War on drugs misunderstands microeconomics

If you reduce the supply of something, the price goes up. The more successfully the US destroys coca crops, the higher the price goes, and the greater the incentive for tropical farmers everywhere to simply grow more.

If you instead reduce demand, the price goes down. The more successfully the US reduces coca demand (whether by moral suasion, education, re-education, imprisonment, testing, etc), the lower the price goes, and the less the incentive to grow, refine and distribute it.

If you focus on demand reduction, you also:

  1. Starve bad guys of profits.
  2. Automatically reduce a variety of related domestic social problems.
  3. Reduce the incentive for corruption of US officials.
  4. Stabilize Mexico’s border regions, reducing violent crime in the US.
  5. Become a model of self-restraint, worthy of self-respect and the respect of other nations.
  6. Save money. Projecting military power is immensely expensive — much more than fixing domestic problems.

Supply reduction accomplishes none of these. Microeconomically, the 20-year “war on drugs” is not only a failure — it is a surprisingly dumb idea.

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