Legalizing drugs: The money argument

December 02, 2008|By DAN RODRICKS

Friday marks 75 years since repeal of the Volstead Act, which made the manufacture, distribution and consumption of alcoholic beverages illegal in the United States. As the anniversary of the end of Prohibition approaches, modern advocates of a similar repeal are calling again for the decriminalization of heroin, cocaine and marijuana - and this time they've come packing a money argument by a Harvard economist.

I like money arguments. They are usually a lot more effective than emotional ones or those that exploit stubborn prejudices with the intent of maintaining the status quo.

As the American economy recedes, state and local tax revenues fall and government budgets are cut, the money argument for changing the way we do things - from enforcing the laws to educating children - makes the most sense and has the strongest appeal.

I've made the argument in this space for more government investment in drug treatment, criminal rehabilitation and ex-offender services - and not just because it's the humane thing to do, but because it's the common-sense thing to do.

We have the highest per capita incarceration rate in the world, and fancy revolving doors on an expensive prison system that takes back, within just three years, more than half of all inmates it releases. We keep financing public failure on a scale that would never be tolerated in private enterprise.

Politicians who hold office and pass laws somehow have convinced us that, if the prison system is broken, we don't need to fix it. Law-and-order types want us to believe they are protecting us from violent criminals, and they are, of course. But they've also created and financed a recidivistic system that does little more than warehouse 1 million-plus American adults until they're released, usually to the same environment and influences that got them in trouble to begin with.

With some education and training, a much higher percentage of these inmates might become productive citizens. A wiser investment of tax dollars might mean more of them staying out of our taxpayer-funded prisons longer - if not for good. Teach a guy a skill, give him a crack at a decent job despite his criminal past, and we might even be able to close prisons instead of building wings on them.

Advocates for narcotics decriminalization have been saying for years that the war on drugs has cost American taxpayers billions of dollars with little to show in benefit, and they're correct. Today in Washington, Law Enforcement Against Prohibition, an organization of former cops and veterans of the war on drugs, will release a study giving the money argument for their cause.

Harvard economist Jeffrey A. Miron's report, funded by the pro-repeal Criminal Justice Policy Foundation, looked at arrest and prosecution of drug crimes across the country, as well as taxation rates for Americans' legal vices - tobacco and booze. The Miron report assumes two things - that full legalization will mean savings in law enforcement costs and that the state, local and federal governments will see new revenues once coke and heroin are controlled and taxed.

Miron reached the following conclusions:

* Legalizing drugs would save roughly $44.1 billion per year in government expenditure on enforcement of drug laws, with about $30.3 billion of this savings going to state and local governments and the rest staying in the U.S. Treasury.

* Drug legalization would yield tax revenue of $32.7 billion annually. That's assuming legal drugs are taxed at rates similar to those on alcohol and tobacco. About $6.7 billion would come from sales of legal marijuana, $22.5 billion from sales of cocaine and heroin and the remainder from the sales of other drugs now prohibited.

The report addresses my personal sticking point when it comes to repealing the drug laws: that lifting the prohibition will likely increase sales of drugs; people not now addicted will become addicted.

But, in projecting tax revenues, Miron assumes there would be no shift in the demand for drugs, that it will stay about the same. "This assumption," the report says, "likely errs in the direction of understating the tax revenue from legalized drugs, since the [existing] penalties for possession potentially deter some persons from consuming."

Miron makes an interesting distinction between legalization and decriminalization. The latter means repealing criminal penalties for possession but keeping them for drug trafficking. Full legalization eliminates arrests for possession as well as trafficking. The advantages of full legalization are greater than those for decriminalization, Miron says, because legalization saves substantially more in prosecution and incarceration.

"Whether drug legalization is a desirable policy depends on many factors other than the budgetary impacts discussed here," Miron says. "Rational debate about drug policy should nevertheless consider these budgetary effects."

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