So, what do you guys think about the War on Drugs?
My opinion is based on a concept in economics. In any activity that you do, whether it's business, pollution prevention, safety planning, etc., the important thing is that you have to provide the level of service such that cost of providing that service does not exceed the benefit that you receive.
As an example, let's use security at Yankee Stadium. Theoretically, the Yankees could hire 55,000 security guards, and have 1 security guard assigned to each spectator. However, this would be incredibly costly. If you pay the security guards $10 an hour, for 4 hours of security (including pre- and post-game activities), you'd be spending about $2.2 million on security EVERY game. You would have the ultimate in security, and you wouldnt have to worry about anyone causng a fight, running onto the field, etc. But obviously, this is not a financially wise decision.
Thus, the Yankees would need to reduce the number of security guards until they reach a point where they have JUST enough guards to ensure an acceptable level of safety. Note that this level of safety does not have to be 100%. It just has to be the point at which if you want to provide a higher level of safety, you have to incur a higher cost than the benefit of providing that safety.
Now, let's move this example to drugs. I feel that WAY too much money is being spent of marijuana prevention, and that it vastly exceeds the social benefit that we receive from marijuana being illegal.
Here is the data that supports my argument:
According to a 1997 study by the Office of National Drug Control, the federal government was spending $15.7 billion annually, and state governments were spending a total of $16 billion annually, on total drug prevention, bringing the total amount of money spent on drug prevention at $31.7 billion. Note that this was 11 years ago. Taking inflation into account, this would be worth about $40 billion in "today's" dollars, assuming the percentage of government spending that goes to drug prevention has not gone up.
The FBI reported that in 1996, 43% of all drug-related arrests were marijuana-related. Thus, it is safe to assume that at least 25%-40% of all drug prevention spending is spent on marijuana prevention. This gives us a range of $10 billion-$16 billion. For simplicity's sake, let's use the lower number: $10 billion.
However, there is another cost that we need to take into account: The lost tax revenue! If marijuana were legalized, the government could tax it and generate revenue from it. As it stands now, people spend a LOT of money buying weed every year, and the government sees NONE of that money. How much do people spend?
The National Organization for the Reform of Marijuana Laws assumes that the total production of marijuana plants in the U.S. equaled $15 billion in 1997, based on number of plants seized by the government, an estimate of what percentage of total crops were seized (about 1/3rd), the amount that can be extracted per plant, and the price at which it can be sold. Accounting for inflation, that is about $20 billion in potential marijuana production per year.
If that sounds like a lot, think of it this way: That equals about $67 per year for each member of the population. Now, obviously, not everybody in the U.S. smokes weed. But those that do, spend a LOT more than $67 per year. In fact, if only 10% of the population (30 million people) smoked regularly, they would only need to spend $667 per year to reach that $20 billion annual mark. Factoring into account the occasional smokers, that $20 billion number is easily reachable.
So, how much tax revenue can be generated? First off, let's assume the government taxes producers at the 35% corporate tax rate. That's $7 billion.
Then, states can receive tax revenue as well. Let's say conservatively that the average state corporate tax is 5% (looking at this site, it appears to be a quite conservative estimate:
Corporate Income Tax Rates--2008). That's another $1 billion in potential tax revenue.
Plus, states often tax certain "bad" products individually. Cigarettes and alcohol, for example. Looking here:
State Tax Rates on Cigarettes, we see that the average state charges a $1.00 tax on a pack of cigarettes. Assuming an average price of $5 per pack, that makes a $4 pack before tax, making it a 25% tax on cigarettes!
If the state governments imposed a very modest 5% tax on marijuana sales, that would be another $500 million in potential tax revenue.
Summing all this up, we see that the potential tax revenue that is lost is about $8.5 billion. Add back in our estimated cost of marijuana prevention, and we have a conservative estimate of $18.5 billion.
Do you really think that the social benefit we get from making marijuana illegal is worth $18.5 billion? I sure dont
Think about how many other uses we could have for that money. We could put it toward education, paying back a tiny part of our debt, fixing social security, etc. Shit, you could even spend it on additional prevention of truly dangerous drugs, like heroin and cocaine!!!
Thus, it is my opinion, that the cost of marijuana prevention that we are incurring annually far exceeds the benefit that we are receiving.
Your thoughts?