Economic Effect of Legalizing Drugs Term Paper

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Economic Effect of Legalizing Drugs

The program for banning the trading and using of narcotic drugs like cocaine, heroine, and marijuana is one of the most essential public welfare program, attracting so much political discourse on the effectiveness of the 'war on drugs' and the substitute programs like legalization, rehabilitation through decriminalization, drug treatment, and medical marijuana. Economists vehemently criticized the success of the war on drugs pointing to the adverse consequences like violent crime and corruption, and suggested the substitute programs like drug legalization and decriminalization. Milton Friedman has since been upheld the legalization of drugs. Garry, Becker, George Schultz, Thomas Sowell and William Niskanan have also approved the liberalization strategy. (Prohibition vs. Legalization: Do Economists Reach a Conclusion on Drug Policy?)

The legalization envisages exerting regulatory government control over drug sales more practically through the state clinics or stores. There is stringent ban on the advertisement, declaring the selling of drugs to children as criminal offence, and stress on stringent implementation of prevailing laws to avoid their evasion. It is declared punishable to drive, fly or pilot under the sway of drugs. The implementation of the laws against drugs, awareness program, rehabilitation and research etc. are funded by the imposition of taxes on the drugs. The habitual street users like drunkards are to be detected and hospitalized rather than arrested. (Biting the Bullet: The Case for Legalizing Drugs) The grey markets exist in every field ranging from dealings on dying out species to prostitutions, from arms smuggling to juvenile markets for cigarette and alcohol. The people receive what they desire. (News and Views from the Dismal Science)

The liberalized trading is considered advantageous to both the parties. The hypothesis is that the legalization of drugs will make it a division of the market where both the buyer and seller would find it beneficial. The benefit to both the parties grows with the every transaction. When Joe is selling a shirt of $10, Joe is presumed to have benefited since in the process of transaction Joe definitely have valued the shirt to be more than $10. Had he not found the transaction beneficial he would not have resorted for such trading. The buyer has also gained from the transaction since he had valued the shirt more than $10. Unless it is so, the trade would not have taken place. The liberal trading in case of the drug markets also functions in the same way. When Joe sells the marijuana for $10, he finds it profitable since the value is worth more to him and the buyer is gaining similarly since he had worth the drugs more than the money he paid. The question of morality whether one should value the drugs more than the money paid or not is a different expect. (Legalize Drugs Now!)

The role of such third party viewing the ethical aspect being isolated from the transaction is considered to be negligible. The satisfaction that a consumer derives after being purchased depends upon the propensity to purchase it. The transaction is considered to be a positive-sum game. In the process both the parties find it beneficial in the prospective sense. However, it cannot be denied that some third parties are upset by the drug trading, on moral or ethical aspects. However, it is worthwhile to search out the transaction that does not upset at least one person. Many people are antagonistic to the sale of alcohol, cigarettes, birth control or animal products; however their opposition seems to have never deterred these items from being transacted. The Marxists are antagonistic to the market transactions since they visualize the commercial activity as necessarily abusive. However, the market transactions evidently never afford to satisfy everyone. (Legalize Drugs Now!)

In the liberalized enterprise economy, however, all the participants in the dealing process is said to be benefiting from it. The third parties that visualize the adverse effects legalized drug trading should visualize that this benefits many more in terms of reduction in the crime. A third party may orally resist any trade. However, such resistance cannot be strong enough to be detected through the market forces in the way the two parties indicate a positive evaluation of the transaction. The liberalized trade of all the commodities is seen advantageous to all of those involved in the transaction process. In a free market economy every body has the scope to be involved in the marketing process and therefore equal scopes have been extended to every body for profiteering from the positive sum transaction. (Legalize Drugs Now!)

The criminalization never makes the market disappear. As per the World Drug Report of 1997, cost of heroin in Pakistan in 1994 at the farm was about $90 per KG. This was sold in the streets of U.S. At $290,000. Similarly the price of cocaine from the farms of Bolivia was about $610 per KG while it was sold at U.S. streets at $50,000 in case of crack cocaine and at $110,000 in case of cocaine powder. The criminalization drifts the supply costs of the drugs in upward direction on their transition from farm to street. However, the higher street prices necessitate proportionate incomes by the consumers. This has a direct relation to the growth of criminal activities like burglaries, and other means of getting income to pay for the drugs. (Biting the Bullet: The Case for Legalizing Drugs)

The legalization of the drug trade entails declining prices, collapse of the drug cartels, reduction in the violence associated with drugs and above all the U.S. will find a surplus of $35 to $40 billion it annually is diverting for struggling against drug trading. Moreover, the twenty five percent of U.S. prison population charged with non-violent drug possession could be released and thereby entailing surplus of money spent on prisons. This would even visualize contributing towards the government revenue with imposition of taxes on the consumption of drugs as it is presently with the alcohol and cigarettes. Further the legalization and declined prices will directly affect the flow of money from drug trading to the non-democratic regimes of Afghanistan and Burma and used for weakening the delicate democracies in Colombia and Mexico. (News and Views from the Dismal Science)

The legalization would also visualized to save the efforts as well as the resources utilized for banning the supplies that are essential for medical, education and research purposes. The medical infrastructure in New York have provision for only 48,000 against the estimated half a million addicts of the State. It is evident that about $700 million has been allotted by the Bush administration for treatment out of a total expenditure of $8 billion allocated for the drug war. The deficiency in the space, resources and personnel causes approximately 90% of the addicts those apply for treatment and rehabilitation. Those who insist on granting of application they have to wait for six to eighteen months. Even after that the 30 to 50% of the drug addicts denied of are seen to reapply after completion of the waiting time. (Biting the Bullet: The Case for Legalizing Drugs)

Moreover, Nadelmann, an ex-professor of Princeton University forecasts about a net surplus of a minimum of $10 billion resulting from the reduction of expenditures on the implementation of drug laws and imposition of new taxes. (Biting the Bullet: The Case for Legalizing Drugs) He urged to ensure use of clean needles, making easier for the addicts to acquire methadone, providing ample scope or heroin maintenance programs to function, to decriminalize the marijuana, and to stop spending billions on imprisoning drug users and drug dealers. The drug abuse can effectively be regulated by diverting such money to the education programs, pre and post natal care and job training programs. But the legalization is condemned to be deficient of economic attribute by Dr. Robert Dupont the founding Director of the National Institute on Drug Abuse-NIDA and the President of the Institute for Behavior and Health in Rockville, Maryland. He warned of the already prevailing two legal drugs, alcohol and tobacco. (Legalization of Drugs: The Myths and the Facts)

At present there are 113 million people who consume alcohol and 60 million consuming tobacco. The cause of the decreased use of marijuana and cocaine is due to the fact that they are illicit drugs. Cocaine and marijuana are more appealing compared to alcohol and tobacco. In case we lift the ban of they being illicit we will be having several consumers of marijuana and cocaine akin to that of tobacco and alcohol. The expenses on health, for making it legal would be extremely high. Moreover, for making it lawful might have impact somewhere else. For instance, the Drug Enforcement Administration declares that to make the drugs lawful the society will have to couch up within $140-210 billion annually in wasted output and employment linked mishaps. Moreover, insurance companies will put on the burden of the expenses of mishap on the customers.

The Institute for Health Policy at Brandeis University discovered that in 1990 dollars the…[continue]

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