1. Illegal Drugs It’s the Economy, Man Review of Sex, Drugs & Economics Written by Diane Coyle Reviewed by Alan Jennings

2. 3 Views on Drug Use Drug use is Evil –War against drugs for drug-free society Drug use is Illness –Medical Treatment –Social Programs People should be Free to use Drugs –Show tolerance, –As long as it doesn’t harm others Premises

3. Drug Use is Inevitable Greek and Aztec used drugs In some Countries, Up to half the population have used drugs illegally –Can something so popular be illegal? –Can so many criminals be meaningful? Most people say the odd joint does not make a person bad or a criminal Premises

4. Drugs are not addictive In Switzerland, –17% have tried drugs, 2% have used in last year Vietnam Veterans used Heroin –Stopped when coming home Drug consumption is much less in people over thirty Hard drugs are addictive, –But many quit anyways Premises

5. Drugs use and Crime Most income for addicts comes from crime –More than 33% -Drug Dealing –More than 47% -Burglary, Assault & Prostitution Illegal drugs use makes crime seem normal Restricts ghettos from developing –Poverty, Violence Premises

6. Drugs as Market Item What has been observed: Demand Price Therefore Supply Heroin Price# of Deaths Substantial Health Costs Cash Crop for Countries –Normally Poor & Violent Premise

7. Government Intervention Penalties Affects Supply or Demand Supply Side Demand Side Harsh penalties for: Less penalties for users Dealing People cut back use Importing Manufacturing More Risk Economics

8. Competition Decays 1.Prohibition reduces supply 2.Competition is reduced as businesses leave 3.Cost increase 4.Near monopoly Formed by police and customs stopping drugs Enforced violently by existing drug dealers 5.Organized Crime spreads globally Supported by high profits Economics

9. Externalities & Elasticity Private Choices cost society as whole Reason for taxes on drugs (tobacco & spirits) –High public health cost supported by tax revenue Elasticity –How much quantity is affected by cost? –No change, Price is inelastic, Tax affect is small –Changes, Price is elastic, Tax affects significantly Economics

10. Cost/Benefit Analysis Weighing benefits to losses gives insight into best solutions Consider penalties relaxed or use sanctioned Economics Benefit More competition Lower price Less crime, Lower policing cost More taxes Costs More users More health costs Loss of productivity Leads to worse drugs

11. Premises Premises are taken as fact for argument’s basis –No matter how unsubstantiated, false or harmful Sources: –Survey results –Antidotal –Generalizations –Most completely unverifiable Minority trying to enforce opinion on majority –Majority of Americans do not use illicit drugs –More position is spread, the more their own view is justified Drugs are addictive –Drug use against all hazard shows irrational compelling force Response

12. Economics Government affect on Market –Clear example of punitive restrictions Emergence of Monopoly –Demonstrates set of factors leading to monopoly –Ease of production not mentioned, Undermines monopoly Reasons for Government involvement –Treats taxes a revenue Maximize drain on public Ignores concern for citizens well being, only health Response

13. Cost/ Benefit Analysis Other analysis is to result in Cost/ Benefit Analysis Rightly commended as powerful tool However, should mention discretion in evaluating –Costs and benefits should be weighed not just by money Should qualify her conclusion is for her values –Has high value on government profitability –Has high value on independence –Has low value for individual burdens of addiction Ignores broader impacts –Everything would have to then be designed for possible use by people under influence Is currently done as a failsafe, but would then need additional line Response

14. Conclusion Horrible, impersonal views used for analyzing in a skewed but useful manner Alan Jennings Coyle, Diane. 2004. Sex, Drugs & ECONOMICS: An Unconventional Introduction to Economics. Thomson Texere, New York, New York. Chapter 2. pp 8-16.