Drugs: Should They Be Legal or Illegal?

Last week, I spoke to a class at Idlewild Presbyterian Church on the economics of drug prohibition. My notes are below. Cross-posted at Division of Labour.

Drugs: Should They Be Legal or Illegal?

One of the most important principles in economics is the law of unintended consequences, and one of the most important implications of careful economic reasoning is that many policies have effects that are exactly the opposite of what their proponents want. To cite just a few examples, rent controls reduce the stock of affordable housing, minimum wages reduce opportunities for the poor, and laws against “price gouging” slow the pace of recovery from natural disasters. What you intend to do by enacting policy and what you actually do by enacting policy are often two very different things. The war on drugs is another example. Here, I’m going to discuss four key propositions. Drug laws are counterproductive, drug laws are costly, the drug war is a source of numerous violations of human rights, and there are far more effective alternatives to prohibition if we really want to reduce drug addiction.

I. Drug laws are Counterproductive.

1. As of 2004, there were approximately 1.2 million arrests for possession of an estimated 28 million drug users; further, many “possession” arrests occurred because people were arrested for other crimes.

2. Drugs are stronger and more dangerous precisely because they are illegal. This is explained by the fact that low-potency drugs become relatively more expensive to supply when enforcement increases. The demand for narcotic effects is extremely inelastic; as we ramp up enforcement, people come up with newer and better ways to serve the demand. One way they do this is by increasing the potency of the product. The drug war is an arms race in which “mutually assured destruction” is not a threat that prevents conflict, but a part of the process itself.

3. Innovation has outpaced enforcement. Drugs–particularly strong drugs—have gotten cheaper, all else equal: the real price of cocaine fell from $450 per pure gram in 1981 to $100 in 1996, according to Miron and Zweibel. In his 1991 book The Economics of Prohibition, Mark Thornton reports that between 1974 and 1984, for example, the relative price of cocaine fell.

4. The problems we associate with drugs are a result of prohibition, not the drugs as such. The drug war is a classic case of confusing correlation with causation. We see crime. We see drugs. We assume that drugs are causing the crime. However, the fact is that it is the prohibition that causes the crime, not the drugs themselves. For example, medical problems with heroin are usually a result of the fact that the drugs are adulterated, not from the drugs as such.

II. The War on Drugs is Costly and Destructive.

1. Drug laws create crime. It has been argued that people who are on drugs will be predisposed to commit crimes. The data suggest, though, that there is a net increase in crime as people seek to feed their habits.

2. The ability to evade drug detection is a complementary skill to being able to evade punishment for other crimes. Therefore, the illegality of drugs increases the rate at which other crimes are committed.

3. Places with strong enforcement will tend to have greater homicide rates. Miron (2004) estimates that eliminating drug prohibition would reduce the US homicide rate by about 25-75%.

4. The drug war is in part responsible for accelerated HIV transmission in the 1980s. One way HIV was transmitted was through the use of dirty needles. Injectable drugs like heroin deliver more narcotic punch per gram than smokable drugs like marijuana or snortable drugs like cocaine.

5. Parts of the US-Mexico border are war zones because of the drug war.

6. The enormous profits that can be had in the illegal drug trade can be (and are) used to fund terrorism. The profits are not because of the drugs per se. They are because of the fact that drug peddling is extremely profitable precisely because it is illegal.

7. Drug laws have reduced the industrial use of hemp and hemp derivatives and have substituted synthetic fibers, etc. for hemp derivatives in various production processes. Hemp could have also been a paper substitute; Mark Thornton points out that the DuPont Corporation had a patent on a wood pulp paper process that could earn higher incomes if hemp were outlawed.

III. The Drug War is a source of fundamental human rights violations.

1. Prohibitions infringe on the right to life, liberty, and the pursuit of happiness. Implicit in prohibition is the idea that it is legitimate for one person to act as another’s moral surrogate. Refusing others the right to make bad decisions degrades their essential humanity and makes them not a valuable entity for their own sake but a means to our end. Because I care about you and see that your humanity gives you intrinsic value and potential as someone created in the image of God, I will try to help you. When I try to force you to act against your will, I am treating you not as a human being with value to God but as a means to my ends. In short, I am treating you as my slave. Even in the language of economics, the “externalities” generated by drug use are pecuniary rather than technological.

2. To be created in the image of God means the right to be moral. I will quote my friend, former neighbor, and former Rhodes professor Tim Watkins: “Part of what [being created ‘in the image of God’] entails is the ability to make morally meaningful choices. The story of the Fall in Genesis is in great part about God allowing humans to make choices that are bad for them because without such freedom morality is a meaningless concept. Prohibition is the denial of moral agency.”

3. Many drug laws have racist origins and racially disproportionate effects. The war on cocaine was waged because people feared that blacks would substitute toward cocaine after alcohol was prohibited. Marijuana laws were, in part, discrimination against Mexicans. Opium and heroin laws were aimed at Chinese immigrants.

IV. Reducing Drug Use

I cannot stress enough that to claim “drug use should be legal” does not mean that drug use should be encouraged, excused, or overlooked. My argument is that the material, moral, and institutional costs exceed the material, moral, and institutional benefits. Our current strategy will not work. In the words of a former student of mine, perhaps we should stop fighting wars against abstract nouns. I would propose a three-pronged strategy that will require some difficult and probably politically unpopular decisions:

1. While the economic analysis might say “legalize everything,” the economics also say “make people responsible for their own actions.” Increase (substantially) the penalties for crimes committed while intoxicated. As Richard Posner has argued, the penalties for drunk driving are too low. While this won’t eliminate completely crimes committed by completely intoxicated people, it will affect incentives at the margin and reduce the rate at which those crimes are committed. I once heard Adrian Rogers say that people who wish not to fall should avoid slippery places. Stronger penalties for crimes-while-intoxicated will raise the cost of putting oneself in those slippery places. Will crimes-while-intoxicated be eliminated? No. They will not. They will, however, be reduced by stronger penalties.

2. Remove barriers to economic growth. As people get richer, they are likely to demand fewer intoxicants. Second, as they have more opportunities, those who wish to fund their habits can do so in the legitimate labor market rather than by committing property crimes. Here’s a proposal based on good economics but that is difficult for a lot of people to swallow: repeal the minimum wage. It’s the main reason why unemployment among African-American youths is so much higher than unemployment for everyone else. Further, it has been estimated (by Steven Levitt and Sudhir Venkatesh) that “foot soldiers” in the drug war earn maybe three or four dollars an hour with a near-certainty of winding up in jail or shot.

3. Education. A more effective strategy than supply-restricting prohibition is to try to reduce demand. The church’s role here is to be a beacon of hope, instruction, and support.

4. If the recent experience in Portugal—which decriminalized drugs in 2001—is any indicator, the nightmare scenario of widespread drug tourism and drug use won’t materialize.


Greenwald, Glenn. 2009. Drug Decriminalization in Portugal: Lessons for Creating Fair and Successful Drug Policies. Cato Institute White Paper, April 2, 2009.

Miron, Jeffrey A. and Jeffrey Zweibel. 1996. The Economic Case Against Drug Prohibition. Journal of Economic Perspectives Paper 9(4):175-192.

Miron, Jeffrey A. 2004. Drug War Crimes: The Consequences of Prohibition. Oakland, CA: Independent Institute. Notes from summary here.

Miron, Jeffrey A. 2009. Legalize drugs to stop violence. CNN.com, March 24, 2009.

Thornton, Mark. 1991. The Economics of Prohibition. Salt Lake City: University of Utah Press.

Meadowcroft, John (ed). 2008. Prohibitions. London: Institute of Economic Affairs.

Block, Walter. Defending the Undefendable. PDF Online.

Chapter-by-chapter audio of “Defending the Undefendable.”

Art Carden is a Research Fellow at the Independent Institute and Associate Professor of Economics at Samford University.
Beacon Posts by Art Carden | Full Biography and Publications
  • Catalyst
  • Beyond Homeless
  • MyGovCost.org
  • FDAReview.org
  • OnPower.org
  • elindependent.org