Legalise drugs?

That appears to be the suggestion of David Grimmond from Infometrics according to this article (also found here).

How do I feel about this suggestion, well I agree.  Legalise it, that way we can apply standard quality controls, pump out education and information, and place externality taxes on it.

Worst case scenario:  The externality tax makes the drug so expensive that the current gang based supply of drugs (with an associated motive to avoid tax) remains the cheapest option for people – in this case the legalisation makes no real difference.  However, I would still only support bans above taxation here if it turned out that bans were arbitrarily cheaper – as other social outcomes would be the same.

There is nothing wrong with someone making a choice to take drugs when they understand the issues surrounding them.  Legalisation helps us create a situation where people can make well informed decisions regarding drug use.

Furthermore, there is nothing wrong with an individual taking the drug persee – although we may be concerned about how their actions following any use impact on other people.  In this case legalisation, education, and a bunch of taxation will do the trick – the current situation does not target these external activities very well at all.

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  • grant

    My immediate reaction is that we already have 2 legal drugs, tobacco and alcohol, that are highly taxed and have massive education programs around their use. And yet we struggle continually with the costs of these addictions.

    Are the costs of administering illegal drugs greater or lesser than the costs of administering legal drugs?

    Will legal drugs reduce the current cost of administering illegal drugs? Or will the police etc continue to get the same amount of money and the tax revenue on drugs disappear into the consolidated fund?

    Until we are able to successfully manage the effects of legal drugs why should we add more problems?

  • @grant

    “My immediate reaction is that we already have 2 legal drugs, tobacco and alcohol, that are highly taxed and have massive education programs around their use. And yet we struggle continually with the costs of these addictions.”

    The tax already takes care of any of the costs of these products that fall on people that aren’t the consumer – like the cost through the health care system.

    Given that any costs to the individual must be outweighed by the benefits to the individual this implies that we are dealing with the cost of these products.

    Since we can deal with these drugs so successfully, why can’t we try it with other drugs?

  • I find addictive substances really hard to think about in an economic framework. The standard explanations about revealed preferences just don’t seem to accord with my intuition about the problem, or with the number of people who talk of their struggles with addiction. How do you reconcile them, Matt?

  • @rauparaha

    Well there are two ways I feel that this can be explained:

    1) Poor information – in which case the solution is education not criminalisation

    2) The fact that, for some people, what may be the ex ante optimal choice is in fact ex post suboptimal. If this is the case then we get stories of addiction ruining lives – but this is not a reason to ban something. If the person is willing to take on the risk they should face the consequences.

  • Grant

    Matt Nolan :
    @grant
    The tax already takes care of any of the costs of these products that fall on people that aren’t the consumer – like the cost through the health care system.
    Given that any costs to the individual must be outweighed by the benefits to the individual this implies that we are dealing with the cost of these products.
    Since we can deal with these drugs so successfully, why can’t we try it with other drugs?

    I don’t believe that the tax takes care of the costs. Especially in the case of alcohol where the impacts of consumption are taxed on the general population through petrol tax, ACC levies. All of which are in some part applied to paying for the costs of alcohol related crashes. Tobacco taxes may well cover the costs of smoking but we expend a lot of effort trying to decrease or stop smoking which implies to me that society sees the costs as outweighing the benefits – something that wouldn’t happen if we were dealing with the costs of the products.

    I agree with rauparaha that addictive substances are hard to deal with in economic terms. In general the personal benefits of consumption are immediate while the costs are delayed a long time into the future and the addictions are promoted to teenagers – who are known for their short term focus and poor long term risk assessment.

    The “decisions” to make tobacco and alcohol available were made long before the full costs were recognized and we now have trouble dealing with the costs that we try unsuccessfully to pay for with taxation.
    We have a much better idea of the costs of addiction and currently the best method is to attempt to minimize use through criminalization.

    And don’t even get started on what are appropriate standards for drugs!

  • No no no! Drugs are bad. They ruin lives!!!! Wake up!!! GRRRRR Idiot!

  • I don´t think drugs should be legalized. Just look at how many drug addicted are in holland.

  • lol, you have anti drug spam bots (mike and bruno) hehe.

  • @MikeE

    I am glad to see spam bots taking a moral stand – one step closer to sentience.

  • Damn, spambots are getting really good, aren’t they!? Do the programmers of spambots use them to signal skill or are the spambots themselves money-making devices?