HOW PROHIBITION HELPS CAP HEROIN USE

IF YOU think economics doesn't have much to do with the drug problem, you
haven't thought much about the problem. Drug taking may be harmful and the
market for drugs may be illegal, but it's still a market - subject to the
laws of supply and demand like any other market.

Most Australians' attitude to drugs comes straight from their emotions and
is very simple: because everything about drugs is abhorrent, they should be
outlawed. We should prohibit their importation, distribution and use. If
the trade continues despite the prohibition, the obvious explanation is
that governments aren't trying hard enough.

But if people had a better appreciation of the power of market forces,
they'd be less surprised that prohibition hasn't stamped out the problem
and less hopeful that ``trying harder'' would do the trick.

Where there's a strong demand for something, outright prohibition isn't
likely to wipe out the market, just drive it underground.

The apparent failure of prohibition has led a small but growing minority of
people to advocate going to the other extreme: legalisation. They argue
that much of the social harm resulting from the use of illegal drugs is the
consequence of the illegality itself.

The deaths associated with heroin, for instance, arise not so much from the
drug itself as from overdoses caused by its uncertain purity and from the
dangerous substances used to dilute it. As well, there's the spread of HIV
and hepatitis C from the use of dirty needles.

A high proportion of theft - burglary, robbery and car theft - is committed
by addicts seeking money to support their habit. Then there's the
corrupting of the police and the violence arising from disputes between
drug dealers.

So, like the Americans with alcohol in the 1930s, why not accept that
prohibition doesn't work and can never be made to work? Why not simply
legalise drugs and do away with all the damaging side-effects that
prohibition creates?

But both the legalisers and the defenders of the ``tough on drugs''
approach have underestimated the success of prohibition.

It hasn't eliminated the drug trade (that was always an unrealistic
expectation) and it doesn't seem to have much effect on the quantity of
heroin and other hard drugs coming into the country. What it has been
successful in doing, however, is greatly raising the price of drugs.

In a completely free market, the price of a ``cap'' (or serving) of heroin
would be just a few dollars. But prohibition has, over the years, forced
the retail price of heroin as high as $40 or $50 a cap. And the great
social benefit of this high price has been to discourage use.

Only about 2per cent of the population has ever used heroin and the number
of habitual users would be no higher than 100,000 at most. So prohibition
has greatly limited the spread of heroin and the damage it does to people's
lives.

How does prohibition force up the price of heroin if it seems to have
little effect on the quantity entering the country? By raising its cost of
distribution.

Because the industry is illegal and the ban is vigorously policed, people
involved in the importation and distribution of the drug require high
rewards to compensate them for the risk they run of conviction and
imprisonment. As well, the industry probably incurs quite a bit of expense
in its efforts to avoid detection.

Researchers believe the demand for hard drugs is quite sensitive to price,
partly because even addicts can stretch out the time between injections,
but mainly because a higher price deters new, casual users, particularly
young people.

At any time, there are many more ``recreational'' users of heroin than
there are habitual users. People in the health industry say about one
person in three goes on to become addicted. So the key to limiting the
number of addicts is to keep the price high to new users.

The latest development is a sharp fall in the street price of heroin - said
to be as low as $15 a cap - and a sharp rise in purity. The unexpected rise
in purity would explain the reported jump in the number of deaths through
overdose.

The drop in price seems to be the consequence of an increase in the
quantity of heroin entering the country, caused by a surge in worldwide
production of heroin.

If the experts are right in stressing the key role that price plays in
limiting the use of heroin, this big fall in price is very worrying. We
could expect to see a marked rise in its use.

The trouble is that research evidence leaves little reason to believe the
efforts of customs officers and police have much effect on the quantity -
and, hence, the price - of heroin available in Australia.

So any campaign by the authorities to increase their seizures of large
quantities of heroin is unlikely to have much effect on quantity or price.

A better approach may be for police to divert more of their resources to
disrupting the distribution process where it's more vulnerable, just above
street level. The goal would be to limit the fall in the retail price by
making life hotter for dealers, thus encouraging them to compensate by
increasing their profit mark-ups.

In any case, there's more we can do to improve the results we're getting
from prohibition. At present, we're spending too little on drug treatment.
There aren't enough places in methadone programs to meet the demand.

The evidence is clear that methadone programs improve the health of addicts
as well as greatly reducing their resort to theft. Heroin trials may
demonstrate similar benefits.