Auteur: Richard Stevenson
Organisation: Dept. of Economics, Liverpool University.
Ralph Salerno is a retired policeman. His career was in the Narcotics Division of the New-York Police Department. Now he is part of the international movement to legalise drugs - even heroin and crack.
Mr. Salerno makes an analogy between drug law enforcement and ten-pin bowling. In the 1960s and 1970s, he explains, we thought that the drug problem could be solved by law enforcement. All we had to do was hit a few target: poppy fields in Turkey, laboratories in France and a handful of big dealers i New-York City. It strikes, but before we could reach for our next ball, some sort of pin-setting mechanism sprang into action, and we still faced ten or more targets.
The resilience of the illegal drug market is hardly surprising. The 'pin-setter' is the profit motive and the illegal drug trade is one of the world's most profitable. As long as profits remain high, policy which acts on the supply side of the illegal drug market is unlikely to be effective.
Still worse, supply side policy causes the cost of drug abuse to spill over in external cost to the whole of society. Where drug problems ramify into gangsterism, corruption and political violence, it is plain that the 'evils of drug abuse' are caused, not so much by illegal drugs as by illegal drug money. As Milton Friedman has put it, policemen and politicians die because the United States and other estern countries cannot enforce their own laws.
Crop eradication programmes, drug seizures and legal penalties on traffickers act like a tax which increases the cost of doing business in the illegal market. This is shown in figure 1 which is a highly stylised model of the illegal drug market.
The negative slope of the demand function, DD i figure 1, suggest that as price fall existing users tend to consume more drugs, and new users will enter the market. It is improbable that demand curves for addictive substances slope upwards, as is sometimes suggested. Demand schedules are defined at a point in time for given tastes. Addiction is a process over time during which the user becomes tolerant to the substance (Culyer, 1973).
Tighter law enforcement has the effect of shifting the supply curve in figure 1 from S(1) to S(2). The price of drugs increases from p(1) to p(2) and the quantity bought and sold falls from q(1) to q(2). In this way supply side policies achieve their objective. Drug use is reduced, but the amount of the reduction depends on the price elasticity of demand.
Price elasticities differ between users and between substances, and there are circumstances in Which the demand for drugs may be elastic (see Wagstaff and Maynard, 1988). But over a wide range of prices, the demand for all drugs (taken as a composite commodity) must be highly inelastic, or what other meaning can be attached to the term 'addictive substances'?
Figure 2 shows the extreme case where the demand for drugs is perfectly inelastic. A reduction in supply increases price but doe not reduce the quantity demanded. Initially in equilibrium at A, total expenditure on drugs is p(1)q(1). Supply side intervention increases the aggregate cost of drug habits rather than perfectly inelasic, drug users will need more income. Some of this extra
Fig 1. Effect of a reduction in supply on market for drugs.
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a1 a2 Quantity
price demand Fig 2.
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p2 |- - - - - - - -|s2
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q1 Quantity
income will be found from legal sources, but to the extent that it is earned from theft and prostitution, the costs of drug abuse spill over to the public in the cost of drug related crime and risks to public health.
Governments also try to deter drug use by policies which attempt to reduce demand. Demand side policies may be coercive (legal penalties on users) or persuasive (education programmes).
Coercive demand side strategies are unattractive. Fines and prison sentences do little to reduce problematic drug use. Instead problems which are social and medical are passed to the courts and the prison system, which are overstretched and ill-equipped to deal with drug addiction. Drug education offers the best prospects for the future, but education programmes are in their infancy and rapid results cannot be expected.
All intuition and experience suggest that current policy which attempts to 'buck the market' in drugs is unlikely to be successful. It cannot be said that existing policies will never work, but no one is willing to predict that victory in the drug war will be either rapid or cheap. It seems reasonable, therefore, to consider some alternatives.
Many possibilities exist. A case can be made for legalising cannabis, coca leaf and other drugs which are less dangerous than others. Impressive social benefits have also been claimed for Dutch policy which has led to the de facto decriminalisation of most drug possession but not drug trafficking. These and other proposals deserve careful consideration but none of them strike at what many see as the fundamental problem which is to get gangsters out of drugs (The Economist, April 2, 1988). Criminals like prohibition. They would hate legalisation.
Legalisation envisages a system in which drugs would be freely available without prescription. Sales to children would remain illegal and drugs would carry a stern government health warning. It would also seem sensible to standardise packaging and purity to diminish the risk of overdosing.
Simple safeguards of this sort are common to all proposals, but proponents of legalisation are not agreed on the amount of additional regulation which would be necessary in a legal system. Some favour a state monopoly in the production and distribution of drugs (Caballero, 1989). Others have argued that drugs could be 'about as legal as alcohol' (e.g. Stevenson, 1990). The choice between alternative systems is a matter for debate, but whatever the outcome, legalisation would enable society to regain the control of drugs which prohibition has handed to criminals.
A wide variety of other social benefits have been claimed for legalisation. They include cost savings to the exchequer and the private sector, a reduction in public health risks, and medical and social benefits to users and their families.
The drug laws are expensive to enforce. If they were to be repealed, substantial savings would be anticipated in police forces, customs and excise, and the legal and penal systems. Social savings would also be expected from a reduction in drug related crime. The price of expensive drugs could fall to as little as one sixtieth of their street price, and a drug habit might be no more expensive than a cigarette habit (Michaels, 1987). Some criminals would continue to use drugs, and some drug users would continue to steal, but no one would need to commit crime to finance a drug habit.
In a legal system habitual users would freed from the risk of prison and from criminal influences, and the dramatic reduction i the cost food, shelter and family support. Health benefits to habitual users are more conjectural, but drug use would be less dangerous in a legal system. In illegal markets drugs of uncertain purity may be adulterated with toxic substances, and their high price gives incentive to intravenous injection (the most dangerous method of ingestion) and the sharing of needles. Some of these risks would be avoided in a legal market, and users would become less alienated from society, more visible and more amenable to traetment and advice.
The immediate objection to legalisation is that the ready availability of cheap, pharmaceutically pure drugs will bring about a large increase in drug use and drug addiction, but this is by no means inevitable or even very likely. In Holland, where good quality, cheap heroin has been available for some years, no increase in addiction rates has been discerned.
Drug use might icrease as a result of legalisation, but the amount of drug addiction and drug related harm could fall. Even in the illegal market, most users cope without becoming addicted. The stereotype view of the drug addict is derived from the small sample of illegal users who come to the attention of the legal or medical authorities. In this sample, drug use is associated strongly with unemployment, crime, ill-health and poverty. Legalisation would modify this relationship, so that a much larger population of drug users could lead fairly normal lives without imposing serious costs on themselves or others.
After legalisation, a need would remain for demand and harm reduction strategies. In the areas an important role would remain for government and voluntary agencies. It would also be proper for some of the social savings to be diverted to much improved medical and social services for problem drug users. Indeed, the inadequacy of these facilties at present is a final twist in the inhumanity of legal prohibition, which defines drug users as criminals, and pursues policies which force them into further crime to finance their habits.
Legalisation will not solve all drug problems, but those which remain will be medical and social, rather than economic and political. Not all legalisers support this change in the law with positive enthusiasm. Some have qualms, but faced with a choice between evils, legalisers prefer legal drugs to the evils created by drug law. Many things, such as terrorism, judicial and political corruption and the spread of AIDS may be judged more serious threats to society than drug abuse.
References:
Caballero, M.Françis, La drogue dans tout ses états (Paris, 1989)
Culyer, A.J. (1973) 'Should social policy concern itself with drug abuse?' Public Finance Quarterly 1:4.449-456
Michaels, R.J. (1987) 'The market for heroin before and after legalisation' in Dealing with Drugs. Hamowy, R (ed) (D.C.Heath & Co., Lexington)
Stevenson, Richard (1990) 'Can markets cope with drugs?' Journal of Drug Issues 20:4, 659-666
Wagstaff, A and Maynard A. (1988) Economic Aspects of the Illegal Drug Market and Drug Enforcement Policies in the United Kingsdom. Home Office Research Study 95. (HMSO, London)
