Now that President Obama has decided to scrap his failed GM bail-out agenda and adopt most of Mitt Romney’s strategy, can we have our $20 billion back?
Mitt told us so.
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Kristofer Lorelli can be contacted at lorville@rogers.com, on Facebook and twitter/Kris_Lorelli.
Race42012 is pleased to present the following Op-Ed by frequent Page 2 contributor Josiah Schmidt
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“These principles of economic law are fundamental. They cannot be resisted or ignored. Against their ultimate operation the mandates of laws and constitutions and the powers of government appear to be no more effective than the broom of King Canute against the tides of the sea.” (Wickersham Report on Alcohol Prohibition 1931, 97)
There is little doubt that the use of many types of illicit (and licit) drugs frequently does serious harm to the user, their loved ones, and their communities. It too often results in torn relationships, lost productivity, and harm to self and others. Drug addiction is a serious issue that plagues society, perhaps moreso than any of us are aware. The fact is that appropriate solutions to these problems need to be recognized, and current anti-drug tactics need to be objectively analyzed in light of their effectiveness in achieving the goals sought after.
I wish to conduct this inquiry into the nature and success of the current US government drug policy in the spirit of the pre-eminent economist of the 20th century, Ludwig von Mises, who stated: “We are exclusively concerned with those acts of interference which aim at forcing the entrepreneurs and capitalists to employ the factors of production in a way different from what they would have done if they merely obeyed the dictates of the market. In doing this, we do not raise the question of whether such interference is good or bad from any preconceived point of view. We merely ask whether or not it can attain those ends which those advocating and resorting to it are trying to attain.”
The goals of the Drug War have been mainly threefold:
1). Reducing overall drug use.
2). Reducing the drug use burden on hospital emergency departments.
3). Reducing adolescents’ approval of drug use.
Let us first examine the success of the current drug policy in attaining Goal #1.
Goal 1 – Reducing Overall Drug Use
In 1979, when the War on Drugs was in its infancy, 31% of Americans had ever used illicit drugs. As of 2001, that figure stood at 41.7%. A more recent report conducted by a different survey put the figure at 46.1%, as of 2005.
And, of course, these statistics do not tell the whole story. As another great economist of the 20th century, Henry Hazlitt, once stated: “The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.” One economic law is that when the price of one good rises, all else remaining equal, there will be a downward effect on the demand for that good, and an upward effect on the demand for close substitutes. This can be seen in the increasing demand for legal drugs for purposes of recreational overuse. Pain reliever use among teenagers has been on a steady upward trend from 1.2% in 1989, to 9.6% in 2001, to 11.2% in 2002.
The 19th-century, classical liberal thinker, Frédéric Bastiat, noted, in anticipation of Hazlitt, that in all economic actions, there exists that which is seen, and that which is not seen. For instance, when a hoodlum breaks a local shop window, the business that the glazier receives is that which is seen. But what is not seen, is that had the window not been broken, the shopkeeper would have spent his money elsewhere (perhaps a new pair of shoes, or a book) and would still have retained the use of his window. The lesson applies here: A fall (or dampened rise) in drug use rates, due to the billions of dollars of resources poured into the Drug War, would be that which is seen. But, perhaps, that which is not seen is the technological innovations, the disease cures, or even the greater ability to purchase American automobiles that such resources could have funded, had they been left in private hands.
Goal 2 – Reducing the Burden on the ER
In 1982, around 25,000 emergency room visits were due to cocaine or heroine use, a number that has been steadily increasing over the past twenty-some years, and, as of 2002, stood at around 200,000 and 100,000 for cocaine use and heroine use, respectively. In 2001, cocaine-related visits constituted 30% of all emergency department episodes.
As far as substance abuse in general, related emergency room visits increased from 323,100 in 1978 to 638,484 in 2001. Between 1990 and 2000, heroin-related visits increased 180%.
Goal 3 – Reducing Adolescent Approval of Drugs
While there is little data on adolescent opinions of drugs, the results in this case are also not entirely heartening in consideration of the sought after goal. Less than a third of the Class of 2005 felt that marijuana use should be a crime. Just about equal proportions felt that it should be decriminalized or legalized entirely.
The National Institute on Drug Abuse found, in a 2000 report, that American youth were far more likely to use illicit drugs than European countries with more lax drug policies. Specifically, 41% of American tenth graders in 1999 had used marijuana, whereas the rate in European countries averaged about 17%, with the lowest being 1% in Romania, and the highest being 35% in France. And, of course, as stated before, this does not take into account the rapidly increasing rates of legal drug overuse amongst US youths.
Why?
The current US drug policy has clearly been in a rut, if not being outright counter-productive, for the past several decades. The question to answer is, “Why?” There are several important economic reasons for the failure of this prohibition.
The first, and primary, economic law that the drug prohibition runs up against, is that when government action causes a good to be artificially scarce, the good will necessarily also be artificially more expensive, and thus, the market for the good will be artificially more lucrative than it otherwise would have been. And, while drugs are not a necessary nor sufficient condition for committing crime (because drugs can be used without leading to crime, and crimes can be committed without using drugs), the price effect of drug prohibition enhances the likelihood that drugs will contribute to crime.
Because the demand for addictive drugs tends to have very inelastic demand curves (i.e. demand for the drug does not diminish very much, if at all, when its price rises), addicts do not merely stop taking the drug when prohibition pushes prices up to astronomical levels. As drug prices rise, the real income of the drug user is eaten away, and the relative rewards of illegal income become more and more attractive. As economist Walter Block has pointed out, many a physician with legal access to drugs, who has become addicted to a substance, has shown that it is possible to lead a relatively normal life and career, and an otherwise crime-free one. However, prohibition’s push against drugs’ inelastic demand curve causes many otherwise noncriminal drug users to look to illegal income to feed their drug habits.
Furthermore, prohibition does not only artificially raise the price of drugs, it also raises the potency. As the cost of transporting the drug increases with prohibition, it is only natural that dealers will tend to make the drugs more potent, so they can ship smaller quantities of it. Economist Mark Thornton found a 93% correlation between increases in drug prohibition enforcement funding and increases in general drug potency. To illustrate, the potency of 100 pounds of pre-prohibition marijuana can now be fit into 16 ounce bottle. The real danger of this is not so much the increase in potency, which would, under normal circumstances, just cause the user to take less of it to get the same amount of hit, but rather that there is a risk associated with the widely varying potential potency of a given amount of drug. Since drugs have been pushed by prohibition into the black market, there is no legal oversight or accountability. Products are not legally required to be labeled with correct information, or labeled at all for that matter. And if a user is harmed or dies from purchasing bad drugs, there is no legal recourse against the seller. (Conjointly, the lack of legal recourse tends to give rise to violent recourse, in the case that a supplier does not deliver as promised.)
Moreover, as more police resources are devoted to enforcing drug prohibition, these resources are necessarily diverted away from enforcing other laws, hence making other crimes less risky. If all the cops are across town conducting a drug bust, the likelihood that the bank robbery on the other side of town will be stopped is exponentially lower.
The student of Mises, and Nobel-winning economist, F.A. Hayek spent a large part of his career emphasizing the importance of the market discovery process to technological innovation and living standard increases. Optimal market conditions are found by a dynamic, rivalrous trial-and-error process, driven by the incentives of reaping rewards from consumers in the form of profit, whenever they correctly satisfy consumer demand. Bureaucracy, by its very nature, almost entirely lacks this incentive structure and market discovery process, and hence is as a matter of course far more inefficient in fulfilling the wants and needs of the people. But bureaucracy does not lack all incentives. Unfortunately, as we learned with the alcohol prohibition of the 1920′s, the prohibition of other drugs does create artificially high incentives for corruption in government and organized crime.
Thornton has also found that, empirically, increases in funding for drug prohibition enforcement tend to funnel into actual enforcement disproportionately to the salaries of the bureaucrats conducting the operation. Thus, the effect is that, with the increase in prohibition enforcement, drug prices rise at a far faster rate than wage increases for the enforcers, creating higher and higher payoffs for enforcers to facilitate the drug trade instead. Helping facilitate a single drug exchange could net the bureaucrat more money than his entire year’s salary. Additionally, increases in funding also tend to go disproportionately to enforcement in relation to oversight of the enforcers, meaning as the operation grows, the relative chances of being caught in crookedness diminish. And as the psychic costs (fear and uncertainty) of engaging in a corrupt activity diminish more and more each time, it becomes easier and easier for the bureaucrat to slide deeper and deeper into corruption.
Appropriate Solutions
The time is now right for conservatives to formulate a new, more appropriate response to the drug issue, in light of the economic laws that the current strategy is (unsuccessfully) attempting to defy. My frank contention is that prohibition has not worked, can not work, and ought to be replaced by a more realistic policy, for reasons economic, legal, social, and in the interest of national defense.
The economic reasons have already been analyzed in great detail above. Government interference in mutual, voluntary transactions artificially increases costs and prices, and all the negative externalities that go along with such artificial hikes (artificially high levels of corruption, crime, violence, drug potency, taxpayer-borne ER visits, etc.), and raises demand for close, but technically legal, substitutes.
The legal reasons are simple enough. The US Constitution simply does not give the federal government the authority to prohibit the American People from consuming any given substance. Thus, by mandate of the Tenth Amendment, the power to regulate such activity lies solely with the States and the people. It’s a matter that ought to be handled at the state and local levels, for both practical and constitutional reasons.
The social reasons, while largely tied to the economic reasons, are merely common sense when one thinks about it. Think of it from a parent’s perspective: If your child used a drug, would you rather he or she be sent to prison, or would you rather deal with it at home, as a private, family matter? Would you rather your child’s problem be addressed through incarceration, or through treatment? And if your child got ahold of some bad drugs that harmed them, wouldn’t you at least like to have some legal recourse against the supplier, which could be attained under an open and regulated system?
The national defense reasons relate back to the broken window law, articulated by Bastiat and Hazlitt. At a time when the US military is already far overstretched, the defense budget is being restricted, and there are more threats to our nation’s security than, arguably, ever before, can we really afford to be throwing billions of taxpayer dollars at a problem that only seems to respond by getting bigger? If conservatives truly believe that the threat of Islamofascism is real, and that a robust War on Terror is necessary to address it, how can we justify diverting scarce resources away from national defense, to stop people from making personal mistakes (if the prohibition is really even effective at that, at all)?
And as a matter of political pragmatism, if conservatives are going to propose a new, bold policy that addresses the drug problem in a way consistent with the free market, federalism, and the defense of our country, now is the time to do it. We must advance a policy of personal responsibility, limited government, and fiscal discipline–a strategy that addresses social problems at the community, church, and family level. This is an issue that conservatives can unite with liberals on, and by taking a firm stance against a prohibition that the American electorate is increasingly opposing, conservatives can get ahead of this movement and ride the coming wave.
Last, but not least, this is a matter of personal freedom and liberty, something that conservatives have long claimed to stand for. Ludwig von Mises once wrote, on this subject: “Opium and morphine are certainly dangerous, habit-forming drugs. But once the principle is admitted that it is the duty of government to protect the individual against his own foolishness, no serious objections can be advanced against further encroachments. A good case could be made out in favor of the prohibition of alcohol and nicotine.
And why limit the government’s benevolent providence to the protection of the individual’s body only? Is not the harm a man can inflict on his mind and soul even more disastrous than any bodily evils? Why not prevent him from reading bad books and seeing bad plays, from looking at bad paintings and statues and from hearing bad music? The mischief done by bad ideologies, surely, is much more pernicious, both for the individual and for the whole society, than that done by narcotic drugs. These fears are not merely imaginary specters terrifying secluded doctrinaires. It is a fact that no paternal government, whether ancient or modern, ever shrank from regimenting its subjects’ minds, beliefs, and opinions. If one abolishes man’s freedom to determine his own consumption, one takes all freedoms away.”
Until conservatives recognize this, not only will we be increasingly left in the political wilderness, but we will also be like King Canute, with good intentions, but merely sweeping against the tides of the sea.
Good news for Conservatives this Monday morning, as Dr. Coburn has announced that he will seek a second (and final) term in 2010.
His 2010 campaign site is here.
The following are excerpts from Gov. Romney’s “The Care of Freedom” address to The Heritage Foundation’s “Protect America” event at the U.S. Navy Memorial:
On North Korea and missile defense:
Freedom is threatened not just by those who aspire to world leadership, but also by the rogue and malevolent. North Korea has made it abundantly clear that they are not only intent on perfecting nuclear weapons, but they are contemptuous of the concerns of the United States and the world at large. It was no accident that they launched their missile while the President was addressing nuclear non-proliferation, and executed their nuclear test to coincide with Memorial Day. The message is clear: the on-again, off-again talks and diplomacy and agreements have been nothing but stalling maneuvers. While diplomats celebrate yet another agreement, convinced that all their work has made the world safer, North Korea continues down the nuclear path Kim Jong Il has long pursued.
Arrogant, delusional tyrants can not be stopped by earnest words and furrowed brows. Action, strong bold action coming from a position of strength and determination, is the only effective deterrent.
It is time to apply comprehensive, regime-crippling sanctions to North Korea . Assets should be seized; international financial capabilities terminated. North Korea should be recategorized as a state sponsor of terror. And, most importantly, the President should immediately reverse his recent decisions and strongly support completing our ballistic missile defense system.
Missile defense is a non-nuclear, entirely defensive system designed to protect not just America but the world from a catastrophic attack. Yet the President plans to cut the missile defense budget by 15 percent, cut funding for missile defense sites in Europe by 80 percent, and reduce the number of planned interceptors in Alaska . That is a grave miscalculation, given the provocations from North Korea , Iran ’s near-nuclear status, Pakistan ’s instability, and the complete failure of the Non-Proliferation Treaty.
