Illegal DrugsIllegal DrugsIt’s the Economy, ManIt’s the Economy, Man

Review of Sex, Drugs & Economics

Written by Diane Coyle

Reviewed by Alan Jennings

3 Views on Drug Use

• Drug use is Evil– War against drugs for drug-free society

• Drug use is Illness– Medical Treatment – Social Programs

• People should be Free to use Drugs– Show tolerance, – As long as it doesn’t harm others

Premises

Drug Use is Inevitable

Greek and Aztec used drugs

In some Countries,

• Up to half the population have used drugs illegally– Can something so popular be illegal?– Can so many criminals be meaningful?

• Most people say the odd joint does not make a person bad or a criminal

Premises

Drugs are not addictive

• In Switzerland, – 17% have tried drugs, 2% have used in last year

• Vietnam Veterans used Heroin – Stopped when coming home

• Drug consumption is much less in people over thirty

• Hard drugs are addictive, – But many quit anyways

Premises

Drugs use and Crime

• Most income for addicts comes from crime– More than 33% -Drug Dealing– More than 47% -Burglary, Assault & Prostitution

• Illegal drugs use makes crime seem normal

• Restricts ghettos from developing– Poverty, Violence

Premises

Drugs as Market Item

What has been observed:

• Demand Price Therefore Supply

Heroin Price # of Deaths

• Substantial Health Costs

• Cash Crop for Countries– Normally Poor & Violent

Premise

Government Intervention

• Penalties Affects Supply or Demand

Supply Side Demand Side

Harsh penalties for: Less penalties for users

• Dealing People cut back use

• Importing

• Manufacturing

More Risk

Economics

Competition Decays

1. Prohibition reduces supply

2. Competition is reduced as businesses leave

3. Cost increase

4. Near monopoly • Formed by police and customs stopping drugs• Enforced violently by existing drug dealers

5. Organized Crime spreads globally • Supported by high profits

Economics

Externalities & Elasticity

• Private Choices cost society as whole

• Reason for taxes on drugs (tobacco & spirits)– High public health cost supported by tax revenue

• Elasticity – How much quantity is affected by cost?– No change, Price is inelastic, Tax affect is small– Changes, Price is elastic, Tax affects significantly

Economics

Cost/Benefit Analysis

• Weighing benefits to losses gives insight into best solutions

• Consider penalties relaxed or use sanctioned

Economics

Benefit• More competition

• Lower price

• Less crime,

• Lower policing cost

• More taxes

Costs

• More users

• More health costs

• Loss of productivity

• Leads to worse drugs

Premises

Premises are taken as fact for argument’s basis– No matter how unsubstantiated, false or harmful

• Sources:– Survey results

– Antidotal

– Generalizations

– Most completely unverifiable

• Minority trying to enforce opinion on majority– Majority of Americans do not use illicit drugs

– More position is spread, the more their own view is justified

• Drugs are addictive– Drug use against all hazard shows irrational compelling force

Response

Economics

• Government affect on Market– Clear example of punitive restrictions

• Emergence of Monopoly– Demonstrates set of factors leading to monopoly– Ease of production not mentioned,

• Undermines monopoly

• Reasons for Government involvement– Treats taxes a revenue

• Maximize drain on public• Ignores concern for citizens well being, only health

Response

Cost/ Benefit Analysis

Other analysis is to result in Cost/ Benefit Analysis • Rightly commended as powerful tool• However, should mention discretion in evaluating

– Costs and benefits should be weighed not just by money• Should qualify her conclusion is for her values

– Has high value on government profitability– Has high value on independence– Has low value for individual burdens of addiction

• Ignores broader impacts– Everything would have to then be designed for possible

use by people under influence• Is currently done as a failsafe, but would then need additional line

Response

ConclusionConclusion

Horrible, impersonal views used for analyzing in a skewed but

useful manner

Alan Jennings

Coyle, Diane. 2004. Sex, Drugs & ECONOMICS: An Unconventional Introduction to Economics. Thomson Texere, New York, New York. Chapter 2. pp 8-16.