DRUG PROHIBITION HAS FAILED TOO

In April, Geoffrey Fieger suggested that Detroit should not enforce
marijuana laws as one way to improve the city's economic situation.
While his reasoning - that Detroit would be a more fun place to live -
wasn't compelling, he is right on illegal drugs.

First, there is the question of principle. In his 1927 book,
"Liberalism," Ludwig von Mises wrote about the government's attempt to
enforce Prohibition:

"It is an established fact that alcoholism, cocainism, and morphinism
are deadly enemies of life, of health, and of the capacity for work
and enjoyment. But this is far from demonstrating that the authorities
must interpose to suppress these vices by commercial prohibitions, nor
is it by any means evident that such intervention on the part of the
government is really capable of suppressing them or that, even if this
end could be obtained, it might not therewith open up a Pandora's box
of other dangers, no less mischievous than alcoholism and
morphinism."

Mises was correct that Prohibition would be a failure.

It did not eliminate alcoholism, and it ended up with the unintended
consequences of establishing a revenue source for the Mafia in the
United States. But the more important unintended consequence for Mises
was that adopting the principle that it is government's role to
preclude us from doing things which are harmful to ourselves leads to
a government that knows no bounds.

"This question cannot be treated exclusively in reference to
alcoholism, morphinism, cocainism, etc., which all reasonable men
acknowledge to be evils. For if the majority of citizens is, in
principle, conceded the right to impose its way upon a minority, it is
impossible to stop at prohibitions against indulgence in alcohol,
morphine, cocaine, and similar poisons. Why should not what is valid
for these poisons be valid also for nicotine, caffeine, and the like?
Why should not the state generally prescribe which foods may be
indulged in and which must be avoided because they are
injurious...Should a press pandering to the lowest instincts of man be
allowed to corrupt his soul?"

Nearly 85 years later, despite the repeal of Prohibition, we find that
the state does prohibit all sorts of our activities, from the
consumption of trans fats to advertising Happy Meals.

But suppose that we assume that it is the role of government to reduce
our use of marijuana and to reduce the amount of money we spend on it.
The method government chooses to accomplish this, - restricting supply
by arresting the sellers - cannot be successful.

Arresting those who engage in the drug trade increases the cost of
producing marijuana. Elementary economics indicates this will shift
the supply curve to the left, resulting in an increase in the price of
marijuana and reducing the quantity of marijuana sold. However, the
demand for marijuana, at least in the relevant price range, is what
economists term "inelastic", which is defined as the percentage change
in the quantity demanded being less than the percentage change in price.

So if the price of marijuana rises by 10 percent, then the quantity
sold will fall by less than 10 percent. Since revenue to the drug
sellers and the amount people spend on marijuana is price times
quantity, the total revenue and total spending must go up, not down.

Also, there is now an incentive to produce substitutes for marijuana,
such as cocaine. The government will respond in the same way, reducing
the supply, thus creating a similar situation in the coke market.
Substitutes for cocaine, such as crack and crystal meth will be
developed as the cycle of government restrictions on the supply and
increasing price continues.

We may thank government's attempts to restrict supply for the
innovation in recreational drugs over the last 40 years.

Rather than attempt to reduce supply, we should reduce demand for
marijuana. When the demand curve shifts to the left the price will
fall and the amount consumed will fall. Since price is falling and
quantity is failing, revenue and expenditures on marijuana must fall.

Rather than spend billions of dollars on attempts to reduce the supply
or recreational drugs, we would be better off reducing consumer
demand. This is best accomplished by the private activity of
persuading users and potential uses, such as our children, that these
drugs are both harmful and illegitimate.

If government must be involved, it should be advertising the harm of
drugs - then treating users rather than imprisoning them.