Different River

”You can never step in the same river twice.” –Heraclitus

March 2, 2005

If drugs were not outlawed…

Filed under: — Different River @ 3:40 pm

… would non-outlaws do drugs?

Russell Roberts at Cafe Hayek seems to think not:

This planet would be a better place if we allowed things that were immoral to be merely looked down on, rather than to be against the law. The war on drugs presumes that if drugs are legal, people will take more of them because somehow, making them legal sanctions them.

Now, I know Russell Roberts to be a competent economist — he’s a professor of economics at George Mason University and has a Ph.D. from the same place as I do.

So he must know that the notion that “if drugs are legal, people will take more of them” is more than just a “presumption” but an inevitable conclusion of the accepted economic theory — and it has nothing to do with whether “making them legal sanctions them”, but with the principle of utility maximization. In other words, a consumer of anything, legal or not, optimizes consumption of each good (or service or activity) based on how much benefit (“utility”) that good provides, offset by how much the good costs to obtain, and subject to total resource contsraints (mainly time and income). If the benefit of a particular good remains the same, but the cost goes down, people will consume more of that good. Maybe not every individual consumer, but consumers as a whole. Making drugs illegal increases their cost, if for no other reason than there is a greater-than-zero probability of getting caught and punished for using them. Making drugs legal removes this portion of the cost, and reducing the cost increases the optimal level of consumption (from the standpoint of the drug consumer). In addition, to compensate the seller for the probability that he is caught and punished, the price paid is higher when drugs are illegal. If drugs were made legal, sellers would be willing to sell them at a lower price, since they would not have to bear these costs. (Of course they’d be happier keeping the price high, but competition would force them to lower it to reflect lower costs.) Furthermore, the illegality of drugs requires them to be produced in secrecy, meaning they are probably not produced at the optimal scale. If drugs were legalized, they would probably be mass-produced (and maybe even sold at your local Safeway), which would further lower the cost.

In short, removing the legal prohibitions against drugs removes the possibility of being punished for using or selling them, and these will both reduce the costs, and therefore increase the consumption of drugs. This could occur either by increasing the quantity of drugs consumed by people who consume them even when they’re illegal, or increasing the number of people who consume drugs, or both.

The only possible objection to this argument is the notion that people use drugs because they’re illegal. I’ve heard this argument, but I don’t find it plausible. Sure, there’s a “rebellion” element to drug use, but if drug use is socially stigmatized (“looked down on” as Prof. Roberts says), that rebellion element will still be there. And, is there any evidence that consumption of alcohol decreased after prohibition was repealed? Given that it seems more than 80% of the people I know drink alcohol at least occasionally, I find that hard to believe.

Note acknowledging all this does not require Prof. Roberts to change his position in favor of legalizing drugs and keeping them “looked down on.” He could simply say that in his view, the social costs of keeping drug use illegal exceeds the social costs of the increased drug use that would result from making them legal. That’s partly an empirical question, but partly a judgement call based on the values one attaches to the non-monetary consequences of drug enforcement and drug use.

10 Responses to “If drugs were not outlawed…”

  1. Kevin Elliott Says:

    Your missing the obvious answer, and the one he suggests- morality constrains peoples behavior much more strongly than ANY law. Case in point- I’m a proud Nevada resident living a mere 10 miles away from the local brothel. In spite of my move from the People’s Republic of California, my consumption of prostitutes has remained flat- I still don’t visit. Indeed, I have no doubt that a signifcant change in pricing would STILL not change my demand curve.

    I’m afraid I can speak form experience when it comes to drugs (not living in a state where they are legal…), but I see no reason why my behavior toward drugs would be any different. I currently have zero demand and reducing the price of cocaine would not change that.

  2. Different River Says:

    Kevin Elliott: no one is claiming that everyone would take drugs if they were legal. Re-read what I wrote: “This could occur either by increasing the quantity of drugs consumed by people who consume them even when they’re illegal, or increasing the number of people who consume drugs, or both.”

    To take your brothel example: You may not patronize the brothel, but obviously some people do, which means not everybody is like you with respect to preferences for brothels. No doubt the vast majority of Nevadans do not patronize brothels — but I’ll bet the number of brothel visits per 1,000 people in Nevada is higher than in states where brothels are illegal. (Also, no doubt some people from other states come to Nevada to patronize the brothels.) At the margin, legalizing brothels increases the number of brothel visits, even if the vast majority of people have better reasons to avoid brothels than the law.

    It’s the same with drugs — you’ll never use drugs, I’ll never use drugs, the vast majority of people may never use drugs — but there will be some people who are on the “edge” between using drugs and not doing so, who will switch from not using to using once the fear of arrest is removed (or once the price drops because sellers no longer fear arrest). Likewise, some people who use drugs now will use higher quantities if drugs become legal, since they’ll be easier to obtain, and cheaper.

    The fact that “morality constrains [SOME] people[']s behavior much more strongly than ANY law” does not mean that the law is irrelevant for EVERYBODY. And it only has to be relevant for at least a few people for my claim to be accurate.

  3. Kevin Baker Says:

    I think, though, that being concerned about how many people do how much drug-taking is beside the point.

    It is Not the Business of Government.

  4. Different River Says:

    Kevin Baker: If you are going to argue that drugs should be legalized because it’s not the government’s business and you don’t care if people take more drugs, that’s fine. But it is disingenuous — and damages the credibility of the pro-legalization (anti-prohibition) argument to claim that drug use will not increase if it’s legalized. Simple economics shows it will.

  5. Kevin Baker Says:

    For how long? And increased over what, the current level of useage, or the level we would have had if the War on (some) Drugsâ„¢ never started?

    There is no doubt that drug useage is destructive to some people. Look at what costs alcohol inflicts on this nation every year. Question: Did repealing Prohibition result in a net increase in alcohol consumption?

    Freedom has associated costs. Prohibition has associated costs. Frankly, I’m in favor of freedom if given the choice.

  6. Kevin Baker Says:

    (For some reason, I expected a rebuttal of this statement.)

  7. Different River Says:

    Kevin Baker: Sorry for the delay — I had an insanely busy weekend, and didn’t get to blog at all. I hardly even got to the computer!

    Anyway, I’m not sure what sort of rebuttal you’re looking for. I am very pro-freedom, and generally think the government ought to stay out of regulating people’s lives. But there are limits. My right to swing my fist ends at your nose — and I don’t have a problem with the government passing laws to protect your nose from other people’s swinging fists. One questions is whether the damage done by drug and alcohol abuse is to the only the abuser(‘s nose), or to others as well. I plan to take this up in a future post. In advance of that, I’ve been very careful not to state a position on drug legalization as such.

    However, in the meantime, I am a strong advocate of both careful reasoning and intellectual honesty, and it is simply incorrect, based on economic theory, to claim that if the cost of something is reduced, people will not consume more of that something. Drug legalization will reduce the cost of consuming drugs — both the cost in terms of getting caught, efforts currently expended to avoid getting caught, and most likely the price paid as well.

    The Prohibition experience (1920-1933) with alchohol bears this out. Prohibition reduced the consumption of alcohol from about 20% (comparison of 1911-14 with 1927-30). This was actually a larger initial drop, followed by an increase which may reflect the time it took for illegal distribution channels to develop. After prohibition, alcohol consumption doubled, though the figure linked is for 1935-75; I haven’t found a figure comparing (say) 1933 with 1938, which would be much more useful.

    Of course, these are estimates, and estimates of the consumption of illegal goods are notoriously unreliable. However, two economists, Angela Dills and Jeffery Miron, have a paper that estimates the effect of prohibition indirectly, using data on deaths due to cirrhosis of the liver. They find that prohibition reduced such deaths by about 10-20%. (The econometrics is rather complicated, since there is a substantial time-delay between a change in drinking habits and deaths due to cirrhosis. It’s similar to smoking — if everyone stopped smoking tomorrow, it would be years before lung cancer deaths ended; if everyone smoking now stopped tomorrow and then restarted in 13 years, it would be difficult to find out how much lung cancer deaths were reduced. Lung cancer usually takes a long time to develop, but the important thing statistically is that the time delay can vary a lot from person to person.)

    Of course, a 20% reduction is not much when the goal of the legislation was to reduce consumption by (approximately) 100%. Then again, there were numerous loopholes — pharmacists could sell alchohol for “medicinal” purposes (similar to the case for opiates today), wine for sacramental purposes was legal (how do you enforce that exception?), production of beer as an intermediate to producing non-alcohol beer was legal, and production of ethanol for industrial purposes was legal. Thus, legal alcohol could easily be diverted to illegal use. Prohibition was not really total prohibition.

  8. Kevin Baker Says:

    Good argument. But there are costs, and then there are costs. The monetary cost of a drink of alcohol or a hit of speed is one thing. The costs involved in enforcement of the law(s) is another thing entirely.

    One of the costs of Prohibition was the establishment of those illegal distribution channels.

    And all that went with them.

    Legalization of drugs will, I agree, increase consumption. For how long I think neither you nor I can say. But the auxilliary costs associated with the enforcement of the War on (some) Drugs will be abated, and I thingk that would be a net good. Hard to tell unless we try, but I am convinced that the continuation and unabated escalation of the WosD is destructive to everyone’s liberty, not just those who use drugs illicitly.

  9. Chris Granger Says:

    Just how many non-drug-users out there are saying to themselves, “I sure wish heroin was legal so I could get some at 7-Eleven without getting arrested” anyhow? I agree that legalizing narcotics would increase overall consumption, but I don’t think the increase would be dramatic, nor do I think the number of new users would increase significantly.

    Of course, I’m referring to the drugs commonly considered dangerous here. Marijuana use would probably increase substantially; I’m just not too sure why that would be such a catastrophe that we have to spend vast amounts of money preventing it. The widespread availability of alcohol since prohibition was lifted hasn’t ruined society. Sure, there are problems associated with alcohol abuse, but that doesn’t mean it should be a crime to buy a bottle of wine. I think the same logic applies to drug use.

    I agree with Kevin Baker’s thoughts about the costs involved. Frankly, I’d like to see the money spent in the “war” on drugs put towards education, medical research and addiction treatment facilities rather than law enforcement and prisons.

  10. Different River Says:

    Chris Granger writes:

    Just how many non-drug-users out there are saying to themselves, “I sure wish heroin was legal so I could get some at 7-Eleven without getting arrested” anyhow?

    It doesn’t matter whether they are thinking now about how nice it would be to get it at 7-Eleven. What matters is what they’d actually do if it were actually available at 7-Eleven. Right now, to get heroin you have to find an illicit seller, go to an unmarked location, risk arrest, and pay a price inflated by the fact that the seller has to go through all that and more, plus risks a higher punishment if arrested.

    If you could go to 7-Eleven, not only would it be easier to get heroin, but cheaper, to. Or you could even just get a gun and hold up the 7-Eleven (which has a corporate policy against employees being armed) whenever you want another fix.

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