Friday, June 03, 2005

Milton Friedman: End Marijuana Prohibition

More than 500 economists from colleges and universities across the United States have signed on to a report calling for the end of marijuana prohibition, and Nobel laureate Milton Friedman, still active at 92 years of age, has put his name at the top of the list.

The report, called "The Budgetary Implications of Marijuana Prohibition," is written by Harvard University economist Jeffrey Miron. In an accompanying "open letter" addressed to President George W. Bush, members of Congress, governors, and state legislators, the 500+ economists state:

We, the undersigned, call your attention to the attached report by Professor Jeffrey A. Miron, The Budgetary Implications of Marijuana Prohibition. The report shows that marijuana legalization -- replacing prohibition with a system of taxation and regulation -- would save $7.7 billion per year in state and federal expenditures on prohibition enforcement and produce tax revenues of at least $2.4 billion annually if marijuana were taxed like most consumer goods. If, however, marijuana were taxed similarly to alcohol or tobacco, it might generate as much as $6.2 billion annually.

The fact that marijuana prohibition has these budgetary impacts does not by itself mean prohibition is bad policy. Existing evidence, however, suggests prohibition has minimal benefits and may itself cause substantial harm.

We therefore urge the country to commence an open and honest debate about marijuana prohibition. We believe such a debate will favor a regime in which marijuana is legal but taxed and regulated like other goods. At a minimum, this debate will force advocates of current policy to show that prohibition has benefits sufficient to justify the cost to taxpayers, foregone tax revenues, and numerous ancillary consequences that result from marijuana prohibition.
The economists signing the letter include, in addition to Friedman (author of Capitalism and Freedom and Free to Choose [with his wife, Rose]), syndicated columnist Walter Williams, who teaches at George Mason University; Howard Baetjer of Towson University; Emily Blanchard of the University of Virginia; John Cuddington and Mark Huggett of Georgetown University; Robin Hanson, Daniel Klein, Joseph Reid, Alex Tabarrok, and Gordon Tullock of George Mason University; Oliver Hart and David Hemenway of Harvard University; John Mullen of SUNY-Potsdam; Ivan Pongracic of Hillsdale College; Ken Schoolland of Hawaii Pacific University; Mohammed Shaaf of the University of Central Oklahoma; Xuejuan Su of the University of Alabama; and Joseph Zoric of the Franciscan University of Steubenville.

"There is no logical basis for the prohibition of marijuana," Friedman told correspondent Quentin Hardy, adding:
"$7.7 billion is a lot of money, but that is one of the lesser evils. Our failure to successfully enforce these laws is responsible for the deaths of thousands of people in Colombia. I haven't even included the harm to young people. It's absolutely disgraceful to think of picking up a 22-year-old for smoking pot. More disgraceful is the denial of marijuana for medical purposes."
Hardy goes on to report that
Friedman's advocacy on the issue is limited--the nonagenarian prefers to write these days on the need for school choice, calling U.S. literacy levels "absolutely criminal...only sustained because of the power of the teachers' unions." Yet his thinking on legalizing drugs extends well past any MPP debate or the kind of liberalization favored by most advocates.

"I've long been in favor of legalizing all drugs," he says, but not because of the standard libertarian arguments for unrestricted personal freedom. "Look at the factual consequences: The harm done and the corruption created by these laws...the costs are one of the lesser evils."

Not that a man of his years expects reason to triumph. Any added revenues from taxing legal marijuana would almost certainly be more than spent, by this or any other Congress.

"Deficits are the only thing that keeps this Congress from spending more" says Friedman. "Republicans are no different from Democrats. Spending is the easiest way to buy votes."
The "MPP" referred to by Hardy is the Marijuana Policy Project, which sponsored the Miron report and gathered the signatures of hundreds of economists to support its findings.

It was probably not so hard for MPP to gather those signatures. Economists, who understand how government interference with the free market in any good or service will create unintended consequences, have also long understood the economics of prohibition.

In fact, there is a book by that title -- The Economics of Prohibition -- by Mark Thornton. In its introduction, he writes:
At the core of this book ... is an economic theory of prohibition, which defines prohibition as a government decree against the exchange of a good or service. Recent studies of decrees against cocaine, heroin, and marijuana suggest that these prohibitions impose heavy costs and are extremely difficult to enforce. Beyond such costs and enforcement difficulties, however, I argue that effective prohibition is impossible to achieve, because the unintended consequences of prohibition itself preclude any benefits.

The only long-term solution to the problems engendered by the "misuse" of a product, I maintain, is legalization of that product. With legalization, as opposed to decriminalization and other forms of government interventionism, the government treats the misused product or service as if it were soybeans, computer chips, or pencils. The market is controlled by self-interest and normal legal constraints, such as product liability law.
After a brief summary of the history of prohibition movements in the United States (which he enlarges later in the book), Thornton, who at the time of publication (1992) was an assistant professor in the department of economics at Auburn University, notes that:
History also supports the finding that prohibition is impossible to achieve in the economic sense. Legislatures do enact prohibitions and establish penalties and enforcement bureaus. The actions of these bureaus to enforce prohibition decrees have an effect, and when a prohibition survives long enough to be enforced it is successful in a political sense. I argue, however, that prohibitions have no socially desirable effect. [emphasis in original]
Thornton is careful to distinguish prohibitions of goods and services from prohibitions of rights-violating crimes, such as rape or murder. He goes on to explain precisely how this distinction should be addressed:
Of course prohibition should not be evaluated against a higher standard than other laws. Murder is against the law, but not all murderers are apprehended, convicted, and punished. Likewise, to expect complete or perfect prohibition is unrealistic. Rather, prohibition will be measured against its public-spirited intentions, that is, to reduce consumption of a good in order indirectly to reduce social ills (such as crime, destruction of free will, drug-related deaths) and to promote social goals (family life, democracy, health, and economic development).

To the extent that prohibitions result in increased prices, they produce increased crime and political corruption. Higher prices for a prohibited product also result in the substitution of related products and the innovation of more dangerous substitutes. Prohibited products tend to be more dangerous than legal substitutes[,] in many respects[ ] the result of prohibition, not [of] the product itself. Therefore, to assume that more severe penalties or increased enforcement will result in the substitution of legal for prohibited products is to make an invalid conclusion. Prohibitions on drugs cause potency to increase. Therefore, the assumption that higher prices achieve the goals of prohibition is unfounded. Given all such considerations, the case for prohibition remains unfounded even if the indirect connection between the consumption of certain products and social ills does exist.
At this point, Thornton puts his larger argument in the context of classical and Austrian economics, and notes how prohibition is a symptom of "rent-seeking," which is a key feature of understanding what we know as the public choice school of economics.
The attempt to understand all human action (as opposed to just commercial activity) as rational represents a revolution in thought. Applied to policy decisions, this revolution is called public-choice economics, and from this perspective it is unacceptable to present prohibition as an ignorant, irrational, or impossible social policy.

Economists now suspect that any net losses to society produced by government policies are the result of rent seeking rather than ignorance or irrationality on the part of policymakers. Rent seeking is a search for privilege and personal gain through the political process. Rent seeking is distinguished from corruption in that rent seeking is legal and corruption is not.

History reveals that prohibitions are indeed classic examples of the co-opting of public -spirited intentions by rent seekers within the political process, thereby explaining the existence of what at first to be irrational policies.
Thornton ends his introductory remarks with what he calls a warning:
The markets in which prohibition has been deployed, such as gambling, intoxicants, and prostitution, have existed for a long time and will continue long after I and my book turn to dust. Prostitution is the world's oldest profession; people have been using intoxicants for as long as history can record; and men and women are risk-taking, fun-loving creatures. Most human beings live for leisure, not for labor. Labor is merely a means to an end.

No matter how deplorable the above activities appear to some, they are "leisure" to others. The only consistently successful method for raising the standards of leisure to higher levels is to allow economic development to take place. Individuals who use certain products or activities to self-destruct have problems far worse than the visible ones. Prohibition of these goods or services will have little impact in such cases.

It is also important to recognize that the problems in these markets (disease, fraud, broken families, and so on) are not the result of a lack of government involvement. Indeed, these markets have been historically characterized by extensive government involvement prior to the enactment of prohibition.
It is a sad fact of contemporary politics that the views of these experts -- more than 500 economists, led by a Nobel prize winner and, no doubt, including future Nobel laureates in their midst -- will be mostly ignored by elected and appointed government officials. After all, Thornton's 1992 book, The Economics of Prohibition, did not result in the scales falling from their eyes and an end to drug prohibition. We still live with its ill winds 13 years later.

Unbending and unlistening officials like Drug Czar John Walters, for instance, will refuse even to read the Miron report. Walters -- the closest thing America has to Chancellor Palpatine -- recently expressed support for more invasive, intrusive measures to accustom young people to a world in which their human rights are routinely violated. In a guest column for The State (Columbia, S.C.) on May 25, Walters wrote:
Nationally, we are now providing funding for the increasing number of public schools that have chosen to implement random student drug testing to detect and deter use among students. Random student drug testing by law must not be punitive, and the results are confidential. School-based testing programs give young people a reprieve from the forces of negative peer pressure and arm them with an excuse to say “no” to drugs.
As long as wise and courageous men and women like Milton Friedman continue to speak out, and as long as organizations like the Marijuana Policy Project continue to insist on truth-seeking, and as long as individual citizens like you and I remain vigilant, Walters and his ilk will not be able to command a monopoly on information and will not be able to fit their yokes on the American people.

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