The Economics of the "Drug Game"

ECONtrepreneurs watch the news. They understand that national and even international-level policies ultimately have some effect on them. They can't be about the business of managing healthy, wealthy lives if they are in the dark about current events.

Anyone who has been watching the news over the past couple of years has noticed a spike in the number of stories chronicling the breadth of Mexico's drug cartels. It's real, people, and not just in Mexico. The war for firepower, territory and control of the drug supply to one of the most drug-dependent countries in the world has been both ineffective and unprofitable for some time now.

You see, in 1969 former President Richard Nixon introduced the nation to the War on Drugs to "...to curb supply and diminish demand for specific psychoactive substances deemed immoral, harmful, dangerous, or undesirable.(1)" This initiative created laws that were to enforce the new campaign.

Well, enforcing gets...expensive. To reduce the supply of drugs a country must hire and salary cops, DEA agents and the like. To reduce the demand of drugs you have to pay for drug treatment, prevention and education. In fiscal year 2008, the U.S. government devoted approximately $13.7 billion to these efforts.

The shrewd ECONtrepreneur would then ask if what we are paying is worth the cost. Well, to this economist the answer is a resounding "NO!" Don't believe, me? Ask a guy from Harvard. Please meet Mr. Jeffrey Miron.



Miron says our economy would in fact save $7.7 billion a year if drugs were legalized. Hmmm...spend $13 billion or save $7.7 billion? A no brainer. Not to mention that the violence that surrounds illegal drugs would gradually diminish and the government could tax the stuffing out of suppliers.

Delasol does not advocate junkies running a muck in the streets of America. We do however agree with the economic argument that is it more profitable, sustainable, logical and justifiable to treat drugs as a health issue and not as a crime issue.


(1) From the omniscient Wikipedia.