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May 1, 2007 - Tribune Star (IN)

Column: Economics Explains Why War On Drugs Is Hopeless

By Arthur E. Foulkes (Mr. Foulkes is a native of Terre Haute and a longtime resident, and writes a weekly column on business and economics.

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TERRE HAUTE -- It's gotten to the point that when I hear of a tragedy, scandal or disaster, I find myself, after the initial shock, anger, or sadness wears off, worrying what those in government will do in response to the problem.

Lawmakers and other government officials want to be seen to be doing "something" in the wake of a disaster, scandal or widely perceived problem. Unfortunately, the laws they pass often create new problems that will eventually result in new laws, and on, and on. One example of this may be in the current legislative steps being taken to combat the "methamphetamine epidemic" -- the latest front in the government's decades-old war on drugs.

It's possible that the steps being taken to combat meth are creating new problems and it's also quite possible that the meth problem itself has its roots in the government's policy of drug prohibition.

Without a doubt, methamphetamine is a very dangerous and harmful drug. Its effects are disastrous for users and those exposed to "meth labs," including, very often, children.

But, in the same way alcohol prohibition resulted in people resorting to homemade and often dangerous "wood" alcohol, drug prohibition may arguably have led to growth and widespread use of homemade and dangerous meth.

"The similarities between so-called 'bathtub gin' and modern meth are inescapable," writes Reason Magazine's Radley Balko. Most "home brewed" alcohol dried up after Prohibition was repealed, Balko notes, adding that the same would likely happen to cruder illicit drugs, such as crack cocaine and meth, if conventional amphetamines were less strictly controlled.

One fairly recent step lawmakers eager to "do something" have taken in light of the meth "epidemic" is to make the purchase of cold medicine and other ingredients used in making meth more difficult to purchase. Buyers of certain cold medicines now have to show an ID, sign a log and give their personal information to a clerk.

The information eventually makes its way to local authorities.

Indiana law enforcement officials say these new laws are working in the battle against meth. Since Indiana, following Vigo County's lead, imposed these sorts of restrictions on cold medicine purchases, the number of meth lab busts in the state has fallen 25 percent, according to Indiana State Police. Busts in Vigo County are also noticeably down. But it's not at all clear these new restrictions have improved matters in the bigger picture, nor is it clear they have even reduced the quantity of meth in the state.

The average street price of meth has remained unchanged for the past couple of years, according to Indiana State police drug enforcement officials.

Assuming there has been no drop in statewide demand for the drug, this indicates the supply of meth in Indiana has remained the same.

"Restricting [sales of meth] ingredients just makes for bigger importation issues," said Lt. Lori Petro, commander of the Indiana State Police Meth Suppression Section. "If we can't make it here in Indiana we've got to get it in somehow -- it's supply and demand," she said. Much of the new meth getting to users in America now is coming from Mexico -- and much of this meth is more potent than the homemade variety, meaning, according to Balko, it is creating more addicts as well as a nationwide criminal distribution network.

Economics helps us understand why the war on drugs is hopeless.

First, by outlawing a product that people want, you cause its price to increase because of reduced supply and greater difficulty obtaining it. This means that a product that may be inexpensive to grow or make, such as cocaine, can suddenly have a street value many times its costs.

As a result, profit margins in the illicit drug business are astronomical. Indeed, every "victory" in the drug war is really setting the stage for more failure.

For instance, when drug agents make a big cocaine bust, they reduce the supply of cocaine, drive up the profit margin and therefore attract new, often more efficient (and potentially more violent) suppliers into the market.

In addition to all this, the drug war is also hugely expensive.

In 2001, according to the Economist magazine, America's war on drugs cost $35-40 billion per year in taxpayer dollars.

It has also led to damaged families and lost productivity when nonviolent drug users are thrown in prison. About one in every four of the approximately 2 million Americans in prison today is there because of a drug offense - up from one of every 10 prisoners in 1980, when the drug war was about to begin.

In addition to astronomical costs of keeping this many people in prison, this also means less room in prisons for violent criminals. Finally, the drug war is necessarily an assault on personal liberty. Because drug transactions are conducted between consenting parties, there is no "victim" in the sense that a robbery or other violent crimes have victims.

Because neither party feels victimized by the crime, the only way the police know of a drug transaction is through some sort of spying. This opens the door more and more to police searches and often seizures of private property and other violations of the basic right to be left alone.

Drugs can be dangerous, addicting or both, but so can alcohol, nicotine, caffeine and even fatty foods.

Once governments decide they should protect us from ourselves, it is hard to see where the scope of their authority ends.

The late Austrian economist Ludwig von Mises summed things up nicely. Long before the "meth epidemic" emerged, he wrote, "It is a fact, that some people harm themselves and their innocent families by consuming narcotic drugs. ... But once the principle is admitted that it is the duty of government to protect the individual against his own foolishness, no serious objections can be advanced against further encroachments." These "encroachments" could easily be extended to include nicotine, alcohol, and even the "mischief done" by bad books, plays or ideologies, he wrote. The drug war is and always has been a lost cause.

Its casualties continue to be innocent people caught in drug violence, victims of crimes committed to pay for drugs made wildly expensive by prohibition and the continued erosion of everyone's right to live peacefully and according to his own rights.

The best way to destroy drug gangs, drug cartels and drug crime would be to end drug prohibition. No other steps will have a significant impact on the violence, waste and crime associated with illicit drugs.

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