The United States’ War on Drugs: An Effort in Missed Economic Growth

[TruthfulDeceit]

This is a research paper I wrote for my microeconomics class a few months ago. Enjoy.

Dating back thousands of years, humans have attempted to alter their mental state of being through the use of marijuana. Marijuana has been used as far back as 2727 B.C. (Erowid). It has been used for many different applications, in everything from a spiritual aid to a form of medicine. Many people today use marijuana to ease symptoms of serious diseases and counter side effects of other diseases. Despite a long history and the heavy use of currently legal narcotics such as alcohol, caffeine, and nicotine, marijuana remains illegal in the United States. The illegality of marijuana in our society today not only takes a hefty toll on society every year, but also represents a large amount of potential taxes that are never realized. The legalization and commercialization of marijuana would not only decrease the burden from a bloated prison and criminal justice system but also provide the country with much needed economic growth.

The 1960’s were a time period unlike any other in America. The American military was at war in Vietnam and the American people were in a state of unrest. Unhappy with the politics behind the war and the institution of the draft, the message of peace and the actions of protest became central themes for the younger generation. It was at this time, during the mid-to-late 1960’s, that drugs, most notable marijuana, gained huge popularity. Smoking marijuana became a form of protest in itself, and due to lax drug enforcement, it goes on mostly uncontested (Frontline). However, as news was coming home that soldiers in Vietnam were developing heroin addictions, drugs became a focal point in American society. On June 17th, 1971, Richard M. Nixon, the 37th President of the United States, declared drugs “public enemy number one in the United States”, thus starting the war on drugs (Frontline). Its purpose was simple: to enforce drug laws and cripple the illicit drug society. Over the next forty plus years, the drug war developed in to the resource hog that it is today.

In 2006, the most recent year with accurate government arrest records, a total of 14,380,370 arrests were made. Of these arrests, 1,889,810 were for drug related offenses (2006 Crime). Marijuana arrests totaled 829,627 that year, with 90,711 being for marijuana trafficking (the distribution of marijuana) and 738,916 being for marijuana possession (simply having some amount of marijuana) (Drug War Facts). Although data is sketchy at best for the cost of the war on drugs and, more specially, the war on marijuana, for 2006, one can view data from 2003 and interpolate data for 2006. What you end up with is a cost of $15.8 billion a year for criminal justice of marijuana laws alone (Appendix A).

Besides the cost of the war alone, the war on drugs costs society as a whole a great deal of money each year. The average drug sentence is 75.6 months in prison (Suite101.com). Assuming an average yearly income of $32,140 (Annual Demographic Survey), the average prisoner for a drug violation will forfeit approximately $202,482 in earnings. At a tax bracket of around 25% (Moneychimp), this comes out to $50,620 in missed taxes. In addition, with estimates ranging from $25,000 to $30,000 a year to house prisoners, each prisoner ends up costing society as a whole in the area of $75,000 to $80,000 a year. Besides the large amounts of money that are wasted in an endless war against marijuana, even greater sums are lost as the opportunities to tax the sale of this plant go unrealized.

Although the exact amount of marijuana that enters the country and is thereafter sold is impossible to accurately quantify, estimates can be made using various sources of information regarding seizures, exports of other countries, consumption figures from surveys, etc. The end result is an estimated average of 14,349 metric tons, or 31,633,805 pounds, per year (Gettman). An average price, also impossible to accurately quantify, can be estimated at $223 per ounce, or $3,568 per pound (Gettman). By multiplying the average weight per year sold by the average price per pound, an average for marijuana sales in dollars can be reached. Using estimated averages, marijuana sales in the United States reach $112,869,416,240, or $112 billion a year.

These figures are based around the fact that the sale of marijuana is currently illegal and importers and growers must put themselves in high-risk situations to sale their product. However, they can be viewed as accurate due to the laws of supply and demand. In the worst case scenario, demand would remain the same, causing the government to supply the same amount of marijuana as is currently available, keeping the price the same, thus keeping revenue at the same level. In the best case scenario, demand would increase, supply would increase to match demand, and price would remain constant, resulting in higher revenue. For the most accurate data, the worst case scenario will be used to ensure revenue is no less then the minimum.

As a base figure, sales will total around $112 billion a year. This is strictly sales. Marijuana is a fairly cheap crop to grow and harvest, but the worst case scenario position needs to be followed, so a rough estimate of 75 percent of sales will be due to costs. This leaves 25 percent of $112 billion, or $28 billion, in profits. Since the growth and distribution of marijuana will be privately owned, these profits will not go to the government. However, due to the profitable nature of the business, a 50 percent of economic profit tax will be instituted, generating $14 billion a year. In addition, a flat federal sales tax of 10 percent will be added to all sales. This will generate $11.2 billion in new tax revenue. The overall added economic benefit, profit tax plus sales revenue, will be just over $25 billion a year. That means in a worst case scenario, the legal distribution of marijuana will increase government funding by $25 billion a year. But this is for new government revenue alone.

The added cost to government funding comes in the form of the previously discussed costs for criminal justice, missed taxes from inmates, and costs for housing violators of marijuana laws. Once again, data for the exact amount of prisoners being held for marijuana law violations is unavailable; however, this data can be interpolated from other available data. The calculations are long, but the result is 233,200 prisoners being held every year for violating marijuana laws (Stopthedrugwar). At a worst case scenario estimate of a $75,000 total cost per prisoner to the government, prisoners being held for violating marijuana laws cost the government a total of $17,490,000,000, or about $17.5 billion, per year (Appendix B). Add to this figure the cost of criminal justice ($15.8 billion) and the missed potential taxes ($25 billion) and the end figure is startling: approximately $58.3 billion a year are lost overall for a war against nonviolent criminals.

How does this affect society as a whole? In 2006, the federal government spent around $118.6 billion on education (Public Agenda). The addition of $58.3 billion would increase spending on education by almost 50%, by far the largest increase in education spending ever. Seen from another point of view, the extra money could be used to assist lower and lower-middle class citizens. The government would have enough extra money to give five million people a year $11,660. The economic stimulus package of 2008 was designed to help citizens with their financial problems by giving out a maximum of $600. Imagine the effects of giving five million people, or about 1.7% of the country’s population of around 301 million (U.S. Census Bureau), over eleven thousand dollars. The benefit to the country would be unheard of.

As far as problems to society go, marijuana is realistically at the bottom of the pile. Using marijuana is a victimless crime. There is a very good chance that someone you know smokes marijuana and you have no idea. It has no major negative side effects and no addictive properties. The fact that it remains illegal is mind boggling. The United States government is ignoring $58.3 billion a year of potential savings and income fighting a war with no victims except those arrested. There is currently much talk in the news of the recession the country may be in or heading towards. This recession could be easily avoided, and, conversely, turned in to a period of economic growth, with the legalization of one simple plant. The fact that it has not yet been made legal is a blunder of monumental proportions that will hopefully be rectified in the near future. The economic benefits of making this plant legal are simply too great to ignore.

[Bluntzilla420]

Too...long...

[wackdeafboy]

yeah i read the first half

well
thats true, that why we want marijuana be legal so we wont lose billions of dollars
i just wish that they would drop this whole stupid war on drugs, it a scam, it a way to make people to lose money to govs so the govs can make billions of dollar a year


but we can still do war on drugs, only on hard drugs, and hard drugs, it wouldnt take that much money to stop em all, probley like a couple million dollars a year

[AugustWest]

Originally Posted by wackdeafboy

but we can still do war on drugs, only on hard drugs, and hard drugs, it wouldnt take that much money to stop em all, probley like a couple million dollars a year

a couple of million a year? How did you come up with those figures?

[aaronman]

Originally Posted by wackdeafboy

but we can still do war on drugs, only on hard drugs, and hard drugs, it wouldnt take that much money to stop em all, probley like a couple million dollars a year

Do you think drug abuse is a criminal problem? Do we send alcoholics to jail?

[wackdeafboy]

Originally Posted by AugustWest

a couple of million a year? How did you come up with those figures?

idk, i'm just sayin

if we legalized marijuana, there wont be that much a problem for economic
if pot is legal, we save billion dollars a year
which can go to schools, health, roads and so forth

[wackdeafboy]

Originally Posted by aaronman

Do you think drug abuse is a criminal problem? Do we send alcoholics to jail?

NO.. we choose to do drugs, that IS OUR PROBLEM, NOT THE GOVS

we CHOOSE TO DO DRUGS

i choose do x and weed but i quit doin x cause i dont wanna do anymore

its our personal opionon

its 50/50
support and not support

[aaronman]

Originally Posted by wackdeafboy

NO.. we choose to do drugs, that IS OUR PROBLEM, NOT THE GOVS

Exactly, so why should tax payers be robbed to fight an endless war on drugs? Even if it is just hard drugs, criminalization is not the solution.

I can't believe people still believe in these state sanctioned moral wars: Terror, poverty, drugs...

[wackdeafboy]

Originally Posted by aaronman

Exactly, so why should tax payers be robbed to fight an endless war on drugs? Even if it is just hard drugs, criminalization is not the solution.

I can't believe people still believe in these state sanctioned moral wars: Terror, poverty, drugs...

yea ik

its all a scam,
gov is tryin to steal our money

the laws now is just fuckin ridiculus,
man, i wish all the laws are burn and start all over again with the american laws that been created in 1700,

[TruthfulDeceit]

From my point of view, most of the problems in this country come down to economic problems. If, for example, our country could afford to give every citizen a million dollars a year, how many problems do you think would occur? Not many, and so that needs to be our overall goal. How do we reach this? Capitalize on high-profit, currently illegal markets.

The bottom line is, we will never stop the production and distribution of illegal narcotics or the sex trade. Human desire is just too great. By making these markets legal, it provides a number of benefits: increased safety, reduced street traffic/violence, open rehab programs, decreased spreading of diseases, increased tax base, etc. The list goes on and on. It seems foolish to ignore all the benefits with no possible way of stopping the illegal trade.

[Bluntzilla420]

It is funny how alcohol and tobacco, the two biggest killers in American society, are supported by the federal government because of the insane profits made from such products. You can buy a couple half gallons of liquor for the amount of like an eighter of pot.

This "Drug War" is the most corrupt and idiotic plan in the last 30 years. U.S. tax dollars are being used to keep people from hitting bongs. Are you kidding me? We are already trillions of dollars in debt. How are citizens so unaware of this? It boggles my mind.

[TruthfulDeceit]

Originally Posted by Bluntzilla420

It is funny how alcohol and tobacco, the two biggest killers in American society, are supported by the federal government because of the insane profits made from such products. You can buy a couple half gallons of liquor for the amount of like an eighter of pot.

This "Drug War" is the most corrupt and idiotic plan in the last 30 years. U.S. tax dollars are being used to keep people from hitting bongs. Are you kidding me? We are already trillions of dollars in debt. How are citizens so unaware of this? It boggles my mind.

Your last paragraph is one reason why legalization hasn't progressed further then it has. Think about it. The people that are keeping these laws around are the same people that made them. Calling their original plan idiotic and corrupt puts them on the defensive, something that's been happening since the War on Drugs began, and defensive people prevent results. The War on Drugs need to be refoucsed and redefined, not based on failures of past generations, but instead based on the vast amounts of knowledge those failures have brought.

And for anyone that says my last sentence sounds like I'm opposed to legalization, I'm not. I support the War on Drugs where I feel it's needed, i.e. keeping "hard" drugs(coke, crack, heroin) away from kids, shutting down meth labs that destroy the lives around it, etc.

[aaronman]

Originally Posted by TruthfulDeceit

I support the War on Drugs where I feel it's needed, i.e. keeping "hard" drugs(coke, crack, heroin) away from kids,

Because we all know the black market checks for ID

I don't know about you, but when I was a kid it was easier for me to purchase black market hard drugs than alcohol.