Legalisation of drugs: A sane economic and social policy
I will explain my long absence from blogging later. It involves Novell, SuseLinux and exasperation. 
Right now, I’m going to blog about the legalisation of drugs.
The two most common argument supporting the criminalisation and prosecution of the drug consumption and trade is that it is harmful to the user, and that it has harmful effects on society such as crime and the breakdown of families.
I would argue that the reason drugs are so harmful, is precisely because they are illegal. Addicts commit crimes against property and person in order to obtain the money to buy more drugs, because drugs are so expensive. And why are drugs so expensive?
Knowledge of basic economics would tell you that the price of any good or service is a result of demand and supply. We can infer from the price of narcotics, that demand outstrip supply. The question is why. Whether the drugs are organic or synthetic in nature, a cursory analysis would reveal most to be rather cheap and easy to manufacture. Hence we can conclude, the sole reason why the demand for drugs outstrip supply is because of legal proscription.
In an undistorted free-market economy, the general trend is for the price of goods and services to fall in the long-run, as increasing productivity allows for an increase in supply of goods and services. The fact is that the criminalisation of the drug trade artificially restricts supply, thereby setting the price at above equilibrium.
You know what this means? The mules and pushers get caught and punished, but the drug lords make tremendous profits off the artificially high price. This is the unfortunate and uncomfortable reality, that being “tough on drugs” actually means “profits to the cartel”.
Imagine a drug industry that is completely decriminalised. A free-market in the drug trade would be almost perfectly competitive, given the wide range of substitutes that each narcotic is to the others. Barriers of entry are low, given that anyone with a recipe and a chemistry set can make their own synthetics, and organics such as opium, marijuana and coca are hardy and easy to grow. Increased competition would mean gains in productivity, translating to increases in supply. Consequently, the prices of narcotics fall.
Ask yourself with a clear conscience, how would anyone have the incentive to rob, steal or murder if any narcotic that they wish to purchase costs as little as a pack of cigarettes or a cup of coffee? (Both of which, are legal stimulants, but not unlike the narcotics.)
The remaining objection to the legalisation of drugs is the harms that addiction will cause to the individual, and to society.
I believe that the dangers of drug abuse are well-known that individuals should be entrusted with the right to decide for themselves whether to consume to the point of abuse. The state has no business here. Knives and cars can be dangerous in the hands of the wrong people, but the government doesn’t ban their use. The same reasoning should apply here. The fact that the phrase “drug abuse” is used correctly implies that there is a boundary between using and using too much.
More importantly, returning to my scenario of a perfectly competitive drug industry, one must realise that unrestrained profit motive can be the most powerfully beneficial instinct to humankind. Think about this: to maximize profits, would you sell someone a product that would kill them quickly? Or would you sell them a product that would keep them coming back for more, but does not kill them?
In a market where the good or service provided is illegal, there is little or no incentive to expend resources investing in R&D to create a better, more effective and safer product. Instead, resources are diverted towards evading the law. That is wasteful and inefficient. Were the drug industry to be legalised, would it not be in the long-term financial interests of drug manufacturers to create drugs which do not kill their customers?
If you think about this carefully, you’ll realise that the food industry fits the description exactly. There is an incentive to make a product that makes people come back for more, and more importantly keep them alive, simply because dead people don’t make good customers.
I welcome anyone who wishes to provide arguments for or against my position. I’ll be away in KL for a few days, but will read replies ASAP.
