. This approach can be effective if say every 10% increase in drug prices has a large negative effect on the use of drugs. This is called an elastic demand. However, the evidence from more than a dozen studies strongly indicates that the demand for drugs is generally quite inelastic; that is, a 10% rise in their prices reduces demand only by about 5%, which means an elasticity of about �. This implies that as drug prices rise, real spending on drugs increases, in this case, by about 5% for every 10% increase in price. So if the war on drugs increased the price of drugs by at least 200%- estimates suggest this increase is about right- spending on drugs would have increased enormously, which it did. This increased spending is related to increased real costs of suppliers in the form of avoidance of detection, bribery payments, murder of competitors and drug agents, primitive and dnagerous production methods, and the like. In addition, the country pays directly in the form of the many police shifted toward fighting drugs, court time and effort spent on drug offenders, and the cost of imprisonment. The US spends about $40,000 per year per prisoner, and in recent years a sizeable fraction of both federal and state prisoners have been convicted on drug-related charges. After totaling all spending, a study by Kevin Murphy, Steve Cicala, and myself estimates that the war on drugs is costing the US one way or another well over $100 billion per year. These estimates do not include important intangible costs, such as the destructive effects on many inner city neighborhoods, the use of the American military to fight drug lords and farmers in Colombia and other nations, or the corrupting influence of drugs on many governments. Assuming an interest in reducing drug consumption- I will pay little attention here to whether that is a good goal- is there a better way to do that than by these unsuccessful wars? Our study suggests that legalization of drugs combined with an excise tax on consumption would be a far cheaper and more effective way to reduce drug use. Instead of a war, one could have, for example, a 200% tax on the legal use of drugs by all adults-consumption by say persons under age 18 would still be illegal. That would reduce consumption in the same way as the present war, and would also increase total spending on drugs, as in the current system. But the similarities end at that point. The tax revenue from drugs would accrue to state and federal authorities, rather than being dissipated into the real cost involving police, imprisonment, dangerous qualities, and the like. Instead of drug cartels, there would be legal companies involved in production and distribution of drugs of reliable quality, as happened after the prohibition of alcohol ended. There would be no destruction of poor neighborhoods- so no material for �the Wire� HBO series, or the movie �Traffic�- no corruption of Afghani or Columbian governments, and no large scale imprisonment of African-American and other drug suppliers. The tax revenue to various governments hopefully would substitute for other taxes, or would be used for educating young people about any dangersous effects of drugs. To be sure, there would be some effort by suppliers of drugs to avoid taxes by going underground with their production and distribution. But since there would then be a option to produce legally-there is no such option now- the movement underground would be much less than under the present system. As a result, the police could concentrate its efforts more effectively on a greatly reduced underground drug sector. We have seen how huge taxes on cigarettes in New York and elsewhere have been implemented without massive movement of production and distribution underground in order to avoid the taxes. So legalization could have a greater effect in reducing drug use than a war on drug without all the large and disturbing system costs. How high the tax rate should be would be determined by social policy. This approach could accommodate a libertarian policy with legalization and low excise taxes, a socially �conservative� position that wants to greatly reduce drug use with very high tax rates, and most positions in between these two extremes. So if drug consumption was not considered so bad once it became legal, perhaps the tax would be small, as with alcoholic beverages in the US. Or perhaps the pressure would be great for very high taxes, as with cigarettes. But whatever the approach, it could be implemented far more successfully by legalizing drugs than by further efforts to heat up the failing war on illegal drugs.

Comments

[Peter Konefal]

I completely agree with both Becker and Posner on the merits of legalization of (certain) drugs. Legalization allows the use of a host of regulatory mechanisms to control use, which are currently not available due to most drugs illegal status.

The important thing to keep in mind however, is that advocates of legalization do not, necessarily approve of drug use - legalization is merely an arguably more pragmatic way to reduce drug use (paradoxically almost) than to pretend that the state can extend perfect control over the use of drugs by the public. Unless supply can be stamped out completely, high pricing will ensure its longevity.

Great article both...

[Corey]

Wow, for the first time since this blog started
I agree with an article. How boring, whatever will I do now.

"We were somewhere around Barstow on the edge of the desert when the drugs began to take hold."
-- Hunter S. Thompson

I for one approve of drug use. Most of my favorite art and literature was created under the influence. Perhaps in an environment of legalization, society can better mitigate the most harmful effects of addiction. I would love to see science produce a less addictive form of heroin.

Support the free market! Put the cocaine back in Coke!

[luca]

i don't know what's going on in the us, but in italy the cocaine price is going down. in some places should be even cheaper than heroine and even maijuana.
i suppose there is a strong supply shock. or is the price accomodating to the new and still to enforce government drug policy, which is punishing marijuana sellers stronger than cocaine ones?
i've downloaded the paper and i'm gonan read it through. it should be really interesting.
aloa

[monkyboy]

"Crime" is a product, and the government "supplies" it by outlawing certain behaviors.

Who demands this product?

People who like to play policeman and judges. Both heroic types who get a kick out of doing good, and corrupt ones who take bribes.

Criminals like it too. Selling drugs is a pretty easy life. Sit around while people come to your house and pay you a high mark-up on your product. And if you get caught...a $40,000/year vacation at the peoples expense...not a bad life.

Certain religious types demand crime, too. How else are they going have people to feel superior to?

And regular folk demand crime. Fictionalized crime is the most watched thing on TV. And real-life shows like "Cops" and the nightly local news, where almost every crime reported, from murder to theft, is fueled by crime.

Yeah, the "War on Drugs" may seem pointless, but if you look at crime as product or service a lot of people "demand", it is easy to understand why it continues. The government could just as well crimilize cheeseburgers or web sites and get the same results...

[James Spencer]

As a former drug dealer,I've watched the futile effort to stop the drug trade on the supply side. The main effect of this is to turn otherwise law abiding citizens into criminals,and to finance the corruption of law enforcement,and govornment officials in our country and others. The people making the big money are not the ones going to jail,it is most often someone who lacks other opportunities,and does not have the money to hire a quality attorney.Clearly something else must be tried.

[goober]

I would argue what has been a failure is the pretty much one size fits all approach to drugs. While all drugs can be abused the negative effects on society and the individuals taking them vary widely. Some drugs, alcohol and methamphetamine cause no end of problems, while others, pot, caffine, and most hallucinogens cause few problems. A better drug policy would take that into account.

Second, the cost issue is hogwash for the most part at least in terms of the price of drugs, since most drugs to the typical causual user are supprisingly affordable. A six pack of beer, box of smokes, hit of E, line of coke, hillbilly heroin, whatever can all be had for less than $20. Price is mosly an issue for people that use large amounts of coke, and junkies.

[RWS]

Since becoming a district court law clerk, I have had the opportunity to see the federal war on drugs in very close context. I have a few observations about this issue that are often missed in the old libertarian versus prohibition argument, two of which are absolutely unique to the modern narcotics trade as opposed to the alcohol trade.

1. The impact of intensely stimulating drugs on prenatal development is severe. The estimation of my brother (a medical student) and father (a physician) is that cocaine, crack, and a few other of the really intense drugs is another whole category of medical trauma than alcohol consumed during pregnancy. The evidence would be the neo-natal unit. My brother estimated that perhaps 3 out of 4 babies in that unit are so-called �crack babies.� Alcohol is cheap and widely available, whereas narcotics are expensive and not easy to get readily, so I think there�s not a good argument for equating them in terms of potency. Legalization would tend to further what is one of the saddest circumstances in America, the baby deformed by its mother�s addictive habit. That is why my brother and father are very, very pro-war on drugs, and I think they have a point.

2. Closely related is the phenomenon of the woman who trades sex for drugs and getting to be the girlfriend of the guy with the most jewelry on the block. That creates a major power for local drug dealers who can hook women on drugs and then use that power to get free sex. We regularly sentence men with many babies by many different mothers, none of whom they married. And, of course, some of those babies may be addict babies, too. The power that the dealer has over the woman can be great. This, in my view, constitutes a major reason to legalize drugs, because it lowers the power of the illegal drug dealer and puts the drug sale into a legal marketplace outside of prostitution.

3. Lastly, and this is another argument against the war on drugs, among poor demographics, the temptation to deal drugs as a quick and easy way to make big bucks, instead of a low-wage job, is enormously tempting. They tend to undervalue the potential cost of incarceration long into the future relative to the good money they can make quick. At a certain level, it is a little sad to see those that want to make money through the virtue of self-interest, a natural and valuable male inclination in general, have to check that ambition because of the fact that what they deal is illegal. I�m not excusing it, I�m just saying, a lot of young, poor men would be better off without that option on the table.

[David Nieporent]

Tom: has there been a rash of driving-while-smoking deaths that I haven't heard about? Presuming that you mean Big Alcohol, what's the problem? We don't need to "immunize" the alcohol manufacturers; we just have to recognize that they aren't responsible for what people do after drinking. But sellers may be, if, for instance, they sell to those already intoxicated.

The company selling crack could be liable to the same extent that the tobacco/alcohol sellers could be: adulterated products, fraud/false advertising. But not for the known harms of crack, which risks are assumed by the user.

Second, there is a huge NIMBY effect. Who would want a place where you could buy illegal drugs in their back yard?

Since the drugs wouldn't be illegal, why would that be any different than a bar or liquor store? You might not want one literally in your backyard, but you don't mind having them around.

[Harry Clarke]

Professor Becker's argument seems to be conditional on the assumption of price-inelastic demands for drugs like heroin. At least one study (H. Saffer & F.J. Chaloupa, �The Demand for Illicit Drugs�, NBER, National Bureau of Economic Research Working Paper, 5238, August 1995) estimates US price elasticities of demand for heroin from �1.8 to �1.9 which are highly elastic. In short, supply measures which raise price will have more than proportionate effects in reducing demands. The reason for the high demand elasticities could be that addicted users spend a high fraction of their incomes on drugs so that even small price variations have a big effect on demands.

I think that the effect of legalising heroin by making it legally marketable would be disasterous at least in part because it also reduces a key non-monetary cost of consumption --namely the social cost of doing something society dissapproves of and which it prosecutes.

As Professor Becker has published some of his own work in this NBER series I guess he knows the Saffer/Chaloupa study. Have I got it wrong and what are the five studies he refers to?

[Anonymous]

Thanks for mentioning HBO's "The Wire." Best - TV - Show - Ever.

[Zathras]

The overriding question in the debate over the war on drugs is: compared to what? A few of many questions:

If drugs are legalized, does this really reduce the need to spend money on law enforcement? Or would it simply require law enforcement to focus on different crimes -- use of drugs still illegal (for experienced drug dealers these would still bring a higher return than newly legal drugs), evasion of taxes on legal drugs, crimes from traffic violations to rape to murder committed under the influence of drugs, sale of drugs to minors?

What are the consequences of varying price elasticities? We know, for example, that a heroin addict is less easily deterred from the use of heroin than someone who has not used the drug. Higher street cost of heroin might not reduce use by addicts, but lower heroin prices might create more addicts. The beneficial effects the creation of more addicts might have on government revenues seems a rather bad trade.

How do we deal with the effects of drugs used in combination? Is it likely that people using newly legal drugs will use each drug by itself, as alcohol is consumed by most people who drink? Do we have any way of assessing the public health costs of drugs used in combination?

What of the way society views drug users? Whether one approves of it or not, criminalization does simplify the relationship between the non-drug using public and the drug user by declaring the user to be always in the wrong. Employees can be fired if they use drugs, tenants evicted, students expelled, military personnel disciplined or discharged. What are the consequences of having to renegotiate this relationship -- or, rather, to comprehensively but selectively renegotiate it, since it is most likely only some now illegal drugs that would be legalized?

This last issue is under-discussed, but perhaps particularly significant. The war on drugs does not reflect just a set of policy decisions, but a deeply felt distaste by a large majority of the population for drug use and drug users. Would not legalization require considerable resources to be employed in combating the effects of that distaste -- protecting the drug-using minority from discrimination in hiring, for instance? Sailing into the wind of public opinion always involves costs; are we sure we know what they would be in this case?

Legalization of just one now illegal drug -- marijuana -- with relatively mild influence on behavior and sources of production more numerous than other drugs, could make resolution of these and other questions a little less daunting than they appear if what we are talking about is legalizing all illegal drugs from heroin to cocaine to methamphetamines. But even limiting legalization to marijuana doesn't make the questions go away.

Lastly, I have to disagree with the first poster on this thread. Some advocates of legalizing drugs are such because they recognize the very high costs of enforcing current drug laws and see legalization as a way of reducing them. They are a minority among legalization advocates, however; most of these are in favor of drug use, for themselves if not for everyone. It is not the drug laws alone they object to, but the hostility toward drug use on the part of most of the population, on which those laws are based and without which they would not exist.

This would seem to complicate efforts for drug legalization in any form -- provided of course that no one is proposing to attempt to find a court willing to rule that prosecuting cocaine users and not heavy drinkers violates Constitutional guarantees of equal protection. One never knows these days. But apart from that public opinion must be moved for drug laws to be changed, and it is in my judgment unlikely to be changed by denunciations of public attitudes toward drug use. Moving public oopinion will depend instead on demonstrations not only of the high costs of enforcing existing laws, but also on some evidence that we know the costs of what we propose to replace them. Becker provides the first, but does not seem to have thought much about the second.

[seth]

I posted a discussion of the issues regarding legalization of drugs at http://blawgandecon.blogspot.com/2005/03/seth-drugs.html if anyone is interested.

[Kerub]

(forgive my English, writing from Italy)

wouldn't it even better to have drug as cheap as you can? so no company would have the interest to raise new customers by distributing free samples and having new people getting addicted?
so may be the drug distribution can be a state-driven affair: anonymous free M.D. prescription for old addicted consumers, almost no new consumer, almost free drug.
the only problems are the new syntetic low-cost drugs: in this case may be there is "room" for price differentiation and resistance to doctor prescription, but since the war on illegal drugs is a failure I do not see better proposal.

[logicnazi]

First a response to the 'crack baby' comment. My understanding is that the crack baby syndrome was mostly revealed to be a myth. That is 'crack babies' are more a result of usage of alcohol and tobacco than crack. If you disagree or want to make medical claims about harms how about some journal citations.

Secondly while I mostly agree with Becker I wanted to take issue with an implicit assumption in his post. That is the assumption that it is a valid governmental goal to reduce drug abuse. While reducing drug use can often serve other valid government goals ultimately the role of the government should be to improve the welfare of its citizens and only fight drugs where they negatively impact this welfare.

Of course the expected response is that drugs have harmful health effects and reduce productivity. This may be true but the welfare of the citizen is not the same think as making the citizen a cog in the machine. The same arguments might be made for chocolate but we think the enjoyment can outweight the negative effects.

In short the government should be about promoting the happiness of its citizens. Now many drugs (crack) may be shown to mostly decress happiness but it is far from clear that say marijuanna does this. We need to get away from our puritanical roots and accept that some drugs might be good simply because people like and enjoy taking them (the same reason we find TV and chocolate acceptable).

Personally I think this is part of a broader error of reasoning where we view 'natural' brain chemistry as fundamentally different than unnatural brain chemistry but I think this is a discussion for another day.

[nmg]

QUOTE: The impact of intensely stimulating drugs on prenatal development is severe. /END QUOTE

This is an excellent reason to punish those who use the drugs while pregnant. But it is a terrible reason to continue a general war on drugs. Just as we punish drunk drivers for driving while drunk and we do not punish ALL drinkers.

To suggest that all drugs should be illegal for everyone because some irresponsible mothers use them is to rely on the general approach to social policy that "since some people will choose poorly when it comes to X, no one should be allowed to make any choice when it comes to X".

Bad policy.

nmg

[Peter Wizenberg]

I'm very pleased to see that proposals for drug legalization are increasingly discussed, even spreading to the mainstream. It reminds me of John Stuart Mill's adage that every movement goes through three stages: ridicule, discussion, adoption.

Not too long ago, people who advocated drug legalization were ridiculed; the idea was considered by many to be beyond the pale. I'm glad to see that it looks like we're finally in the discussion stage.

[Greg]

One cost that the above analysis fails to include is search costs. Given the underground nature of the product, search costs can represent an enormous portion of the overall price of the good, particularly if it means traveling to neighborhoods one might not ordinarily venture to. In fact, in terms of demand, if search costs were reduced to near-zero, due to legality, I would think this would overwhelm any increase in the price that would result from a combination of legality and taxes.

[Ryan]

I can't wait until the government legalizes marijuana and Haliburton finds a way to make a buck off of it.

"No war for weed!"

[Daily Texican]

Amen. Great argument.

[Pferree]

This is how I think product liability would pan out:

Drug companies would be held strictly liable for the harmful effects of their products, as are nearly all companies in the US who produce consumer goods. This means that producers must pay for all harm caused by their products, regardless of whether or not the consumer was being careless or just plain stupid when using the product. When producing and pricing the drugs, producers will count the projected costs of lawsuits and settlements as just another production cost, and the resulting price and quantity produced would be the optimal amount. So, product liability remains intact, and it even achieves the optimal production of drugs, assuming that externalities can be adequately regulated or compensated for.

[[email protected]]

If you have a society with drug users legally buying drugs and rotting in the streets, all with implicit public approval, you're sending a message that we don't care if people want to destroy themselves. Is a methadone clinic more a function of compassion or indifference? Hard to tell. The moral apathy is potentially very corrosive. That's why there is no legalization.

[RWS]

In re: crack babies, I stand humbly corrected.

http://www.come-over.to/FAS/crackbaby.htm

For that reason, the other two phenomena I find interesting, the narcotics-prostitution connection and the "punishing those who want to make money" issue both counsel in favor of legalization + high tax.

I find the narcotics-prostitution connection particularly troubling, personally, as that creates so many babies out of wedlock, in addition to the harms of prostitution that the woman gets into when she hangs around drug dealers and does drugs.

[Tom]

Pferree brings up a point that I would like to see discussed more.

Most companies don't get away with producing a product as dangerous as tobacco. If Sony made a TV that had a great picture, but burned the retina (retintae?) of 1/3rd of the people who watched it, the CPSC would have said television pulled off the market. And, that's only retina burning, not lung cancer.

Tobacco is the exception to products liability in America, not the rule.

So, while I agree with Pferree that firms would build the cost of potential liability into the price, I'm not certain if that can be done effectively without creating a black market.

Given the taxes, and now the cost of liability, I doubt these new legal suppliers will be able to compete with the already entrenched network of illegal suppliers.

Becker mentions taxes on cigarettes as an example why their won't be a underground drug market, but I don't think the analogy holds up. People are used to getting their cigarettes legally. People aren't used to getting their drugs legally, AND there is already a network of illegal drug suppliers out there. Cigarettes don't (I don't think) have such an underground. I doubt the illegal drug market would fold up shop just because people could buy drugs legally.

[J.S.]

Great article and I couldn't agree more. One thing I would add is on the philosophical side: the state currently chooses which drugs are legal and which aren't according to historical prejudice and little more- i.e. alcohol and tobacco are much deadlier drugs than many illegal ones and yet are celebrated and advertised throughout society- it is morally wrong to have such an inconsistent and illogical system. The fact that someone who wants to drink a beer or smoke a cigarette can do so lawfully while someone who wants to smoke marijuana or use cocaine risks hard jail time is insane.

J.S.

http://voicesofreason.info

[Nixflix]

Just this morning, I watched a segment of The Today Show that introduced me to the term "Skittling." Apparently teens are popping Coricidin and other antihistamines (that have the appearance of Skittles candies) at 4 or 5 times the recommended dosage to get high. It occurs to me having read Becker (haven't gotten to Posner yet) that if people can find ways to abuse legal drugs (setting aside the legality of alcohol and tobacco consumption), the "war on drugs" doesn't have a snowball's chance in hell of every really working - at least not as it's currently structured.