Stumbling in the dark
Jul 26th 2001
From The Economist print edition
Moral outrage has proved a bad basis for policy on illegal
drugs, says Frances Cairncross. Time for governments to go
back to first principles
IF ONLY it were legitimate, there would be much to admire about
the drugs industry. It is, to start with, highly profitable. It
produces goods for a small fraction of the price its customers are
willing to pay. It has skilfully taken advantage of globalisation,
deftly responding to changing markets and transport routes. It is
global but dispersed, built upon a high level of trust, and markets
its wares to the young with no spending on conventional
advertising. It brings rewards to some of the world's poorer
countries, and employs many of the rich world's minorities and
unskilled.
However, it is an odd business. Its products, simple agricultural
extracts and chemical compounds, sell for astonishing prices. A kilo
of heroin, 40% pure, sells (in units of less than 100 milligrams) for
up to $290,000 on the streets of the United States—enough to
buy a Rolls-Royce car. These prices directly reflect the ferocious
efforts by the rich countries to suppress drugs. The effect is to
drive a massive wedge between import and retail prices. The
import prices of both heroin and cocaine are about 10-15% of
retail prices in rich countries. In poor countries, the ratio may be
more like 25%. Add a little more for seizures, valued at import
prices, and the grand total is probably about $20 billion. That
would put the industry in the same league as Coca-Cola's world
revenues.
Taken at retail prices, it is almost certainly the world's largest illicit
market, although probably smaller than the widely quoted estimate
by the United Nations Office of Drug Control and Crime Prevention
of $400 billion, which would put it ahead of the global petroleum
industry. Every number about the production, consumption and
price of drugs involves much guesswork, a warning that applies all
through this survey. But global retail sales are probably around
$150 billion, about half the sales of the (legitimate) world
pharmaceutical industry and in the same league as consumer
spending on tobacco ($204 billion) and alcohol ($252 billion).
The estimate of world drug sales comes from Peter Reuter, an
economist at the University of Maryland and co-author (with
Robert MacCoun) of a comprehensive new study of illegal drugs on
which this survey frequently draws. He notes that the official
estimate of retail drug sales in the United States is $60 billion,
making America easily the world's most valuable market. European
sales are at most the same again, probably less. Pakistan,
Thailand, Iran and China account for most of the world's heroin
consumption, but prices are low, and so sales in total are probably
worth no more than $10 billion. Add in Australia and Canada; add,
too, Eastern Europe and Russia, where sales are growing fast, but
probably still make up less than 10% of the world's total. Exclude
European marijuana, much of which is domestically produced.
It may seem distasteful to think of drugs as a business, responding
to normal economic signals. To do so, however, is not to deny the
fact that the drugs trade rewards some of the world's nastiest
people and most disagreeable countries. Nor is it to underestimate
the harm that misuse of drugs can do to the health of individuals,
or the moral fury that drug-taking can arouse. For many people,
indeed, the debate is a moral one, akin to debates about allowing
divorce, say, or abortion. But moral outrage has turned out to be a
poor basis for policy.
Nowhere is that more evident than in the
United States. Here is the world's most
expensive drugs policy, absorbing $35
billion-40 billion a year of taxpayers'
cash. It has eroded civil liberties, locked
up unprecedented numbers of young
blacks and Hispanics, and corroded
foreign policy. It has proved a dismal
rerun of America's attempt, in 1920-33, to prohibit the sale of
alcohol. That experiment—not copied in any other big
country—inflated alcohol prices, promoted bootleg suppliers,
encouraged the spread of guns and crime, increased hard-liquor
drinking and corrupted a quarter of the federal enforcement
agents, all within a decade. Half a century from now, America's
current drugs policy may seem just as perverse as Prohibition.
For the moment, though, even having an honest debate about the
policy is extremely difficult there. Official publications are full of
patently false claims. A recent report on the National Drug Control
Strategy announced: “National anti-drug policy is working.” In
evidence, it cited a further rise in the budget for drugs control; a
decline in cocaine production in Peru and Bolivia (no mention of
Colombia); and the fact that the proportion of 12th-grade
youngsters who have used marijuana in the past month appears to
have levelled off at around 25%. If these demonstrate success,
what can failure be like?
Nearer the truth is the picture portrayed in “Traffic”, a recent film
that vividly demonstrated the futility of fighting supply and
ignoring demand. In its most telling scene, the film's drugs tsar,
played by Michael Douglas, asks his staff to think creatively about
new ideas for tackling the problem. An embarrassed silence
ensues.
This survey will concentrate largely (but not exclusively) on the
American market, partly because it is the biggest. Americans
probably consume more drugs per head, especially cocaine and
amphetamines, than most other countries. In addition, the effects
of America's misdirected policies spill across the world. Other rich
countries that try to change their policies meet fierce American
resistance; poor countries that ship drugs come (as Latin American
experience shows) under huge pressure to prevent the trade,
whatever the cost to civil liberties or the environment.
Moreover, America's experience demonstrates the awkward reality
that there is little connection between the severity of a drugs
policy on the one hand and prevalence of use on the other. Almost
a third of Americans over 12 years old admit to having tried drugs
at some point, almost one in ten (26.2m) in the past year. Drugs
continue to pour into the country, prices have fallen and purity
has risen. Cocaine costs half of what it did in the early 1980s and
heroin sells for three-fifths of its price a decade ago. Greater
purity means that heroin does not have to be injected to produce
a high, but can be smoked or sniffed.
A matter of fashion
However, American experience also suggests that the pattern of
drug consumption is altering, arguably for the better. Casual use
seems to have fallen; heavy use has stabilised. More American
teenagers are using cannabis (which, strictly speaking, includes
not just the herb—marijuana—but the resin), but the number of
youngsters experimenting with cocaine or heroin has stayed fairly
steady. The American heroin epidemic peaked around 1973, since
when the number of new addicts has dropped back to the levels of
the mid-1960s. The average age of heroin addicts is rising in many
countries—indeed, the Dutch have just opened the first home for
elderly junkies in Rotterdam. America's hideous crack epidemic has
also long passed, and cocaine use has retreated from its 1970s
peak. And a recent study shows that the likelihood of proceeding
from cannabis to harder drugs such as cocaine or heroin has fallen
consistently for a decade. “We are largely dealing with history,”
says Mr Reuter. “The total population of drug users has been
pretty stable since the late 1980s.”
This is not an unmixed blessing: heavy users seem to be using
more drugs, and to be injuring and killing themselves more often.
As with cigarette-smoking, drug-taking is increasingly
concentrated among the poor. And in some rich countries other
than America, such as Britain, the number of both casual and
heavy users of most drugs is still rising. In the poorer countries
and in Central and Eastern Europe too, drugs markets are
flourishing. India and China are probably the fastest-growing large
markets for heroin.
But in the rich countries, the drugs that
increasingly attract young users are
those that are typically taken
sporadically, not continuously: cannabis,
ecstasy, amphetamines and cocaine. In
that sense, they are more like alcohol
than tobacco: users may binge one or
two nights a week or indulge every so
often with friends, but most do not crave
a dose every day, year in, year out, as smokers generally do. That
does not mean that these drugs are harmless, but it should raise
questions about whether current policies are still appropriate.
Today's policies took shape mainly in the mid-1980s, when an
epidemic of crack cocaine use proved a perfect issue around which
President Ronald Reagan could rally “middle America”. His
vice-president, George Bush, called for a “real war on drugs”,
which caught the mood of the time: opinion polls showed that
drugs were at the top of people's lists of worries. By the early
1990s the crack scare had faded, but a series of increasingly
ferocious laws, passed in the second half of the 1980s, set the
framework within which Mr Bush's war on drugs is still waged
today.
This framework is not immutable, although formidable vested
interests—including the police and prison officers—now back tough
drugs laws. Attitudes to policy change over time (see article), and
drugs policies in many countries are changing with them.
Governments are gradually putting more emphasis on treatment
rather than punishment. Last autumn, in a referendum, California
voted to send first- and second-time drug offenders for treatment
rather than to prison. And the law on possessing cannabis is being
relaxed, even in parts of the United States, where several states
now permit the possession of small amounts of it for medical use.
In Europe and Australia, governments have relaxed the
enforcement of laws on possessing “soft” drugs. In Switzerland,
farmers who grow cannabis for commercial sale within the country
will be protected from prosecution if a new government proposal
goes through. In Britain, Michael Portillo, a top opposition
politician, advocates legalisation. But it is hard for an individual
country to set its own course without becoming a net exporter, as
the experience of Europe's more liberal countries shows.
Ultimately, the policies of the world's biggest drugs importer will
limit the freedom of others to act.
At the heart of the debate on drugs
lies a moral question: what duty does
the state have to protect individual
citizens from harming themselves? The
Economist has always taken a
libertarian approach. It stands with
John Stuart Mill, whose famous essay
“On Liberty” argued that:
The only purpose for
which power can be rightfully
exercised over any member of a
civilised community, against his
will, is to prevent harm to
others. His own good, either
physical or moral, is not a
sufficient warrant. He cannot
rightfully be compelled to do or
forbear because it will be better
for him to do so, because
it will make him happier,
because, in the opinions of
others, to do so would be
wise, or even right. These
are good reasons for
remonstrating with him, or
reasoning with him, or
persuading him, or
entreating him, but not for
compelling him, or visiting
him with any evil in case
he do otherwise. Over
himself, over his own body
and mind, the individual is
sovereign.
This survey broadly endorses that view. But it tempers liberalism
with pragmatism. Mill was not running for election. Attitudes
towards drug-taking may be changing, but it will be a long time
before most voters are comfortable with a policy that involves only
remonstration and reason. People fret about protecting
youngsters, a group that Mill himself accepted might need special
protection. They fret, too, that drug-takers may not be truly
“sovereign” if they become addicted. And some aspects of
drug-taking do indeed harm others. So a first priority is to look for
measures that reduce the harm drugs do, both to users and to
society at large.