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2005-2006 Essay Contest Standard Economics Second Place Essay

The Economical Solution to the War on Drugs

Stephen Dignin
Roseville Area High School
Roseville, Minnesota

The war on drugs does not get the media attention that it once did but drugs are still a major blight on American Society. To quote former presidential candidate Michael Badnarik, "Drug prohibition has caused gang warfare and other violent crimes by raising the prices of drugs so much that vicious criminals enter the market to make astronomical profits, and addicts rob and steal to get money to pay the inflated prices for their drugs." This hits on the underlying economic roots of the illicit drug industry. The problem with America's current approach is that we focus too much on the supply end of the business. If we want to eliminate the market for psychotropic drugs we need to look at it from the perspective of an economist. By doing this we can derive a three part plan to eradicate the market; decrease the demand, increase the supply, and stop corruption in our law enforcement.

The demand side of the drug market is neglected in America's current system. According to a study by the Substance Abuse Mental Health Services Administration only 52% of the need for drug treatment is met in the United States.1 The people that are addicted to illicit drugs seek treatment but a lack of funding means that most are turned away and continue on with their habit. This means that the demand of drugs stays at a constant level and since the current program focuses on reducing the supply of drugs, it causes the price of narcotics to sky rocket. This leads to numerous externalities as addicts turn to petty theft to support the rising cost of their addiction. So the first plank of the plan for the elimination of the drug market is a switch from the policy of drug control to a treatment based program. This would reduce the demand for drugs, driving dealers out of business and would cost one fourth of the current strategies of domestic enforcement.2 The plan would also include increasing production and availability of pharmaceutical drugs that treat drug addictions such as Methadone, which would allow for more complete treatment. Currently Methadone is the most effective treatment option available for opium addictions3 but restrictions allow for only a little over 20% of opium addicts to be treated.4 The government cannot allow social stigma to turn them away from effective treatment methods.

The next part of the plan would be to increase the supply of drugs. Some may think that this sounds like the opposite of the desired goal but in the long term this would be better. By legalizing drugs, the market would be flooded with cheap product eliminating crime based drug organizations. At the same time it would bring the market into the open where it could be regulated and controlled. There could be required warnings on packages and information about treatment which would help to lower drug use. After a time the black market would disappear and the government could begin placing more and more regulations on drug sales much like the current regulation of cigarettes. A steady increase in price would allow for a decrease in drug use. In the cigarette industry a 70% increase in the price of cigarettes from 1997 to 20015 is linked to a significant reduction in smoking among teens and women.6

The final part of the solution is to stop corruption. The UN Drug Control Program explained that, "In systems where a member of the legislature or judiciary, earning only a modest income, can easily gain the equivalent of some 20 months' salary from a trafficker by making one 'favorable' decision, the dangers of corruption are obvious."7 While the elimination of the black market will reduce this problem, we need to deal with it. According to the General Accounting Office "... several studies and investigations of drug-related police corruption found on-duty police officers engaged in serious criminal activities, such as (1) conducting unconstitutional searches and seizures; (2) stealing money and/or drugs from drug dealers; (3) selling stolen drugs; (4) protecting drug operations; (5) providing false testimony; and (6) submitting false crime reports."8 Not controlling this problem would mean that the corruption would flow over into some other form of law enforcement. The best economical solution to corruption is to create economical incentive not to be corrupt. First, increase the pay of law enforcement so they do not feel the need to make the "favorable" decisions. Then, provide bonuses to officers who make legitimate arrests or turn in illegal merchandise. This would result in the elimination of drug related corruption.

Even though the "War on Drugs" has dropped off the map, the problem of drug trade is growing. In recent years we have seen increases in heroin production out of Afghanistan, methamphetamines smuggled into the US from Mexico and Columbian cocaine is just as rampant as ever. Everywhere sellers are trying to get into the money making industry of drugs. Something needs to be done to change the economical situation so that the desire to buy and sell drugs is eliminated. By implementing the reforms outlined here to decrease demand, increase supply and abolish corruption, the United States should be able to get a handle on the problem. As a country America needs to lay the foundation of a better drug policy so that the ideal country can be reached. As American romantic author Henry Thoreau said, "If you have built castles in the air, your work need not be lost; there is where they should be. Now put foundations under them."


1 Woodward, A., Epstein, J., Gfroerer, J., Melnick, D., Thoreson, R., and Wilson, D., "The Drug Abuse Treatment Gap: Recent Estimates," Health Care Financing Review, 18: 5-17 (1997).

2 Rydell, C.P. & Everingham, S. S., Controlling Cocaine, Prepared for the Office of National Drug Control Policy and the United States Army (Santa Monica, CA: Drug Policy Research Center, RAND Corporation, 1994), p. xvi.

3 "Of the various treatments available, Methadone Maintenance Treatment, combined with attention to medical, psychiatric and socioeconomic issues, as well as drug counseling, has the highest probability of being effective." Effective Medical Treatment of Opiate Addiction. NIH Consensus Statement 1997 Nov. 17-19; 15(6): 7.

4 Fiellin, David A., MD, Patrick G. O'Connor, NO, MPH, Marek Chawarski, PhD, Juliana P. Pakes, MEd, Michael V. Pantalon, PhD, and Richard S. Schottenfeld, MD, "Methadone Maintenance in Primary Care: A Randomized Controlled Trial," Journal of the American Medical Association (Chicago, IL: American Medical Association, Oct. 10, 2001), Vol. 286, No. 14, p. 1724.

5 U.S. Department of Labor, Bureau of Labor Statistics, Consumer Price Index-All Urban Consumers (Current Series). Washington, DC: U.S. Department of Labor, 2002.

6 Johnston LD, O'Malley PM, Bachman JG. Monitoring the Future national results on adolescent drug use: overview of key findings, 2001. Bethesda, Maryland: National Institute on Drug Abuse, 2002 (NIH Publication no. 02-5105).

7 United Nations International Drug Control Program, Technical Series Report #6 Economic and Social Consequences of Drug Abuse and Illicit Trafficking (New York, NY: UNDCP, 1998), p. 39.

8 General Accounting Office, Report to the Honorable Charles B. Rangel, House of Representatives, Law Enforcement: Information on Drug-Related Police Corruption (Washington, D.C.: USGPO, May 1998), p. 8.