Dirty Money: The economics behind the drug trade

From a policy standpoint, drug use takes on a much greater significance than the individual choice to use or not. Each year, the U.S. spends an estimated $40 billion on prosecuting and imprisoning drug users and dealers, barring the illegal import of drugs into the country and related anti-drug campaigns.

That expenditure can also be added to lost revenue from not taxing the import and sale of drugs. Though the public health issues must be confronted head on by government, prohibition may not be the most effective means of doing so, nor the most fiscally well-reasoned approach.

Many opponents point to the “War on Drugs” as the most costly war in American history that we are still losing. NPR published a timeline chronicling the history and growing intensification of the War on Drugs.

The piece was published in collaboration with a Frontline documentary, which presents the conclusion reached by interviewees that the U.S.’s current strategy has cost billions and yielded few results at best, and at worst has helped to deepen the violence and drama of the drug trade.

Another study published by the Drug Policy Alliance lists the economic impact of the war on drugs at a national and state level. Though the piece demonstrates that treatment is the most effective way of decreasing drug use, the administration has yet to change course. During the late 80s, at the same time that prison budgets grew 30%, we saw over an 18% cut in funding for higher eduction.

In contrast to U.S. policy, many countries have looked to liberalized drug policy focusing on treatment as opposed to law enforcement. The Netherlands for instance has a more lax drug policy, while Switzerland experimented with “Needle Park” a zone where drugs could be freely bought, sold and used. Both countries however soon reverted to stricter drug policy after their cities became hotspots for “drug tourism,” drawing users from across Europe.

While the DEA stands by their philosophy of strict prohibition, despite the fact that in many cases it leads to clandestine trading, increased violence and government corruption in drug producing countries, rehabilitation and treatment options for addicts have proved the most effective in reducing drug use.

Former head of the DEA, Jack Lawn suggests in the Frontline piece, “Let’s create an organization that says, ‘Well, this year ninety percent of this budget is going to go into education and prevention. Would that work? We won’t know unless we try it. But twenty years of doing it the other way certainly has not worked.’”

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