Monday, February 7, 2011

The Cost of Legalization

Whenever I mention legalization, someone will inevitably reply "I don't have a problem as long as I don't have to pay for their choices". And that is a legitimate concern. My argument for legalization often follows a similar argument I make for open immigration, starting with the caveat "if we can first eliminate the welfare state". And just as open immigration would be a disaster with our current welfare state in place1 , legalization will be more costly if enacted with our current laws in effect. However, unlike open immigration, I do not think the costs of legalization would be prohibitive.

Still, as I want to be fair, let us look at the most likely costs, and see what we can discover.

The most obvious cost would clearly be health care, as drug users are prone to health complaints. And, if we assume that legalization would increase the number of those using drugs, then we would need to take that into account. However, I think there are a few factors which argue against a greatly increased cost, as well as an analogous situation which supports some of those arguments.

First, as I argued before, I think most addicts not likely to be deterred from drug use by laws, which means legalizing drugs would create mostly casual users. As casual use of non-intravenous drugs produce relatively few health problems, and as casual users are unlikely to use intravenous drugs, this means the health problems resulting from drug use would likely be very similar to what we see now. There may be a slight increase, but I doubt it will even be noticeable.

However, let us assume that there were a huge increase in drug related illness, what would be the cost? Drug abusers are not likely to wait until late in life to begin, so most will exhibit the effects of long term use early in middle age. As the most common illnesses resulting from drug abuse, AIDS and hepatitis, are often fatal, it is likely that these drug users will die at a relatively early age. As some studies with smokers suggest, even if the disease itself is medically costly, by dying at an early age these people will still result in a net savings to the health care system2. It is not absolutely certain, as I am unsure how the costs of AIDS or hepatitis compare to emphysema and lung cancer, but it is quite possible that an increase in drug use could actually save the system money3.

Finally, I would argue that we cannot base public policy entirely on banning acts which cost the system money. Were we to consistently do so, we would certainly have to ban alcohol, as the consequences of long term alcoholism are just as damaging, if not more so, than long term drug abuse. And, as they are not usually fatal, but are debilitating, those costs last much longer than the comparable costs from an intravenous drug user4. Nor is that enough. If we base policy on the "social cost", then we must go beyond even the most silly CSPI request, and place legal limits upon food intake based on weight, as obesity clearly kills many more than drugs ever will.

I could go on, but you can see my point. There may be increased medical costs, there may not, but that cannot be the sole basis for our decision. If we worry that legalization will cause skyrocketing medical costs, then the answer is not to keep a ban on drugs, but to reform how we handle medical costs. Why keep a bad law to balance out another bad law? We should fix the original problem.

Moving on from medical costs, the next problem area is public welfare.

As a former social services employee, I can state that some fears are based on a mistaken belief, though one with a grain of truth behind it. The mistaken belief is that drug addiction is a disability, and entitles addicts to welfare money or medical assistance, that is not true5. Drug addiction alone does not qualify anyone as disabled. However, drug addiction does often make it easier to convince a mental health professional that one has other underlying mental illnesses, which may serve to make one disabled, and thus qualified for monetary or medical benefits. Still, strictly speaking, drug addiction alone does not qualify anyone as disabled.

Of course, there are any number of well meaning psychiatrists, psychologists, social workers and others out there who would be happy to declare a drug addict "bipolar" or a "borderline personality" in order to help them get medical benefits, so this may be something of a moot point. On the other hand, I would argue that it really doesn't matter. As I have argued before, the only real increase in drug use would likely be among casual users, who are hardly the group which will be applying for welfare. The hard core addicts are already with us, and those who would seek a place on the welfare roles are already doing so. Legalization will probably change very little in terms of the number of addicts applying for or receiving welfare.

The only other significant area of cost will be in law enforcement, and here it is arguably a savings rather than a loss.

Many have proposed that legalization will add to the number of crimes as the number of addicts swells. I just cannot imagine this would be true. First, as I continue to argue, I think the number of addicts will not increase. But even if we imagine that it will, does anyone think drugs will be more expensive when legal? Thanks to markup and risk premiums, as well as the relatively closed market, drug prices are absurdly high now, legalization, as with alcohol in the 1930's, will cause a massive price drop. With drugs much cheaper, addicts will have less reason to rob, not more. Even if their numbers swell, the amount of crime per addict should drop more than enough to offset the increased numbers.

However, for the sake of argument, let us agree that the number of addicts will grow, and that they will commit more crimes, I still say the net cost of law enforcement will drop. How so? Because while addicts may be committing more petty crimes, the former drug dealers themselves, no longer fighting over turf, will have much less cause to murder one another, reducing the number of very costly homicide investigations and prosecutions. In addition, all of the money spent on drug enforcement, interdiction, surveillance, and all the rest, will be free for other uses. Considering the net savings in those two areas, I just cannot see petty crime rising enough to outweigh the savings.

Of course, it is possible some of my predictions are wrong, and there is some cost I have missed. Or perhaps I have been overly optimistic in my estimates. Both are always possible. But, as it see it now, legalization will, on the whole, result in a net savings rather than loss, at least in financial terms. Of course, it will be an uneven savings. In some areas we may even spend a bit more, while others will see a tremendous savings, but, on the whole, I think we will find that the final balance will show that we will come out ahead.


1. Costs of welfare for new immigrants is not the only argument against open immigration in today's world. Obviously security concerns would need to be considered. Even when I claim to support "open" immigration, I do not propose a suicidal allowance of every immigrant. My proposal for open immigration, provided welfare as we know it no longer exists, would still allow the state to bar known criminals, citizens of declared  hostile nations, known terrorists, and those with infectious diseases. I do believe that free mobility of labor is beneficial to all concerned, but I also am realistic enough to recognize that there are concerns other than purely economic. However, this is a topic for my other blog, so I will stop this footnote now.

2. Not so sound mercenary, but as many drug abusers manage to get themselves declared mentally ill as well to collect SSI from social security, an early death also results in a net savings for social security, making the state's savings from an early death even greater.

3. To be fair there may be some additional costs from unforeseen events among casual users such as strokes from excessive cocaine use, and overdoses from inexperienced casual users of heroin, but as these are most likely to prove fatal to casual users, their net effect will likely be to reduce, rather than increase health care costs. There may be the rare case where a casual user has a mishap which increases his overall health costs while not shortening his life (eg. a cocaine induced stroke causes nonlethal brain damage), but such things are not likely to be that much more frequent with legalization than they are now. As they will be rare events, by definition they will have only a minimal impact on overall costs.

4. My wife is a nurse, as I have mentioned before, and her descriptions of the dementia suffered by chronic alcoholics has convinced me that alcoholism and the subsequent long term care, is clearly much more expensive than any IV drug user could ever be. Not to mention that her, admittedly subjective, perception is that alcoholics simply have more problems than even the worst drug abusers. (And she previously worked at a Baltimore hospital filled with addicts, some of whom went so far as putting toilet water on wounds to cause an infection so they could get drugs.)

5.  My first hand knowledge ended in 1996 when I left social services. However, when I thought my condition was growing worse, I checked out my employer's long term disability policy, and saw that they used the social security criteria (for the most part). Looking at SSA's rules, it appears they are much the same as I remember. Drug addiction and alcoholism do not, in themselves, qualify one as disabled, and may even serve to undermine some claims. So, it appears that my impression, though a bit out of date, is correct.

Originally Posted in Examining the War on Drugs on 2008/06/01.

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