Tuesday, April 21, 2009

Illegal Drugs Make Some People Smarter

The left has a hard time applying economic analysis to problems except the drug war. And the right is fairly good at economic analysis (comparatively) except for the drug war. Drugs makes the left smarter and the right stupider. Interesting, no?

Capitalism applies selection pressure in the right direction - efficiency, waste reduction, etc. Socialism (government) applies selection pressure (the process Schumpeter referred to as creative destruction) in the wrong direction.

I'm a libertarian - but not an absolutist - I believe in a minimal safety net - but it should not be comfortable. And why do I believe in a minimal safety net? Because revolutions are bad for business.

Here is the Joseph Schumpeter book that made his reputation: Capitalism, Socialism and Democracy.

Cross Posted at Classical Values


Tom Cuddihy said...

Is that an intentional broken metaphor? Natural selection requires not only selection pressure but also isolation of reproduction.

Where is the isolation in the drug war or politics?

I won't touch your use of "stupider" to mean "disagrees with me" or "smarter" to mean "agrees with me," but if the ultimate correct answer can be given by economic analysis, how do you define the "right" or "wrong" direction for a desirable endstate? How do you define which endstate is desirable?

Or is your "right" direction the direction that you personally prefer the market to go, and the "wrong" direction the opposite?

M. Simon said...


It only requires isolation for a new species. To improve the "old" species you just have to have selection pressure on that species. Eventually the "old" species will be unable to mate with older copies of themselves. So that gives you isolation in time. And even if you do not get a new species you get an alteration of the frequency of a selected or deselected trait. Obviously, we still get stupid and peaceful drug dealers. They get weeded out. Just enough so that no matter how hard the enforcement - supply meets demand. In fact the smugglers are so good supply exceeds demand. Drug prices have been going down for at least 40 years. You might want to read my recent post Government Subsidized Lies for details.

You seem a little dense today Tom. Smarter and stupider is with respect to understanding economics. I thought I made that clear. But it is very possible that you are a prime example of my thesis. Given the evidence you have provided.

BTW Tom - supply and demand will tell you where the market is going. Uh. You know Economics. The stuff the Right is normally better at. My hypothesis is looking better and better all the time.

So what do we know about the supply demand curve for illegal drugs? It is pretty inelastic. Estimates are that a 5% decrease of supply causes a 10% increase in price. As supply/demand curves go that is rather steep.

What else do we know - the rate of drug use peaks at around age 20 and about 1/2 the population are users. There after use declines with age. And what are the social characteristics of that cohort? It is a time of high anxiety. Career selection, mate selection. As that anxiety declines so does drug use. Which tends to support my self-medication hypothesis.

We may see a reversal of that for boomers when they get the word out to their cohorts that pot is better than viagra (cheaper too - even at black market prices. And viagra can cause blindness - there is zero evidence pot does. In fact there is good evidence that pot helps prevent glaucoma and improves night vision) and is also good for arthritis. And if the word ever gets out that pot is an anti-depressant that has fewer and less severe side effects than the ones the legal drug cartel is pushing - well. Big pharma will take a huge hit. Especially when you consider that the ultimate cost of pot will be in the hot house tomato range. That would put the cost of a dose at around .1 cent. A heavy user might incur a cost of as much as 10¢ a day. Very roughly. Now consider that the legal cartel sells its anti-depressants for $1 a dose. Or more.

So citizens are paying for the drug war in two ways. Higher pharmaceutical costs and the enforcement costs. We could lop off $20 billion from the cost of medicine if only half of those people on anti-depressants found pot a better alternative - assuming legal supplies.


Consider other market forces. Tobacco is an anti-depressant. With the recent tax increases a month's supply of pot now costs 1/2 of a month's supply of tobacco for a pack a day cigarette smoker. Even at black market prices. In economics it is called the substitution effect.

Anonymous said...

Yet another dose of snarky, sarcastic, bullshit from the Jackass of All Trades™ (but master of none, right?)....

Tom Cuddihy said...

I don't think I'm being dense, although I'd like to see an example of a leftist applying good economic analysis to anything. I'm skeptical, because to a lefty any real economic analysis, and particularly the acknowledgement of the role of important concepts such as supply and demand, is a bit like garlic to a vampire. So please link it if you have such an example.

My point is more in the validity of your stated goals-- efficiency, waste reduction, etc. Are the attainment of those goals truly a valid replacement for morality?

At the risk of invoking Godwin's law on myself, the Nazis were pretty efficient Jew exterminators. The efficiency with which it proceeded didn't make it any more moral.

The free (or even restricted) market may be good at winnowing out self-destructive losers, but it definitely doesn't guarantee that the winners are necessarily good either. In fact, the market can and does reward actions or enterprises over the short term that are over the long term destructive to very free market itself.

I think you're assuming that drug policy makers don't understand the effect of their actions on the drug market and on drug availability or on the economies of third-world drug producing and transporting nations.

I think you're mistaken in that assumption, and I think you're not considering the positive effect of the current drug laws on overall rates of drug usage.

On the source side, Colombia and Venezuela have had economies that over the last 15 years have reversed positions, despite having an opposite direction of government drug law enforcement. That is, paradoxically, as Colombia has stepped up enforcement and Cocaine supression efforts, its economy and security has dramatically improved. Meanwhile, as Venezuela has become the prime corridor transport of cocaine, its economy has tanked and its crime rate has skyrocketed.