Saturday, March 26, 2005

Supply side economics

Dave Borden over at Stop the Drug War points out some interesting things about opium and Afghanistan.

He says there is a fatal economics problem with the drug war. Let me start with the theory. If prices for drugs are raised in the home market fewer people will buy them. If prices for drugs in the production countries are lowered fewer will be produced.

So let me ask you what system is known for increasing prices to consumers while lowering prices for producers? Obviously it cannot be a market based system. Market based systems tend to reduce prices to the consumer and paradoxically due to the desire for increased efficiency also increase the return to producers.

There is only one system in the world that can produce the desired results.

Socialism.

However due to the ubiquity of markets socialism can't produce its effects for very long. Supply meets demand at a price.

So how is the drug war doing economically?

Producers are still producing enough supply to meet the demand. And guess what? Over the last 30 years the cost for a given quality/quantity of drugs has fallen. In addition quality has gone up over time. The only drug market where this may not be true is marijuana. This is because it is a bulky commodity, relatively easy to interdict. But the marijuana market still follows the iron law of prohibition. - The harder the enforcement the harder the drugs. Price is up but quality is improving as well. Cross border importation has given way to hydroponic homegrown. Ever notice how many hydroponic stores are in your town? Our small town just added another a year ago. Prices will start to fall in time even in the marijuana market.

The free market in action.

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REDFORD said...

History shows that drug prohibition is a monstrous failure.

When the drug warriors began "saving people from themselves" over 90 years ago there was no such thing as a "drug problem" in the United States. No one was robbing, whoring or murdering over drugs. There were no drug gangs, no criminal drug cartels and no such thing as "drug crime."

When addicts could buy all of the morphine, heroin, cocaine and anything else they wanted cheaply and legally at the corner pharmacy drug addicts held regular jobs, raised decent families and were indistinguishable from their teetotaling neighbors.

All of our real problems with drugs come from a lunatic drug crusade that has utterly failed for decades.

see: The Consumers Union Report on Licit and Illicit Drugs http://www.druglibrary.org/schaffer/Library/studies/cu/cu5.html