Wednesday, August 08, 2007

Legalise, tax, regulate, educate, rehabilitate and beat the Taliban

This post appeared as "Legalise drugs to beat terrorists", in the Financial Times, Comment & Analysis, Comment, Wednesday, August 7, 2007, here. The UK government is considering reclassifying cannabis from a Class C drug to a Class B drug carrying higher penalties for using and dealing. As an economist with a strong commitment to personal liberty and responsibility, my preference would be to see all illegal drugs legalised. The only exception would be substances whose consumption results in behaviour likely to cause significant harm to others.

Following legalisation, production and sale of these drugs should be regulated to ensure quality and purity. They should also be taxed, as are tobacco products and alcoholic beverages. Greater resources should be devoted to educating the public, especially children and teenagers, about the health hazards associated with the drugs; more money should be spent on the rehabilitation of addicts.

Ideally legalisation should occur simultaneously in a number of neighbouring countries, preferably at the level of the EU. When the Netherlands became an enclave of tolerance of drug use, drug users from all over Europe congregated there.

The principle-based argument for legalisation is that behaviour that harms others ought to be criminalised, not behaviour that only hurts the person engaged in it. It is not the government’s job to protect adults of sound mind from the predictable consequences of their actions.

If the public is ill-informed about the consequences of drug taking, there is an educational role for the state. Children should be protected from drugs, as they are from tobacco and alcohol. So should the mentally ill and mentally incapacitated. Parents should be paternalistic, but when it comes to mentally competent grown ups, the state should not be. It is not the responsibility of the state to ensure our ‘happiness’ - whatever that is. That is the road to a Brave New World.

The argument that countries with publicly funded or subsidised healthcare have the right to proscribe the use of drugs likely to cause harm to the user is a ludicrous misuse of the concept of an externality. Should we ban rugby because it is more dangerous than tiddlywinks? If it is considered unfair that those who do not use drugs end up subsidising the care of those who do, then this is an argument for the NHS to develop a policy of discriminating among patients on the basis of how they have contributed to their illnesses.

A pragmatic argument against criminalising drugs is that criminalisation creates vast rents and encourages criminal entrepreneurs to use violence, intimidation, bribery, extortion and corruption to extract these rents.

Another pragmatic argument is that it is pointless to waste resources fighting a war that cannot be won. The losing war on drugs wastes resources that could be used to fight terrorism and other crimes.

Another important argument for legalising in particular all cultivation of poppy and of coca (and their illegal derivatives) is that this would take away a key source of income and political support for terrorist movements, including the Taliban and al-Qaeda in Afghanistan, and the FARC and various paramilitary groups in Columbia.

The UN estimates that opium production in Afghanistan grew to more than 6,000 metric tons last year with a value exceeding $3bn. It is the origin of more than 90 percent of the world’s illegally consumed opiates. A significant portion of the profits flow to the Taliban, who act as ‘middlemen’ in the opium business. They combine extortion and threats of violence towards the poppy farmers with the sale of protection to these same farmers against those who would destroy their livelihood, mainly the NATO allies and the Afghan central government.

Following legalisation, theAllies in Afghanistan could further undermine the financial strength of the Taliban and al-Qaeda by buying up the entire poppy harvest of the country. If a sufficient premium over the prevailing market price were offered, the Taliban/al-Qaeda middleman could be cut out altogether, and thus would lose his tax base. Winning the hearts and minds of poppy growers and coca growers is a lot easier when you are not seen as intent on destroying their only viable livelihood.

This proposal for legalising poppy growing regardless of what the poppy is used for is much more radical than the proposal from the Senlis Council to license the growing of poppy in Afghanistan only for the production of essential medicines. The Senlis Council proposal would not end the problem of illicit poppy cultivation co-existing with licensed cultivation. With the illicit price likely to exceed the licit price, the Taliban would retain a significant tax base.

Is legalisation of all opiates an integral part of the proposal that the Allies procure the entire poppy harvest in Afghanistan? Consider procurement without legalisation. The Allies would find themselves each year with the largest stash of poppy the world has ever seen. What to do with it?

The entire global medical demand for morphine, codeine and other ligit poppy derivatives could be satisfied - possibly even free of charge. The global demand for medicinal opiates at a zero price will greatly exceed the current medicinal use of opiates, since many developing countries are either effectively priced out of the legal market altogether or are, for budgetary reasons, restricted to purchasing inadequate quantities that leave wide-spread unnecessary suffering among poor patients. Supplying the world’s demand for medicinal opiates free of charge would create economic problems for the current licit growers of poppy for opium, in Turkey, India and elsewhere; and well-targeted development aid can address this issue.

If poppies cannot be profitably turned into bio-fuel and if opium and heroin remain illegal, the rest of the allies’ poppy stash would have to be destroyed. This would drive up the street price of opium and heroin and create even more massive rents for the remaining suppliers. Poppy growers would try to withhold poppy from the Allies’ procurement round in order to sell it later in the illicit market. The Taliban would retain a tax base.

Legalisation is crucial for the success of this squeeze play on the Taliban.

If opium and heroin were legalised, the Allies’ stash could be sold to regulated producers/distributors of opium, heroin and other formerly illegal poppy derivatives. Our chemical and pharmacological industries, and indeed our cigarette manufacturers would be well-positioned to enter this trade. The profits made by the Allies on the sale of the stash could be turned over to the Afghan government. It surely makes more sense for the government to tax the poppy harvest than for the Taliban to do so.

So legalise, regulate, tax, educate, and rehabilitate. Stop a losing war, get the government off our backs, beat the Taliban and deal a blow to al-Qaeda in the process. Not a bad deal!

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