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Reassessing the war on drugs: Patrick Basham

While a policy analyst with the Fraser Institute, Patrick Basham presented the following speech at a conference in Edmonton in 2000 entitled “Reassessing the War on Drugs." Basham’s remarks are part of a growing body of intellectual work opposing the war on drugs from a conservative perspective.

Patrick Basham - September 30, 2009

The bottom line is that prohibition has created a business environment in which there's nothing as profitable as smuggling and selling illegal drugs. For the drug entrepreneur, the profit margins are extremely high. For example, the retail prices of cocaine and heroin are 5 times their import prices.

Now, through into the mix the fact that the profits are tax-free. This reality has two negative consequences for the war on drugs. First, it provides a huge incentive for others to enter into this line of work; and, second, it provides a huge incentive for suppliers and dealers to create more demand among their potential customer base.

So, the economic rationale for entering into the illegal drug business is pretty straightforward.

But, are we able to put a figure on what the illegal nature of the drug business costs the rest of us, as citizens and as taxpayers?

One recent study conservatively estimates that 1.4 billion dollars are lost in Canada in relation to illegal drugs. This covers everything from prevention programs, health care costs, lost productivity, and -- the biggest cost of all -- law enforcement.

Of course, these figures are dwarfed by the size of the taxpayer investment in the drug war south of the border. Directly and indirectly, Americans currently spend about 60 billion dollars a year on the War on Drugs. In total, the annual economic cost of North American drug law enforcement is estimated at 90 billion Canadian dollars.

As Cato Institute scholar James Ostrowski has written: "The War on Drugs imposes economic costs on large numbers of non-drug-abusing people in a failed attempt to save a relatively small group of hard-core drug abusers from themselves. It's absurd to force some people to bear costs so that others might be prevented from choosing to do harm to themselves."

It's highly revealing that drug war advocates are unable to defend drug prohibition on rational cost-benefit grounds. You see, there's not a single empirical study that demonstrates that the social and economic benefits of drug prohibition outweigh the social and economic costs.