Legalising drugs reduce public spending, boost tax receipts, and lower addiction
By Stuart Rodger. This is a summarised version of a longer article that can be found here
Of all the Government’s victories so far, what is perhaps most chilling of all is the scale of their propaganda victory. Britain, we are endlessly told, is on the verge of a debt crisis, and that this can only be remedied with a programme of deep, rapid public spending cuts.
The reality is that, as a proportion of GDP, the UK’s debt has been higher for 200 of the past 250 years. In 1945 Britain’s debt stood at 250% of GDP – and we built the NHS. In 2011 Britain’s debt stands at 60% of GDP – and we’re cutting the NHS.
But still, while there is plenty of room for fiscal manoeuvre, it is true that we are paying a very high rate of interest on our debt – £44bn annually to be exact – and we can all agree that this is far from ideal.
Austerity isn’t working: David Cameron is in fact exacerbating the very problems he claims he wants to solve. The government claim they want to eradicate the deficit within this five-year parliament, and ‘get our economy moving again’.
The coalition has begun this financial year with increased borrowing: For April 2010, borrowing stood at £7.3bn; for April 2011, borrowing stood at £10bn. The Chinese bond-rating agency, Dagong (which is regarded as a more impartial guide to credit-worthiness) has down-graded the UK’s credit-rating from AA- to A+.
Part of a better way out of this financial hole may lie in an unexpected place: the drugs trade and its legalisation. Every debate about drugs policy must begin by acknowledging one hard, solid fact: the market for drugs is ineradicable. 45% of the British population admit they have taken an illicit substance.
By criminalizing these substances, what you do is transfer a huge, lucrative market into the black-market, where they become drastically more dangerous. And, because drug dealers cannot appeal to an army of accountants, lawyers and police officers to protect their property rights – they do it themselves, with guns, knives, and machetes.
The answer is to legalise: to take drugs away from armed criminal gangs, and hand them over to doctors, pharmacists, and off-licenses. For an idea of what a legal, regulated model would look like check out Transform’s in-depth report ‘After the War on Drugs: a Blueprint for Regulation’. Far from being a commercial free-for-all, a legal model would have in place solid consumer protections, production-controls, and marketing-laws. The administrative costs would be negligible.
Furthermore, the facts demonstrate that legalisation precipitates a dramatic fall in hard drug use. Since 1971 when the Misuse of Drugs Act was passed in Britain, use of heroin has increased by 1000%. When personal possession of drugs was decriminalised in Portugal in 2001, use of heroin dropped by 50%. It isn’t legalisation that acts as a ‘slippery slope’ towards the gutter – it’s prohibition.
And here’s where the economics comes in. The first and most obvious saving to the Treasury would be in the tax revenue generated by cannabis sales: The Independent Drug Monitoring Unit estimates that combining the resin and herbal ‘skunk’ markets, based on a tax of £2 per gram, could generate around 1 billion of tax revenue annually. Transform Drugs Policy Foundation report that 4.036 billion goes on the criminal justice system every year (at least 50% of Britain’s prison population are in for drug offences) – a sum that would collapse under legalisation.
The illicit drugs trade acts as a giant pyramid-scheme: the alchemy of prohibition, as it is known, multiplies profits by 3000%, and each user is then incentivised to find another user to sell to in order to fund their habit (few customers are as reliable as drug addicts). It constitutes a giant 4.8 billion pound market: an un-taxed vacuum in to which money is sucked (These figures are for England and Wales only, and ignore the Drug Capital of Europe: Scotland).
There would be a historical precedent for this. It is no coincidence that Alcohol Prohibition was ended in America in 1933, just four years after the Great Crash of 1929. US tax revenues had collapsed by 60% over three years, and they desperately needed revenues to fund a Keynesian stimulus.
Of course, many people have understandable concerns that, under legalisation, we will see a rise in addiction. What every advocate of legalisation needs to explain is how exactly it helps the bruised, broken human beings who we all see stumbling and shaking their way down the streets of Britain’s cities. Many parents who have, tragically, seen their children descend in a spiral of addiction are aghast at calls to legalise: their anxieties must be answered with a convincing response.
That is the challenge for those who want to see a sane drugs policy which is based around harm reduction and can be a real boost to the economy.
62 Responses to “Legalising drugs would help reduce the deficit”
Jamie
Legalising drugs would help reduce the deficit: http://bit.ly/nI71uV: writes Stuart Rodger #warondrugs
dave
opps i meant that towards Mr.Sensible, not rory
Leon Wolfson
Fine, Mr. Sensible, let’s adopt a policy like Portugal’s then.
Still a LOT cheaper, and with better outcomes.
David Hart
Mr Sensible: “why should a regulated market end the black market?”
It won’t, but it will significantly reduce it. There’s only so much demand for drugs. If drugs are available over the counter, in measured doses, unadulterated with junk, most people will choose that over dirty, unpredictable-strenth black market stuff, just as most people are prepared to pay for legally produced beer, wine and cigarettes, rather than dodgy bootleg stuff. Is it better that all of the profits of the drugs industry go to criminals, or only some of it? You seem to be suggesting that we should reject a solution that will make things better just because we don’t have a solution that will make things perfect.
“And whatever we did, these drugs would still remain dangerous.”
Yes, but less dangerous. One of the inevitable consequences of prohibition is the total removal of government regulation over the strength and purity of the product. Which is more dangerous? A bag of heroin which contains some adulterant, might be chalk, might be brick dust, and you don’t know how much actual drug is in there, or a bag of heroin manufactured in a clean pharmaceutical facility under licence, guaranteed pure and containing exactly as much heroin as it says on the label? Or, to pick a historical example, a bottle of bootleg alcohol made by Al Capone’s henchmen, possibly containing some toxic methanol, which could turn you blind, probably quite strong but you’re not sure how much is in there – compared with a bottle of beer containing 0.5 litres, and measured at 5%ABV? A tab of ‘MDMA’ made by an underground chemistry graduate in the Netherlands with an actual MDMA content that could be as little as zero, and other stuff to try to mimic the effect, including ketamine, caffeine, mephedrone or other such unmarked ingredients, as opposed to a pharmaceutically manufactured tab of MDMA that contains only MDMA?
While you are correct in a technical, nerdy sense that legalisation would not make these substances safer as chemical entities, you are absolutely wrong to suggest that in the real world the drugs that are actually available for people to buy would not be made safer by a regulatory system that demanded they be manufactured to be as safe as they can be.
“I think a lot of addicts want to get clean.”
Fair enough. But don’t forget that the overwhelming majority of drug users are not addicts. The average person enjoying a pint at the pub, a line of coke at the club or a tab of LSD in the woods with a circle of close friends does not want to get clean. They should want there to be services in place if their drug use started to become a problem, but we should not base our policy on the obviously false assumption that all use is problematic use, or inevitably becomes so.
And this is before we even begin to address the manifest injustice of punishing people for their own private pleasures in the absence of harm to others. You simply cannot demonstrate that people deserve to be punished for doing something, simply because it presents a potential health risk. Future generations, I confidently predict, will have the same sense of disdain and bafflement at our tolerance of the legal persecution of minority drug users as we have for the legal persecution of homosexuals, ethnic minorities, catholics, ‘witches’ and other historic victims of majoritarian prejudice.
“the decriminalization and legalization argument simply does not have credibility.”
Well, speak for yourself:-)
David Raynes
“Oh, and ending prohibition will reduce the black market by a huge margin. Now, I wonder what would be best? A big black market (like we have now) or a much smaller one?
Comment by Rory on August 8, 2011 at 12:20 pm”
There is no intellectual basis for suggesting that under legalisation of any particular drug the black market would be smaller than were the drug to stay illegal. The UK illegal tobacco market is enormous, certainly over 20% of the total market and it has been higher and is a higher proportion in some other countries. Quite obviously everything depends on the total size of the market. The tobacco market is MUCH larger than the cannabis market currently. There is plenty of scope for the cannabis market to grow substantially if it were legalised. Organised crime would want a part of that market. Put rules (age etc) round who can be supplied and organised crime would supply those excluded. Crime can also undercut legal supply, even if there is no tax applied.
Your suggestion is the sort of pointelss rubbish put out by Transform, it is intellectually incoherent. Three years ago nearly now, they were going to produce an academic to prove what I say is wrong. I am still waiting. Bluff called?
The legalisation argument does not need to stand on such tenuous ground.