Llad Phillips 1 Casual Users, Substance Abusers, and Public Policy The War On Drugs

Llad PhillipsLlad Phillips 11

Casual Users, Substance Abusers, and Public Policy

The War On DrugsThe War On Drugs


Questions

Should public policy towards marijuana be Should public policy towards marijuana be any different than public policy towards any different than public policy towards alcohol consumption and cigarette alcohol consumption and cigarette consumption?consumption?– Why?Why?


Drugs and Crime: The Perception of the VictimDrugs and Crime: The Perception of the Victim

Source: http://www.ojp.usdoj.gov/bjs/Source: http://www.ojp.usdoj.gov/bjs/




Arrests: The War on Arrests: The War on DrugsDrugs




State PrisonersState Prisoners Federal Prisons:Federal Prisons:

In 1996, Drug OffendersIn 1996, Drug Offenders accounted for 60% ofaccounted for 60% ofFederal PrisonersFederal Prisoners

Federal Spending on Drug ControlFederal Spending on Drug Control19811981 $1.5 Billion$1.5 Billion19891989 $6.7 “$6.7 “19901990 $9.8 “$9.8 “19951995 $13.0 “$13.0 “20002000 $17.9 “$17.9 “20012001 $18.1”$18.1”


Federal Drug Budget By Function Total Total $17,940.3 $17,940.3

$18,053.1$18,053.1 Drug treatment $2,915.2 Drug treatment $2,915.2 $3,168.3$3,168.3 Drug prevention 2,338.6Drug prevention 2,338.6 2,515.7 2,515.7 Criminal justice system 8,429.0 Criminal justice system 8,429.0 9,357.79,357.7 International 1,892.9 International 1,892.9 609.7609.7 Interdiction 1,965.9 Interdiction 1,965.9 1,950.41,950.4 Research 89.6 Research 89.6 106.1106.1 Intelligence 309.1 Intelligence 309.1 345.2345.2 International (U.S. SupportInternational (U.S. Support for Plan Colombia 954.4for Plan Colombia 954.4





Drug Use by High School SeniorsDrug Use by High School Seniors ER IncidentsER Incidents



http://www.cdc.gov/hiv/graphics.htmhttp://www.cdc.gov/hiv/graphics.htm


Death Rates from HIVDeath Rates from HIV





Questions About Crime What are the Social Policy Options What are the Social Policy Options

Towards Victimless Crimes?Towards Victimless Crimes?– education problemeducation problem

preventionprevention

– health problemhealth problem cure for addicts and abuserscure for addicts and abusers

– fiscal problemfiscal problem control use through taxescontrol use through taxes

– law enforcement problemlaw enforcement problem focus on demand?focus on demand?

– usersusers

focus on supply?focus on supply?– distributorsdistributors


Education Let an informed public make a choiceLet an informed public make a choice

– An individual would weigh the benefits against An individual would weigh the benefits against the coststhe costs

– If the benefit/cost ratio exceeds oneIf the benefit/cost ratio exceeds one smokesmoke drinkdrink

– Could impose costs on othersCould impose costs on others driving under the influencedriving under the influence second hand smokesecond hand smoke

– Protection of MinorsProtection of Minors blandishments of advertisingblandishments of advertising influence of peersinfluence of peers


Health

Treat substance abuseTreat substance abuse– Need to identify the abusersNeed to identify the abusers

many citizens are not covered under health plansmany citizens are not covered under health plans

– Difficult to cure addictsDifficult to cure addicts


Fiscal Policy

Use excise taxes, a tax per unit, to control Use excise taxes, a tax per unit, to control demanddemand– tax per pack of cigarettestax per pack of cigarettes– tax per bottle of gintax per bottle of gin

Policy moderates rather than eliminates usePolicy moderates rather than eliminates use– lacks the moral suasion of a law prohibiting uselacks the moral suasion of a law prohibiting use


Law Enforcement Control demand?Control demand?

– hard to keep tabs on numerous users hard to keep tabs on numerous users – loss of respect for the lawloss of respect for the law

people like to partypeople like to party

Control supply?Control supply?– at homeat home

search and destroy policies have a low success ratesearch and destroy policies have a low success rate

– abroadabroad interdiction of supply has low success rateinterdiction of supply has low success rate we export our enforcement problem to:we export our enforcement problem to:

– producing countries, e.g. Boliviaproducing countries, e.g. Bolivia

– transhipment countries, e.g. Mexicotranshipment countries, e.g. Mexico


What are the Tradeoffs Among Policy Options?

Policy Benefits Costs

Education Prevent Abuse Limited Effect*

Health Cure theAbuser

LimitedCoverage

Fiscal DecreaseDemand

Does NotEliminate Use

Enforcement Discourage theLaw-Abiding

LimitedEffectiveness

* Scare tactics such as Reefer Madness are not convincing


Some Consequences from Criminalizing Substance Use

barrier to law-abiding suppliersbarrier to law-abiding suppliers enriches crooksenriches crooks

– prohibition financed the Mafia in the USprohibition financed the Mafia in the US– drug profits have created a new Mafia in drug profits have created a new Mafia in

ColombiaColombia high prices drive some users to crime to high prices drive some users to crime to

support their habitsupport their habit easy money corrupts some law enforcement easy money corrupts some law enforcement

officialsofficials


“Scale, nature, and perception of the drug problem are very

different in ...” United StatesUnited States CanadaCanada Western EuropeWestern Europe

Source: Peter Reuter et. al., Comparing Western Europe and North American Drug Policies, Rand


The Western Nations Drug Problem

Country Heroin Use CocaineUse

SocialProblem

US high high Violenceguns & drugs

Europe moderate low

Canada low low

Behavior Social Problem

drug use

crime

AIDS

( violence: US with guns,50 million hanguns in private hands = 100 timesthe per capita rate in Europe)

(free needles for addicts:GermanyItalyNetherlandsSwitzerlandGreat Britain)


CountryCountry Number of Heroin AddictsNumber of Heroin Addicts Epidemic DecadesEpidemic DecadesUSUS 600,000 - 800,000600,000 - 800,000 60’s & 70’s60’s & 70’sGreat BritainGreat Britain 60’s60’sGermanyGermany 60’s60’sNetherlandsNetherlands 60’s60’sSpainSpain 80’s80’sCanadaCanada NoneNone

CountryCountry Number of Cocaine AddictsNumber of Cocaine Addicts Epidemic DecadesEpidemic DecadesUSUS 1,800,000-2,000,000*1,800,000-2,000,000* 80’s80’sCanadaCanada NoneNone* 12,000,000 users of at least once per year* 12,000,000 users of at least once per year


The Western Nations Drug ProblemCountry Policy Response CommentsUS law

enforcementItaly health problem decriminalized

useNetherlands health problem Cannabis legally

availableSpain health problem drug use or

possession, legalSwitzerland health problem heroin

maintenanceplan

England health problem methadoneavailable


Market Analysis

Compare and contrastCompare and contrast– free marketfree market– enforcementenforcement– fiscal policyfiscal policy

excise tax as a control deviceexcise tax as a control device


Market Analysis

conceptsconcepts– market supplymarket supply

marginal cost of production: the additional cost of marginal cost of production: the additional cost of one more unitone more unit

cost of production equals the sum of marginal costscost of production equals the sum of marginal costs revenue = price * quantity soldrevenue = price * quantity sold

– market demandmarket demand price some consumers are willing to payprice some consumers are willing to pay expenditure = price * quantity boughtexpenditure = price * quantity bought consumer surplus: a measure of welfare for those consumer surplus: a measure of welfare for those

consumers willing to pay above the market priceconsumers willing to pay above the market price


Market Analysis

ConceptsConcepts– supply and demandsupply and demand

determines the market pricedetermines the market price– the marginal cost of production = the marginal value of the marginal cost of production = the marginal value of

consumersconsumers

the quantity demanded equals the quantity suppliedthe quantity demanded equals the quantity supplied profit = revenue - cost of productionprofit = revenue - cost of production

– profit, or producer’s surplus, is a welfare measureprofit, or producer’s surplus, is a welfare measure

total welfare benefit = consumer’s surplus + total welfare benefit = consumer’s surplus + producer’s surplusproducer’s surplus

Quantity Produced

Cost ofProduction

Marginal Costof Production

MarginalCost

Quantity

Market SupplyMarket Supply

Market DemandMarket Demand

MarketPrice, PM

Quantity Demanded, QM

RevenueR = PM QM

Market Demand

ConsumerSurplus

MarketPrice, PM

Quantity Demandedand Produced, QM

Demand

Supply

Cost ofProductionTrapezoid

Profit =Revenue -Cost

ConsumerSurplusTriangle

Market Supply and DemandMarket Supply and Demand

Enforcement Policy: Search, Confiscate, ResaleEnforcement Policy: Search, Confiscate, Resale

a

PM

PM

2 a

2 PM

FreeMarketSupply

Search, Confiscate,Resale: Supply

Quantity Produced

Price,MarginalCost

a

2 a

FreeMarketSupply


Quantity Producedand Demanded, QS, C, R

Price,MarginalCost

Demand

FreeMarketPrice, PFM

Search,ConfiscateandResalePrice, PS, C, R

Enforcement Policy: Search, Confiscate, ResaleEnforcement Policy: Search, Confiscate, Resale

Enforcement Policy: Search, Confiscate, BurnEnforcement Policy: Search, Confiscate, Burn

a

PM

PM

2 a

2 PM

FreeMarketSupply


Quantity Produced

Price,MarginalCost

Search, Confiscate, Burn: Supply

QM

QM / 2

a

2 a

FreeMarketSupply


Quantity Producedand Demanded, QS, C, B

Price,MarginalCost

Demand


Search,ConfiscateandBurnPrice, PS, C, B

Search, Confiscate, Burn :Supply

Enforcement Policy: Search, Confiscate, BurnEnforcement Policy: Search, Confiscate, Burn

Fiscal Policy: 50% Excise Tax, Government Keeps the RevenueFiscal Policy: 50% Excise Tax, Government Keeps the Revenue

a

PM

PM

2 a

2 PM

FreeMarketSupply

50 % Excise TaxSupply

Quantity Produced

Price,MarginalCost

Tax/unit = 0.5 Price/unitRevenue - Tax = $20,0002 Plots*P - 2 Plots*T = $20,0002(P - T) = $20,0002(P - 0.5P) = $20,000P = $20,000

a

2 a

FreeMarketSupply


Quantity Producedand Demanded, Q

Demand


After a 50 %Excise Tax:Price, PTax Rate =0.5 P

Price,MarginalCost

Fiscal Policy: 50% Excise Tax, Government Keeps RevenueFiscal Policy: 50% Excise Tax, Government Keeps Revenue

a

2 a

FreeMarketSupply


Quantity Producedand Demanded, Q

Price,MarginalCost

Demand


Price, Pwith a 50%Excise Taxand BuyProgram

50 % Excise Tax and BuyProgramSupply

Fiscal Policy: 50% ExciseTax, Use Revenue to Buy MarijuanaFiscal Policy: 50% ExciseTax, Use Revenue to Buy Marijuana

Documents

Llad Phillips 1 Casual Users, Substance Abusers, and Public Policy The War On Drugs