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.
15 Comments
The thing is, there’s no drug lobby, but there’re cigarette/alcohol lobbies.
hmmm… how bout drug cartels. drugs are addictive in nature, (not talking about pot), once a critical mass is ‘hooked’, an artificial demand is created. surely this will warp the fragile free mkt scenario.
it’s a compelling theoretical argument you put across, but surely in practice, it will be too open to abuse.
no?
anyway i’ve found a partial khaki for u… there’s this great guy i know who grew up in detroit and swears that all of society’s problems will be lessend if drugs were licensed. Food for thought?
Merry Xmas!!!!
Agagooga:
Haha, yeah, but then again, its hard to have a lobby when all your resources are expended towards evading the law yeah? So I guess the first step towards sanity would be to legalise the drugs.
ivan:
I’ve considered the addiction problem before, and I’ve found a close analogy.
In many ways, food is an addiction, no? You need to eat it everyday, and if you starved yourself, you’ll start suffering withdrawal symptoms i.e. hunger. And yet why are there no food cartels? Why, despite massive population growth, is there no food shortage? In fact one would argue that there is TOO MUCH food, because people are dying of diseases from overconsumption e.g. heart attack, hypertension, obesity… etc
So there are 2 answers to address the addiction problem. Firstly, “food” is a huge category. Obviously in the “food” category, there are many perfect and close substitutes, hence it would be extremely difficult for any sort of cartel to arise, and to enforce any sort of oligopolistic restriction of output.
Similarly, I would argue that many forms of narcotics are actually close, if not perfect, substitutes. I have no experience with narcotics whatsoever
, so I really can’t say with first-hand experience whether different drugs are close substitutes or not, but I can guess with a certain degree of accuracy based on the experiences of people I know, that certainly people can get their fixes from different sources. Hence I would argue that because the different types of drugs are close substitutes, the industry would certainly trend towards perfect competition.
Secondly, as we have seen, despite massive population growth, there is still no food shortage, contrary to the predictions of Malthusian alarmists. Hence we can conclude, as long as producers of narcotics invest their profits in productivity-enhancing innovations, as one would expect in a perfectly competitive scenario, increases in supply can be maintained in the long-run. Therefore, as long as supply can surpass demand, the same way supply of food is still greater than the quantity demanded, a low price for narcotics can be maintained, thus reducing the incentive to commit crime.
I think we should be allowed to take drugs because they make us feel nice. We may all be killed by a tsunamis or kind tomorrow, as such I conclude that we should do whatever it takes to feel nice today.
I’m boliao, and your argument is so flawed.
“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.)”
I can clearly answer yes (you’re asking in the wrong manner, it should be a yes no question) to that question. I mean, like, duh? It’s like comparing pen knifes to assault rifles.
Just so that you know, nicotine and opium addiction may draw the same breathe along a sentence, but to assume that they have the same addictive properties? gosh
Now, ask yourself. Is there really a dosage of heroin which a doctor would prescribe for someone perfectly healthy to feel “high” and at the same time avoid addiction? Please don’t go down the “sick man in pain” route. It’s a one off dose. if not, it’s given to cancer patients (to my knowledge and 1st hand exp) who were going to die anyway.
“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?”
“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.”
“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?”
I think they have. It’s the multibillion industry called tobacco. Unfortunately, they’re not the same. Ask the folks who just got sued for over-prescribing sleeping pills.
I’d argue more, but I think you should relook your argument yourself instead.
Gosh I hope you’re not really studying to be a lawyer. You sound like Lawyer Hutz from the simpsons. And in capital letters at that. GOSH
“I can clearly answer yes (you\?re asking in the wrong manner, it should be a yes no question) to that question. I mean, like, duh? It\?s like comparing pen knifes to assault rifles.
Just so that you know, nicotine and opium addiction may draw the same breathe along a sentence, but to assume that they have the same addictive properties? gosh”
No where in that quote you picked out did I assume that they have similar addictive properties. You failed to see my point, which is crime occurs because of the high price of narcotics. If the price were low, the incentive to commit crime would not exist.
“Now, ask yourself. Is there really a dosage of heroin which a doctor would prescribe for someone perfectly healthy to feel \?high\? and at the same time avoid addiction? Please don\?t go down the \?sick man in pain\? route. It\?s a one off dose. if not, it\?s given to cancer patients (to my knowledge and 1st hand exp) who were going to die anyway.”
I fail to see how is this relevant to the discussion. Do people only smoke if doctors prescribe igarettes? Or eat food because chefs tell you to eat? This is an issue in which people have to decide for themselves, not base their decisions on the authority of others.
“I think they have. It\?s the multibillion industry called tobacco. Unfortunately, they\?re not the same. Ask the folks who just got sued for over-prescribing sleeping pills.”
Firstly, you don’t explain what you mean by “not the same”. Secondly, “over-prescribing” is somewhat vague isn’t it? Who decides how much is too much? When is the “over-prescribing” limit breached? Lastly, how is this linked to the argument for legalisation of drugs?
“I\?d argue more, but I think you should relook your argument yourself instead. Gosh I hope you\?re not really studying to be a lawyer. You sound like Lawyer Hutz from the simpsons. And in capital letters at that. GOSH”
I believe that if you had any semblance of an understanding in economics, you would’ve seen the merit of my arguments immediately. Instead you choose emotion over reason, knee-jerk reaction over logical analysis and personal attacks over civil discourse. If you had provided substantive arguments, I would have taken you seriously. Not only do you not make concrete and logical arguments, you choose to engage in ad hominem attacks. What is the point of making a comment then?
Hmm…… economics…….
You argue about supply and demand. Drug raids - Supply drops - prices inflate. However, since supply has already dropped, that does mean that the drug producers are selling less, albeit for more. Do they make more profit this way? That depends on the elasticity of demand, no? Maybe the demand curve is such that the drug producers actually make more profit from selling more for less? What you are assuming is that demand is very unelastic, which really is a very big assumption. That is not to say that your assumption is wrong, but I reckon that it will be very difficult to prove that it is right too.
Guofeng:
The objective of this model is not to deprive suppliers of profits. In fact, if the suppliers make profits from volume rather than higher price per unit, then its even better.
Keep in mind, my hypothesis is that all crimes associated with drugs are a direct result of the high price of drugs. If drugs cost as much as a pack of cigarettes, there wouldn’t be any incentive to rob or steal to get money to buy drugs, no?
Thus, if suppliers find that they can make more money by increasing supply and reducing price rather than restricting supply and jacking up prices, then the objective of reducing the incentives for crime is achieved,
Hmm…… I see what you mean. Legalise a vice so that it can be controlled better. Less crime committed by addicts will have a positive social outcome. I suppose you are a supporter of the heroin injection room at King’s Cross, Sydney?
But I will have to remind you that legalising drugs will also have negative social consequences. I’ve not consumed any before, but as far as I know, such drugs are very different from smoking. When smoking ciggies, you just return to normal after that. Other more potent ones will probably cause irrational behavior or causing users to zone out for hours or days. If taken in public, they are an eyesore and a nuisence. If taken in private, they are a domestic accident waiting to happen, especially if they have kids at home.
How do we resolve this then? Take a utilitarian approach and see if there is any positive utility overall? Do we measure utility in dollars?
Guofeng:
I’m working on the second part of the model, which deals with enforcement. So far I’ve only considered the aspect of crime. Of course, I realise that the model is incomplete if I do not deal with the issues of addiction and rehabilitation.
Thanks for your comments though. I appreciate it. Discussion and debate helps to reveal the truth.
Thanks for taking my views into consideration too. Since we are Singapore, we would also have to consider the all important economic consequences. Heh! Good luck with working on the model. Do post the complete works.
i think cannabis should be legalised because all the people trying to ban it haven’t even tried it and it’s less dangerous that alchol which makes people violent.
In general, I think there are very good reasons to legalize drugs. There are some good points here, but I think a few are flawed as well.
“the reason drugs are so harmful, is precisely because they are illegal”
Certainly the illegality of drugs creates a lot of problems. But I wouldn’t go so far as to say the illegality is the only reason drugs are harmful. Certain drugs are highly addictive and can kill you if you take just a little too much. That’s harmful whether they’re illegal or not. And driving under the influence of most drugs is potentially harmful as well. You can’t take the harmfullness out of a substance my legalizing it. You can only regulate its use by legalizing it.
“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”
I doubt it would be quite that simple. If drugs were legalized, then there would definitely be regulation. So everyone couldn’t just make their own and sell it.