Let’s say that the government figured out a way to prevent all illegal drugs from entering the US. What would the economic effects of this be?
What would the effect be if there were also able to prevent abuse of prescription drugs?
Once the border is completely secure, once we have no flow of illegal drugs into/out of this country, once we have peace and safety from the illegal drug user, that is the day the religious fascist has you right where they want you.
Fortunately, that is not the direction this country is going. We, fellow smokers of anything, are moving toward a progressive smoking country, where Doctors do not dictate policy about individual health, you do. A world where the Doctor is on trial, if the patient dies, where we pay doctors according to fixed rates set by the people. Where the government can remove medical personnel, not promote them, in the event of a disaster such as, death on the operating table, death from misdiagnosis or overdose, etc… Imagine a world where you get to make decisions based on truthful information from the media outlets…It is a brave new world!
Everyone seeks the mind altering effects that alcohol and legal/illegal drugs produce, (a few rare exceptions).
Besides, what the question might be is, "How would the government benefit from legalizing and taxing the contraband known as Controlled Substances?
In our economics classes we produced numbers, (conservatively) that would pay off the $7.5 Trillion debt in less than five years, just from tax on marijuana.
Put that in your pipe and smoke it!
I’m actually all in favor of drug legalization, but I find it rather hard to believe that you could raise $1.5 trillion a year from taxing marijuana. The highest tax rate on cigarettes would appear to be Rhode Island, at $2.46 a pack. Assuming you taxed whatever the equivalent of a “pack” is for marijuana, then at $2.46 a pop, every man, woman, and child in the United States would have to smoke (or at least buy) the equivalent of over 5 packs a day, every day of the year.
I mean, you don’t have to be some kind of “Reefer Madness”-fearing Drug Warrior to wonder if marijuana consumption on that scale might possibly cause enough loss of productivity to perhaps offset the resulting gains from the tax on marijuana.
I’m going to assume you mean that all domestic production of illegal drugs stops as well.
Well, off the top of my head, we’d have a whole bunch of policemen, lawyers, judges, court bailiffs, court stenographers, prison guards and other Justice-industry types looking for new work. Not sure what the economic effect would be, exactly, but without all that crime, we wouldn’t need that many workers in those jobs.
I’ve already figured out how to prevent all illegal drugs from entering the country. Make all drugs legal.
How do the numbers look if you do it this way?
Let X = cost to grow 1oz of marijuana
and Let Y = street price of 1oz of marijuana.
Then Y-X = Z, the current profit-per-ounce for marijuana.
Now suddenly, all sales of mj are through government-owned stores (like liquor stores in PA and other states), and Z goes entirely to the government (less store overhead obviously).
[QUOTE=Zeriel]
Even assuming that marajuana would be sold in government stores, like liquor in some states, and not in private stores, like tobacco is, your formula is still wrong. First, the current street price of marijuana is inflated. It’s an illegal, black market subastance, and that’s a major externality which raises the price. Legalize it, the price is likely to go way down. And X would be more than the cost to grow 1oz of marijuana. X would be the manufacturer’s wholesale price of the marijuana (taking into account the growers and the cigarette maker’s profits too).
The only way the US could get near that goal would be to tightly watch the borders, and crack down on local producers. Thus scaring traffickers into another line of work. Sealing the borders this way would be obscenely expensive.
Yeah, I know that rfgdxm.
But it was the OP that said
My post was just in answer to the question
[QUOTE=Captain Amazing]
Or it could be more, if the government had a monopoly on it, they could set any price they want.
And you’d be absolutely correct. $1.5 trillion is nearly 14% of the entire GDP for 2003. To raise equal revenue by other means would require an additional 15% tax on all goods and services consumed in the U.S. No way legalizing marijuana could possibly produce this much revenue.
Looking at it another way, GDP per capita in the U.S. was $37,800 in 2003 and there were about 293,000,000 persons. To raise 1.5 trillion dollars, you gotta get $5,120 from each of them. No way.
Preventing the import of narcotics would serve to bring their production to US soil, and shift the focus from agricultural drugs to chemical ones which are more difficult to control, such as methamphetamines.
This is great news. Instead of fighting the war on drugs, they could use their efforts towards the war on terrorism.
If the federal government sold marijuana at the current price–which is grossly inflated because it’s illegal–you’d just force the illegal cultivators to charge less then the government price.
I can think of a few short term effects. First, the growth in the prison population would likely slow dramatically, if not reverse. Assuming that drugs are still illegal, but no longer obtainable, prisons would likely stay open, but slowly decrease in size as individuals’ terms run out and they are released. (If drugs were simply legalized, I would expect that a large number of prisoners would be released right away, and the roughly $5 billion budget for federal prisons – and the very large amount spent nationwide on state prisons – would be cut substantially within months, leading to losses of perhaps 5,000, 10,000, 15,000 or so jobs.)
As far as the effect on the number of cops on the street, I would imagine that most beat cops would probably keep their jobs, and if anything, a decline in law enforcement employment would probably be spread out over a period of years. Most folks like having more police around, so I can’t imagine the Mayor of New York City going before the press one day and announcing, “I have great news! I’m laying off 5,000 police officers! And I just saved a bunch of money on my car insurance!” Sudden layoffs in large numbers of police just doesn’t seem reasonable. I would imagine that the effects would be the same if drugs were simply legalized.
If drugs were no longer available, there would likely be some increase in worker productivity. How much is a complete guess, I have no clue, but it would be a boost to the economy. Also, there would likely be some measure of decline in state funded health care costs, since homeless folks would no longer be OD’ing. Similarly, treatment of drug related criminal violence would decrease. (If drugs were legalized, a decrease in crime is also likely, but a decrease health related costs is probably somewhere in the area of “debatable” to “questionable.”)
Finally, I’m betting that there would be some stimulative effect of an increase in consumer spending on licit items, and an increase in tax revenues. The currency outflows to Colombia, Afghanistan, and elsewhere would likely stop, and more funds would be channeled through taxable transactions (as opposed to laundering funds, etc). Of course, the profits that end up in the illicit sector is already some part of the economy (someone is paying for the guns, ammo, fancy cars, and baggies to put crack into, for example), so I’d guess the currency outflows would be the main boost as it is redirected into the consumer economy. (The effect on the economy in this regard if drugs were legalized is probably more complex: would the US Government buy cocoa from Bolivia, or would we try to grow it here? It’s probably too complex to answer.)
No, that wouldn’t happen. If they set the price at the “government marijuana store” too high, you’d see fewer people buying marijuana from the government store, and a black market would spring up again (like the black market that exists now).
Not really if you consider cigarettes, there is a blackmarket for them sure but people are still buying them primarily from the stores, with the government having them artificially higher then they should be (via taxes)
Well short term certainly bad… crime lords would start doing other bad stuff… you’d have rehabilitation clinics taking care of million of drug crazed in withdrawl americans 
Interesting OP question. Well long term… what would the rich shithead do with the extra leftover cash they aren’t snorting ? Would you have drug vacations to other countries ? Would alcohol and other legal drugs get a huge boom ?
Hard question to answer… overall I think effects would be beneficial… workers not having drug hangovers.
Yes, but they can’t set “any price they want”; in effect, the prohibition of those drugs currently deemed illegal is equivalent to setting a price on them that is higher than the market will bear. So it is with legal-but-taxed things; if the price set is higher than the cost of selling the goods on the black market and accepting the risks that entails, that’s what will happen. Witness the UK, where grey imports of cigarettes (i.e. people hopping over to France and driving back with van-loads of relatively untaxed ciggies) is estimated to make up somewhere between a quarter and a third of all cigarettes consumed.
But this started with
And this reply
All I am saying is the government can use the “Y” value. And possibly a bit more if your increased the punishment for holding/using/selling non-regulated “Y” substance.
I agree that eventually you will find a breaking point where people will just go back to getting it on the blackmarket but “Y” is valid for now.