Toward a More Rational Drug Law

Top-flight economists show why the War on Drugs isn't working. In fact, it tends to make the problem worse.

"in the case of illegal goods like drugs -- where demand seems inelastic -- higher prices lead not to less use, but to an increase in total spending.

In the case of drugs, then, the authors argue that excise taxes and persuasive techniques -- such as advertising -- are far more effective uses of enforcement expenditures.

'This analysis ... helps us understand why the War on Drugs has been so difficult to win ... why efforts to reduce the supply of drugs leads to violence and greater power to street gangs and drug cartels,' conclude the authors. 'The answer lies in the basic theory of enforcement developed in this paper.'"

Aggressive enforcement simply increases the negative economic effect of drugs when it does not reduce demand. The moral to the story may be to keep the price low on addicting drugs and use other methods to reduce consumption. A low price would also put many criminal enterprises out of business.