There are some basic laws in economics that most people understand. If not intellectually, they definitely can grasp these laws intuitively as they interact with others in the marketplaces of idea, goods, services, politics and human relationship.
Everyday Economic Examples
For example, we may not think about it as much, but all of us who are married are monopolists. We have obtained a scarce resource - our spouse - and made a contract with them guaranteeing us exclusive use of their bodies (at least). Monogamy is a monopolistic concept. If another man engages in force to break this contract between my wife and I, or if my wife willingly violates this law with another man - many people would see me as justified in seeking justice over the broken contract.
We can understand the basics of supply and demand. Many people might notice that HDDVD players dropped in price quite a bit over this last month, almost half in some stores. People paying attention to the news on this know that Blue Ray has won the next gen format war and that HDDVD support is going to dwindle. It is no shock to them, then, that prices have gone down, as the demand for these goods is sloping downward in favor of the victor.
Rising prices is something that is understood in the same way, but the inherent emotionalism of people often clouds the interpretation. Nevertheless, there is still some basic part of everyone that can rationalize why Superbowl tickets can sell for over a thousand dollars. It does not take an MBA to know that there are literally hundreds of thousands of people who would like to go to the Superbowl, but only about 70,000 seats. The demand far exceeds the supply - this is going to push the price up dramatically.
The Universality of Economics
Yet while people do generally understand the way the world works (for this reason, much of economics fits into a broader category of science and sociology called “natural law”) they fail to apply these principles universally. Professor Edwin W. Patterson said it thusly:
Principles of human conduct that are discoverable by “reason” from the basic inclinations of human nature, and that are absolute, immutable and of universal validity for all times and places. This is the basic conception of scholastic natural law … and most natural law philosophers.
While this explains our inherent understanding of monogamy or HDDVD prices, it does not explain why it is that we still pursue such economically infeasible and irrational projects such as universal health care, farm supports, wage and price controls and even the drug war.
Application to Drug Laws
Take the issue of the illegal drug trade. The United States and most countries with anti-drug laws are entirely focussed on fighting drug use by attempting to overwhelm economic law. It is US policy to go after the “supply side” of drugs - dealers, suppliers and importers.
But this policy is inherently flawed. For instance, we know that it is demand for a good or service which drives the market. A good can be either scarce or abundant, but until lots of people want it, no one does much to bring it to market. Oil was never a valuable substance until it became an instrumental element of energy creation and expenditure. Drugs are heavily demanded because of their addictive nature. A heroin addict is going to want the drug (or a valid substitute) whether it is $10 or $1,000 a hit.
This is why supply-side enforcement practices fail. Every time the coast guard, FBI, CIA or police manage to prevent or arrest a supplier of drugs, the result is an increased scarcity (with no decrease in demand). This is akin to a drought in California, with steady demand for oranges remaining. The price shoots up, encouraging farmers of other goods to switch to making oranges to satisfy the demand (and obtain higher profits). Drug busts do the same thing - people who were doing law-abiding professions now risk criminality to grow a few pot plants on the side to cash in on the high price. This criminalizes more and more of society, and perpetuates and expands the drug problem.
Victory in Surrender
The very fact that were “fighting” the drug war is causing us to lose. With every single “victory” - we are bringing about more drug use and encouraging more of the anti-social and criminal activity that accompanies a black market.
But the irrationality persists. It absolutely baffles some as to why people like myself, who do not use drugs (nor ever will), could support the decriminalization of all drugs. I have been called unchristian, I have been called an anarchist (with malevolent intent) and I have been even called ignorant or reckless for such a proposition. But the reality is that universal natural law is on my side - because I detest drug use and the crime that surrounds it, I see no other moral alternative but to support the only rational solution to the problem.
Until we admit that we cannot “fight gravity” (that is, overcome natural law by government laws) then we are just going to keep jumping up towards the sky in futility, wearing ourselves out. We will devote more and more resources, better used in much more productive pursuits, to an unwinnable war. We will drain the economy, encourage crime and strengthen the “enemy” until the economic backlash against us is so strong that it will knock us over.
The very fact that were “fighting” the drug war is causing us to lose. With every single “victory” - we are bringing about more drug use and encouraging more of the anti-social and criminal activity that accompanies a black market.
I guess I keep coming back to the same response… why is Amsterdam one of the most crime and drug-infested cities in the world when it is largely legal to have and sell drugs (especially pot) there? This is one of many examples that would seem to disprove the above statement (unless the thought is that Amsterdam is only drug-infested because of the demand in other countries, which might have some validity).
However, even if it’s true that Amsterdam is only squalid and drug-infested because of OTHER countries’ anti-drug laws, doesn’t that indicate that unless all (or at least most) countries adopt a more libertarian view of drugs, the governments that do legalize drugs will be opening their country up to becoming the next Amsterdam? In other words, if America becomes one of the few countries to legalize drugs, until such a point that other countries follow suit, our cities will be even MORE crime-ridden. Tourists (read: criminals) will come from all over the world to buy and sell their drugs here.
I don’t think we can draw any inferences from Amsterdam. It’s just one city that tolerates a few softer drugs. The harder drugs are still illegal and are not tolerated. (Actually, I am given to understand that selling pot is still illegal, but it’s just not enforced.)
But Amsterdam is just one city. It attracts tourists, sure, but tourism and travel is easier in Europe. We can’t presume that a similar flood of tourists would engulf America if the US ended drug prohibition. For one thing, it’s expensive to fly to America. For another, it’s a big country. It’s one thing to inundate one city with drug tourists; it’s quite another to inundate the world’s third most populous nation.
A very important question. I think it would a be a good study to attempt to determine why Amsterdam has high crime.
However, correlation does not equal causation on the matter of drug tolerance and crime. Your attitude after this very important question seems to be, if it is not drug tolerance, than what else could it be? This is not a scientific conclusion.
Do you think a government campaign against drugs by attacking the demand side may work? I don’t know exactly how they’d do that though.
A couple comments:
Natural law. I’m not sure that term was around when I went to college. Is it new? By your definition I’d just call it common sense.
Regardless of what you thing of as a natural law, I simply cannot view all of life in economic terms. Your example of marriage is one I never would have thought of. (I do understand how wives are considered an economic resource in many “primitive” cultures, but that is a different topic.) Whether drugs should be legal or not is NOT, in my opinion, an economic question.
So when it comes to legalizing drugs, I take the same approach as to legalizing abortion–I vote against it because of a principle. I don’t want buying drugs to be thought of as having no more consequence than buying ice cream, so I make a statement to that effect by criminalizing the sale and the purchase of such.
Will that, in fact, change how much drug trade there is? I don’t know. Quite possibly not. But saying it is OK to buy and sell drugs by decriminalizing them is saying just that: drugs are OK. I don’t want to say that.
This statement seems inconsistent with the rest of your post, as does the entire premise that higher prices do not reduce consumption. Let’s take Bolivia as an example. When my wife was there, she discovered you could buy a full bunch of bananas for a penny. These were better tasting, larger bananas than you could find in most grocery stores in the US. Then she realized that an apple would cost $5. It was a scrawny, nasty looking apple, far less desirable than you can pick up cheaply in the US. What impact does this have on consumption? As a result of the price difference, most people buy the bananas. Sure, the wealthy and those addicted to apples will still buy them, but consumption is reduced.
Going back to the drug war, raising prices DOES reduce consumption. There are a large number of people who would “try” drugs if they were cheaper or less legally risky. They do not because of the laws and high prices. Does this make a difference for the junkie? Probably not. It also results in a wealthy black market that funds and encourages criminal behavior. A rational case can be made that the downsides of the drug war outweigh its benefits, or even that government should not mandate individual health (what next, a ban on fast food, one might ask). It is NOT accurate to say that raising the price of something by increasing its scarcity does not reduce consumption though. Basic economics dictate that as price of a non-essential good increases, consumption decreases. This is true of gas, it is true of electricity, and it is true of cocaine.
Of course, it we REALLY wanted to go to war on drugs we would institute mandatory detox treatment for all first time offenders, with regular checkups mandated after release. Repeated offenses would eventually land one in lifetime confinement to a detox facility. With no repeat customers, high prices would drive drug sellers out of business. In the modern age, these people could even be allowed to telecommute, though be under regular surveillance to prevent drug use. Of course, this goes back to the question of whether such an invasion of personal liberties to prevent drug use is ethical, and whether similar systems could be imposed on those who over eat.
i like that it’s a simple look at the intricate system of economics
I believe the real problem here is perception, we perceive those who smoke cannabis as inferior or even worthless. The main problem behind this is, of course, ignorance. Most people are ignorant to the fact that cannabis is the most widely revered spiritual plant in human history, just as they are ignorant to the countless ways the hemp plant could help us create a sustainable society. here’s just a few potheads: Carl Sagan, Richard Feynman, Buddha, Christ, Bob Marley, Brad Pitt, H.S.T., Al Gore (yes, it is true no matter how he downplays it now!)… this plant is part of our culture, just refer to the music industry if you have any doubt about this. It is our war against drugs that created the black market which is killing our children and fueling terrorism, it is in the name of this ill-gotten war that our federal government tramples privacy rights of innocent suspects and arrests well over half a million harmless cannabis users every year. The budget for this year’s war against plants and chemicals is well over $7 Trillion dollars according to their own website, this does not even begin to take into account the ‘collateral damage’ that is destroying our environment, economy and more importantly our credibility. We ended alcohol prohibition because we realized it was counterproductive to try and overcome human nature, and even the experts agree that pot is far less harmful to the user and others than alcohol; why is it so hard for logic to overcome fear?
Darius wrote: “I guess I keep coming back to the same response… why is Amsterdam one of the most crime and drug-infested cities in the world when it is largely legal to have and sell drugs (especially pot) there?”
I don’t necessarily agree with the correllation/causation argument presented here, but since you’ve brought it up multiple times, I feel like I should address this argument.
Where are you getting the idea that Amersterdam is especially “squalid” and “crime-infested”? Based on what data? I’ve taken a couple of minutes to explore some data…
http://www.nationmaster.com/graph/cri_mur_percap-crime-murders-per-capita
The Netherlands ranks 51st in murders (0.0111538 per 1,000 people), versus the USA at 24th (0.042802 per 1,000 people). The US has four times the murders that the Netherlands does. I don’t think this is enough to judge a nation, and in fact I’d rather live in the US than in the Netherlands, but you’ve made the argument that the Netherlands is especially crime-infested, and this just isn’t the case.
The US also has higher rates of car theft, rapes, and total crime…
Netherlands:
Variable Amount/description Rank
Crime > Car thefts (per capita) 2.33559 per 1,000 people
Crime > Rapes (per capita) 0.100445 per 1,000 people
Crime > Total crimes (per capita) 79.5779 per 1,000 people
USA:
Variable Amount/description Rank
Crime > Car thefts (per capita) 3.8795 per 1,000 people
Crime > Rapes (per capita) 0.301318 per 1,000 people
Crime > Total crimes (per capita) 80.0645 per 1,000 people
Furthermore, a study of the Best Cities in which to live (2007) found Amsterdam ranking 13th. The very best US city ranked 27th.
[http://www.citymayors.com/features/quality_survey.html]
Jasen, I think Atanamis’ last paragraph explains how it would have to happen. I would say it would likely have to go farther because of the chemical effect - you would have to have a whole separate police force, databases on everyone, enforcement without warrants or privacy considerations and severe criminal sentences (capitol punishment, life, massive fines) for use.
Atanamis, I am not addressising the demand side of higher prices. There is, of course, an effect. However, like all market goods this is often offset by available substitutes (crack instead of cocaine for example) and the chemically addictive nature of the drug. Of course the higher prices make a dent in immediate profits, but in the long term, it only brings more resources into the industry as a whole.
gurr8, I don’t have any “evidence” to prove that Amsterdam is especially squalid, just what I’ve read in multiple sources and from people (such as Theodore Dalrymple) who have visited/lived there. I’ve never been to Europe, so I have no personal experience either way. So perhaps Amsterdam isn’t so crime-infested. However, from what I’ve read, I would have to assume that Amsterdam is at least NO BETTER than places that are much more strict with drugs. It’s no secret that it’s the drug capital of the world, and where there are drugs, there’s usually criminals (at least as long as there exist countries that ban drugs, if you believe Colin’s premise).
Darius: “I would have to assume that Amsterdam is at least NO BETTER than places that are much more strict with drugs.”
Actually, it is exactly 14 places BETTER than the best the USA (the country spearheading the War on Drugs) has to offer. From this I deduce that countries strict on drugs make their cities squalid.
Amsterdam isn’t just about drugs. There’s also a famous red light district.
Exactly. Also, “squalid” can’t be defined merely by crime rates. For one, since Amsterdam isn’t strict on a lot of crime, obviously they have lower rates of it. Similar to Britain, where police routinely ignore crime so that they don’t have to file reports and so that the officials can say that they have lowered crime rates. Meanwhile, theft is rampant.
Yes, the UK is squalid too.