This column is to appear in the Augusta Business Chronicle (September 2001). Legalizing Drugs? In late July, The Economist magazine published a lengthy review on the economics of legalizing illegal drugs. The verdict? A confirmation of what even "conservative" economists have suggested for many years: the idea of legalizing drugs makes enough sense to warrant serious policy discussion. The problem is which of the two available alternatives to choose, criminalization or legalization? We've tried the former for several decades, and it turns out to have made the problem worse, just like Prohibition in the 1930s made the alcohol problem worse, not better. Let's dispense with one myth right away. Apart from the relatively harmless caffeine, by far the most widely used, dangerous, and deadly drugs are not cocaine and heroin but nicotine and alcohol. For example, more than eighty percent of nicotine users are dependent on the drug. This contrasts with thirty percent of heroin users and twenty percent of cocaine users. The death rates associated with nicotine and alcohol use are much higher than those of heroin and cocaine use. Let's also dispense with another myth: illegality does not prevent access. A fundamental principle of economics is that markets are markets whether or not politicians declare them illegal. Witness black markets from trade in endangered species to prostitution to arms smuggling to under-age markets for cigarettes and alcohol. What people want people get. Criminalization does not make the market disappear. The recent movie Traffic contains a trenchant line spoken by a teenager: presently, it's easier for kids to access illegal drugs than to access alcohol and tobacco. The solution is to legalize – and regulate – the market that already exists. According to the 1997 World Drug Report, the farm price of heroin in Pakistan in 1994 was about $90 per kilogram. The US street value for that same kilogram was $290,000. For cocaine, the numbers were $610 (from Bolivia) for a kilogram of coca leaves to $50,000 US street value for crack cocaine and $110,000 for a kilogram of cocaine powder. Criminalization drives up drug supply costs on their way from farm to street. But higher street prices require commensurate incomes by users. Thus the link to increased incidences of burglaries and other means of obtaining "income" to pay for drugs. Criminalization of drugs leads to other crimes. By decriminalizing the drug trade, prices would fall, drug cartels would collapse, direct and indirect drug-related violent and non-violent crime would fizzle, and the US would save itself most of the $35 to $40 billion it now spends annually on fighting the drug trade. In addition, one quarter of the current US prison population (some 500,000 people) serving time for non-violent drug possession could be released, and monies would be saved on prisons not built and staffed. Indeed, the US government could even make money by taxing the consumption of drugs, as it does now for alcohol and cigarettes. Moreover, legalization and lower prices would undermine the flow of drug monies that presently prop up the non-democratic regimes in Afghanistan and Burma and that destabilize fragile democracies in Colombia and Mexico. In addition to the economics, there is also a fundamental principle of political philosophy that speaks in favor of the legalization of drugs: the state's power of coercion is limited to those of my actions that would harm others. If I engage in activities that endanger only myself, but not others, so be it. And where my activity does entail potential dangers to others, we legalize, but regulate, the activity, e.g., by requiring driver's licenses and gun licenses, which carry penalties only for misuses. Indeed, it is precisely this principle of "personal freedom with responsibility toward others" under which nicotine and alcohol – despite their potentially devastating effects – are widely available as regulated, but legal, drugs. Both criminalization and legalization deal with the supply-side. The ultimate solution to any drug problem is not to curtail supply, but to curtail demand. In advocating the legalization of drugs I am not advocating the use of drugs! The point is that responsibility for non-use or for responsible use starts in my home, not in Washington, DC. I am a teetotaler, and I am teaching my children not to drink. I am a non-smoker, and I am teaching my children not to smoke. I do not use drugs, and I am teaching my children never to do so either. Whether my children – and yours – ultimately stay away is a matter of the example we set, not whether or not Washington declares a market legal or illegal. Meanwhile, legalization with regulation is a better supply-side alternative than criminalization. Dr. J. Brauer is Professor of Economics at Augusta State University's College of Business Administration. He can best be reached via his web site (http://www.aug.edu/~sbajmb).