The High Cost of Prohibition

This week, over 500 leading economists, led by conservative icon Dr. Milton Friedman, called for a national debate about whether prohibition of marijuana is worth the cost. The occasion was a new report by Harvard University economist Dr. Jeffrey Miron estimating - - probably conservatively -- that replacing prohibition with a system of common-sense regulation could mean $10 billion to $14 billion per year in reduced government spending and new revenues.

"We believe such a debate will favor a regime in which marijuana is legal but taxed and regulated like other goods," Friedman and colleagues wrote. "At a minimum, this debate will force advocates of current policy to show that prohibition has benefits sufficient to justify the cost to taxpayers, foregone tax revenues, and numerous ancillary consequences that result from marijuana prohibition."

A good case can be made that prohibition costs too much -- in money, but also in ruined lives and harm done to society. But first, let's talk about dollars:

Using figures from a variety of federal and state government sources, Miron estimates that replacing prohibition with regulation would save $7.7 billion annually in government spending on enforcement. Taxes on regulated marijuana sales could generate $2.4 billion if marijuana were taxed like ordinary consumer goods. If -- as seems more likely - - marijuana were taxed like alcohol and tobacco, tax receipts would be about $6.2 billion, and conceivably more, depending on the tax rate.

Such estimates, of course, aren't perfect. Available data is incomplete, so economists must make assumptions that could turn out to be either too high or too low. Miron's numbers may be conservative: He didn't attempt to quantify every possible saving, and in one major expense category -- the number of inmates locked in state prisons on marijuana charges -- the White House Office of National Drug Control Policy just released an estimate 60 percent higher than the one Miron used.

These are not trivial sums. In the words of the late Sen. Everett Dirksen, "A billion dollars here, a billion dollars there, and soon you're talking about real money" -- money that could be used to fix our schools, strengthen Social Security, or protect America against terrorism.

For example, the $30 billion cost of securing thousands of Soviet-era "loose nukes" -- unsecured nuclear weapons that security experts fear might fall into terrorist hands -- could be paid for in less than three years with the savings and revenues generated by marijuana regulation. One year's savings alone would cover the full cost of port security measures required by the Maritime Transportation Security Act of 2002, estimated by the Coast Guard at $7.3 billion to secure 3,150 port facilities and 9,200 vessels.

What are we getting for the billions spent on marijuana prohibition? We certainly haven't gotten marijuana off the streets. Last year, 85.8 percent of high school seniors told government survey-takers that marijuana was "easy to get" -- a figure that has remained virtually unchanged for three decades. While marijuana arrests nearly tripled from 1991 to 2003 (the latest figures available), the number of teens trying marijuana for the first time went up by over 50 percent.

According to the federal government, nearly 15 million Americans use marijuana at least once a month. That's equal to every man, woman and child in the states of Oregon, Nebraska, Indiana and Oklahoma combined. It's nearly as many Americans as will buy a new car or truck this year. It's a huge market.

Prohibition cannot and will not make that market go away. It has simply given criminals and violent gangs an exclusive franchise, and society pays the price every day: In unregulated drug dealers with no incentive not to sell to kids, in clandestine grows hidden in national parks and surrounded by booby traps, in the bloodshed that inevitably comes with prohibition -- just as it did during America's ill-fated experiment with alcohol prohibition during the 1920s.

These 500 economists are right: There might be a better way, and it's time to start talking about it.

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