Monday, 17 January, 2005

Did you know the British public spends 0.3% of GDP on Cocaine and Heroine alone? To put that into perspective, that's three times the amount of money that is spent on transport by the government.

Why did I research this figure I hear you ask? Well I asked myself, if we really wanted to stamp out all illegal substances surely we could? And even if we couldn't then there is plenty of scope for improvement! Why after so many years have we not seen a radical decrease in the amount of drugs in on the street?

Before we go any further I'd like to say I don't advocate drug taking or distribution for any illegal substance, that said, there's a tendency to categorize these complex topics like drug-use in to two amorphous lumps: Good and Evil. Life is never that straight-forward, so I write this to present a economic argument for (soft) drugs, even though I might not agree with what I'm writing!

So is there a better explanation for why there are lots of tough words on drugs but not to much action? Well, one suggestion I would like to put forward is that ecnonomically speaking, it is beneficial to have a drug-culture.

As stated above, 0.3% of GDP is three times the Government's transport budget. That's a huge amount of money but who has this money? Well, drug dealing is a low skill, high risk job. They're typically from a poor background and live in a poor area. It's fair to say that drug dealing pays the a dealer far more than they could ever hope to earn in a conventional job otherwise they'd choose a legitimate job with equal earning potential over a job which could very easily land you in prison.

Well, okay we've got ourselves an overpaid drug-dealer that is potentially causing a lot of harm to society. How does anyone else benefit? Well this dealer has to spend their money and they're going to spend it in the local community since this is where they live. This is a key point, the dealer will buy more expensive cars, bigger televisions and he'll probably buy more food from the local shop. All this puts money back into socially deprived areas.

The only drug where I think the trade-off is worth it is Pot. Pot is generally grown locally and it's done within the community. There's a big insentive to grow your own plants if you're a pot dealer. Not only can you ensure good quality produce but you also cut out the middle man. In this respect, pot dealing is the "peer to peer" drug of drugs network. The competition between suppliers drives prices down and quality upwards. As said above, a pot dealer will generally live within a deprived community and invest his capitial back in to the community. Since the social impact of the drug is fairly low the trade-off works out in society's favour.

Of course, if we look at harder, more addictive drugs, like cocaine or heroine this argument is non-sense. Heroine production is very centralised and very aggresively controlled. It also creates it's own demand through its addictiveness and that addictiveness is tremendously destructive to the local community. The list of bad attributes goes on ad infinitum. Whatever benifit there was in these drugs economically it is totally destroyed by the social damage caused by the substance.

This is why I advocate keeping soft drugs such as pot illegal but not policing it too heavily. Economically, we do win with pot being illegal. And as such, we shouldn't change the situation. If we we're to legalise the substance the big tabacco companies would be able to mass produce the substance at very low cost and wipe out the home-grown suppliers. This would be bad for the economy and the country as a whole.

Simon.