George Soros, the billionaire former currency trader that now wishes to be taken seriously for thinking outside his realm of expertise (e.g., his market and economic theory of “reflexivity”) nonetheless has the right answer about legalizing marijuana.  Here’s Soros, writing in the Wall Street Journal’s opinion pages:

Our marijuana laws are clearly doing more harm than good. The criminalization of marijuana did not prevent marijuana from becoming the most widely used illegal substance in the United States and many other countries. But it did result in extensive costs and negative consequences.

Law enforcement agencies today spend many billions of taxpayer dollars annually trying to enforce this unenforceable prohibition. The roughly 750,000 arrests they make each year for possession of small amounts of marijuana represent more than 40% of all drug arrests.

Regulating and taxing marijuana would simultaneously save taxpayers billions of dollars in enforcement and incarceration costs, while providing many billions of dollars in revenue annually. It also would reduce the crime, violence and corruption associated with drug markets, and the violations of civil liberties and human rights that occur when large numbers of otherwise law-abiding citizens are subject to arrest. Police could focus on serious crime instead.

California will vote in the upcoming elections on whether to legalize the recreational use and cultivation of marijuana.  Which is to say, it will vote on whether it wishes to legitimize the now illicit relationship several millions of its citizens have with the drug.  It’s hard to tell if there is a connection, but Mexican drug gangs have lately been busy gunning people down on the Mexican side of the border:

The slaying of 13 people at a drug rehabilitation clinic in Tijuana is a sign that the relative peace here celebrated recently by the president himself may be fracturing.

GUILLERMO ARIAS/The Associated Press
GUILLERMO ARIAS/The Associated Press

In Tijuana, a soldier guarded a drug rehab center and several of its clients Monday, a day after the center was stormed by gunmen whose attack left 13 dead.

Sunday’s killings in Tijuana, across the border from San Diego, followed the deaths of 14 young people in Ciudad Juárez, next to El Paso, who were gunned down at a birthday party Friday night.

What is the one thing that would put the Mexican drug gangs out of business?  Indeed, legalization of drugs, or specifically, the legalization of marijuana, which is their main product.   Mexico’s drug cartels do not wish to see America moving toward legalizing marijuana.  Consider the recent eruption of violence along the border as something like all those foreign dollars Obama is claiming the US Chamber of Commerce spends to influence elections.  A little carnage before a major drug legalization bill nearby a state that is a major smuggling route might influence some fence sitters to vote against the bill.  That the shooting victims were likely members of cartels competing for turf with the cartels of the assassins, makes the shootings for them equivalent to killing two birds with one stone.

On its face, the war against illegal drugs makes no sense.  It is hideously expensive, yet utterly ineffective at its purported aim of decreasing the usage and availability of certain narcotic substances that are deemed dangerous (to whom, it is wondered?).    To understand it, we must look past the surface, and ignore the stated aims of the war, focusing instead on its true effects so we can tease out its true causes, remembering all the while that the prime motivation of all living creatures–both  individuals and organizations–must always be the perpetuation of their own existence, else they would quickly cease to exist. 

What are some of the drug war’s effects?  

The criminalization of everyday, victimless behaviors; the incarceration of minorities, particularly blacks; the premature deaths of scores of minorities in gang violence; the confiscation without due process of millions of dollars of property by local and federal law enforcement; the growing militarization of street gangs; the rise of drug gang monopolies; the stigmatization of recreational drug use; enhanced governmental power and control, at the local, regional and national level with corresponding decreases in individual liberties, particularly due process protections involving search and seizure and property interests, and ultimately, higher street prices for illegal drugs, that enhance the incentives for supplying drugs to the market.

What hasn’t been an effect? 

 The originally-stated purpose of engaging the drug war, i.e., a decline in addiction and broken lives due to abuse of illegal drugs.   While there has been some decrease in illegal drug usage over the last three decades, the decreases have leveled off, and to some extent, the abuse of prescription drugs has taken the place of banned narcotics.   It seems that the drug war may have had some effect in lowering usage on the margins, increasing the costs of drug usage enough (through interdiction efforts restricting supply and stricter punishments for recreational use) to dissuade some recreational users.  But addicts, it seems, are something like the poor:  They’ll always be with us. 

So what is really going on with the drug war?  Everyday, victimless behavior has been criminalized, leaving the discretion of enforcement to governmental authorities. 

Not surprisingly, the majority ethnic group to whom the authorities must answer wishes them to focus their prosecutorial zeal on mostly disenfranchised minorities.  The drug laws, and its attendant war to enforce them, allow the authorities to clean the streets of the rogue minority underclass, while the criminalization of a heavily-demanded (if stigmatized) product simultaneously provides lucrative employment opportunities (in supplying the demand) not otherwise available to  mainstream society cast-aways in the barrios and ghettos. 

Because the particpants in illegal drug markets can’t resolve their differences through ordinary judicial proceedings, nor protect their market share through legally-defensible efficiencies in operation, the only recourse is violence, which tends to decrease the numbers of disenfranchised that police and jails must contend with, though only marginally.  The jails are still full of drug-dealing gang bangers. 

Because force is necessary in enforcing contracts and protecting market share, gangs peddling illegal drugs necessarily must become highly militarized, investing a goodly portion of their profits in the weaponry needed for fighting their battles.  As the drug gangs acquire and stockpile more and deadlier weapons, the governmental authorities charged with enforcing the drug laws can then justify their own acquisition of more sophisticated and powerful weaponry.  

The more effective is the government at curtailing the supply of drugs for sale, the more profitable is peddling illegal drugs, and more profitable still is the drug-peddling gang that can wrest market share from its competitors through the application of force.  The government and the drug gangs exist in symbiotic harmony, neither of them wishing for drugs to be legalized, nor for there to ever be much decrease in drug demand and usage, while drug gangs fiercely compete amongst themselves in establishing and maintaining market share.

From the individual gang-member’s perspective, employment in a drug-peddling gang is at once glamorous and lucrative–far more so than many other opportunities regularly available to the poor and disenfranchised.  It’s easy to see, even accounting for the high mortality rate for gang members, how joining a drug gang is a rational choice for many. 

From the organizational perspective, keeping in mind that, like all organizations everywhere, drug gangs exist to perpetuate their own existence, the gang’s decision to trade in illicit goods makes perfect sense.   The authorities restrict supply sufficiently until prices for their products command a premium, so wages are much higher for a drug gang member than, say, a McDonald’s employee.  Market competition is not radically different than any ordinary competition among businesses, i.e., the biggest, most efficient supplier to the market has the capacity to make the most money, but the competition carries a twist.  Market share is earned and protected through force.  What drug gangs perhaps don’t know about efficiency in formulating distribution channels, they make up for with understanding efficient means of protecting their turf.  Coming from the dog-eat-dog mean streets of the inner city, or from subsistence living in their home countries, they often have a comparative advantage in force application principles that can be exploited to gain market share.  Because the government provides price support for their product by restricting the overall market supply, snuffing out competitors translates to fatter profits.

The analysis of the incentive structure for domestic drug distributing gangs holds with minimal modification for international drug-supplying gangs from less-developed countries.  Gang members join for the rational reason of bettering their economic circumstances.  Drug supplying gangs compete just the same for market share, i.e., through violence.  Prices are supported by native government prohibitions and limitations, as well as US government interdiction.

From the perspective of the authorities trying to enforce laws against illegal drug use and possession, i.e., for those prosecuting the war on drugs, the very last thing they hope for is to win the battle, or more pointedly, for there to be much in the way of decreased demand for drugs.  The authorities garner greater resources and power because of the battle.  Without the never-ending need to interdict and slow the supply of drugs flowing into the US, the need for law enforcement at all levels would diminish precipitously.  Remembering that the DEA, the FBI, the local police agencies, etc. ultimately exist to perpetuate their own existence, the continuation of the drug war smartly serves the purpose by simultaneously enhancing the size, scope and breadth of their powers.  The drug war is existential for them.  It grounds their reason for being.  

The drug war also enhances the political fortunes of the leaders of the organizations fighting it.   For example, when the local sheriff is up for reelection, it never hurts for the sheriff’s department to mysteriously intercept a drug-laden truck passing through town just before the voters go to the polls, especially when the truck driver is Mexican (in an Anglo community), or at least has a Mexican-sounding name, as recently happened in my hometown.  (Ninety kilos of cocaine were allegedly discovered in a secret compartment of the truck’s cab, after the driver was stopped for a routine traffic violation and consented to a search of the vehicle.  Its estimated street value was $5.4 million.  It was rather convenient for the sheriff that a huge stash of cocaine would fortuitously be found on its way through town just when the campaign was heading into its final weeks. ) The drug war provides a steady source of illegalities that law enforcement can selectively enforce when it needs to justify its existence and continued employment.

Drug exporting governments have a somewhat different perspective than do US authorities.  Exporting anything, illegal or not to the destination country, supplies foreign currency to the exporter, so even contraband export can be viewed somewhat favorably by the local governments of areas that manufacture and export drugs.  But the drug trade is so lucrative, as Columbia and now Mexico have found out, that the amount of cash accumulated through drug exporting can rise to such extremes as to destabilize the government of the exporting nation.  Drug cartels, commanding greater and better-armed armies, become de facto governments for whole swaths of territory.   The business of drug cultivation and export exists as a separate, and mostly invisible, economic entity within the state.  Legitimate governments find their own organizational survival imperiled, and find they must reassert governmental perogatives in areas where cartels are the de facto rulers, else risk losing their legitimacy.  This in turn allows the US authorities to justify extending their presence and power abroad to help native governments regain control of territory lost to drug cartels (i.e., to help them fight the cartels that arose because of domestic US drug policy).   The US gains an ally (the enemy of my enemy is my friend) and its presence and power helps the exporting nation reach some sort of reasonable power-sharing agreement with the cartels threatening to destroy its legitimacy.  Happily for both the US and the exporting nations, the flow of drugs continues more or less unabated.

Thus the drug war works like this:  The criminalization of victimless behavior results in real victims and real violence.  Like a fireman that sets a fire, the state creates the problem and then humbly offers to fix it.  But the state knows full well that the application of force to decrease the supply and demand of illegal drugs is like pouring gasoline on the fire.  So that’s exactly what it does, in order to ensure the embers will continue to burn.  

No matter what happens with California’s Proposition 19, the drug war is here to stay.  The parties waging it have too much vested in it to quit.

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