Although it is apparent that America’s drug plague is reaching epidemic proportions, costing US taxpayers an estimated 20 billion dollars in a year, the legalization of drugs cannot be economically justified. Despite pro-legalization arguments, the estimated economic benefit that would be derived from the legalization of drugs would not compare to the enormous social-economic costs that would result.
The main assumption that is made concerning the legalization of drugs is that taxes on drugs could raise large amounts of revenue. First, this assumption is simply untrue if compared to the tax revenues collected on alcohol, a legal drug. The total tax revenue from the sale of alcohol is $13.1 billion a year while alcohol extracts over $100 billion a year in social costs. (Magginnis, 2001) This assumption also does not take into consideration that legalization would perpetuate the criminal black market. Government regulations on drug sales would open the doors to cheaper, more potent drugs being offered to under-aged users who could not obtain the legal version. This criminal sale of drugs would continue the need to spend money funding additional law enforcement and judicial personnel.
The legalization of drugs would also help bring in many new drug users. It has already been proven that drug use and abuse is reduced by drug prohibition. Demand is less when the drug is illegal. The use of heroin and cocaine, two popular illegal drugs, usually begins in social situations. The likelihood of an initial user obtaining the drug from a drug dealer is slim. In one study it was found that almost 90 percent of the initial use of cocaine took place at a party or other informal social event. About 70 percent of new users obtained it from friends or relatives. Only 5 percent of the new users obtained it from dealers. (Edgmand, Moomaw, Olson, 2001) Thus a vicious circle emerges; society’s increased social interaction with drugs resulting in new users who may not have otherwise been exposed, who are also exposing new users. Once new users become addicted users, the social costs rise.
Since many illegal drugs are extremely addictive, users begin having less control over the amount they consume. Drug addicts now begin costing taxpayers in various ways. Drug addicts that are unable to support their habit legally will often resort to crime to support it. An economic approach to crime control implies that government can control crime because it can create conditions in which crime does not pay. Jailing criminals, increased law enforcement and judicial costs help create these conditions.
The higher crime rates directly result in higher cost. Of course this cost does not include the spillover crime effects of drug use also known as negative externalities. Unwanted costs on third parties who neither asked to be a part of, nor benefited from, drug-related crime. Externalities may range from the person mugged to the mother who finds it harder and harder to deep her impressionable teen from trying the now more abundant supply of cheap drugs.
Another economic strain resulting from increased drug use can be seen in the increased health care needs for drug abusers. Rehabilitation, babies born addicted to drugs, and increased drug-related accidents all contribute to these costs. In 1988, it cost $2.5 billion for the intensive care needed to keep crack- addicted babies alive after birth. It is estimated that it will cost $15 billion to prepare these children for kindergarten, and will then cost between $6 billion and $12 billion for every year of special learning and will run approximately $90 billion by the time they graduate from high school. (Schaffer, 1990)
The Drug Enforcement Administration has estimated that the legalization of drugs would cost society between $140 to $210 billion a year in lost productivity and job-related accidents. Health insurance companies would in turn pass on the increased accident expenses to consumers through higher premiums. A report published by the Institute for Health Policy at Brandeis University stated that, “As the number one health problem in the country, substance abuse places a major burden on the nation’s health care system and contributes to the high cost of health care.” (Maginnis, 2001)
History also provides evidence as well that the legalization of drugs in foreign nations has been a financial disaster. The Netherlands is often cited as a country which has successfully legalized drugs. The official tolerance has led to significant increases in addiction. The city of Amsterdam’s 7,000 drug addicts are blamed for 80 percent of all property crime. The city’s burglary rate is now twice that of the rate in Newark, New Jersey. (Maginnis, 2001) In Sweden, the legalized doctor prescriptions of amphetamines in 1965 helped the number of intravenous “speed” addicts to rise 88.5 percent. A study of men arrested during the legalization period showed a high correlation between intravenous use and a variety of crimes.
Another negative economic result of the legalization of drugs would directly affect the economically blighted areas with weak social structures. As globalization makes the problem of creating economic and social opportunity for the most disadvantaged all the harder, the availability of drugs at lower prices would exacerbate the current problems of the poorest neighborhoods. Beating addiction when it occurs is more likely among people who have reasonably stable and supportive families, people who have sufficient income to obtain the best treatments and people who feel they have greater economic prospects and thus more to lose from addiction. The absence of many of these offsetting factors make the effects of drugs more devastating in these poverty stricken areas.
In conclusion, the argument for the legalization of drugs just doesn’t hold water. It boils down to simple cost / benefit analysis. Legalization has no economic justification. The tax revenue gained by the legal sale of drugs would only offset a fraction of the social costs incurred. The fact of the matter is that less than 12% of spending for law enforcement is attributed to drug control activities. That equates to roughly 1.5% of total state and local spending.
When taken in context, these obligations demonstrate the need for greater resources.
Legalization would only lead to a greater burden on the economy.
Other nations have learned that legalization only leads to more addicts and greater social consequences. While there are problems with the current “War on Drugs”, the argument for legalization only sets the country back even further.