Drug War

New Cato Paper Sees $88 Billion Annual Budgetary Benefit From Calling Off the War on Drugs


In a new Cato Institute paper, Harvard economist (and Reason contributor) Jeffrey Miron and NYU graduate student Katherine Waldock estimate that ending the war on drugs would save more than $40 billion a year in enforcement costs (about $16 billion federal, $26 billion state and local) while allowing collection of some $47 billion a year in new tax revenue. Although marijuana is by far the most popular illegal drug and accounts for half of all drug arrests, Miron and Waldock calculate that legalizing it would yield just one-fifth of the $88 billion in total savings and revenue:

Only about $17.4 billion in budgetary improvement can be expected to come from legalizing marijuana in isolation. Yet the current political climate gives no indication that legalization of other drugs is achievable in the short term. So the budgetary impact from the politically possible component of legalization—marijuana—seems fairly modest.

Marijuana accounts for a relatively small share of the savings largely because offenses involving other drugs are more likely to result in prison time and tend to trigger longer sentences. Cocaine and heroin, with something like 6 million past-year users (according to the government's survey data), account for 15 percent of state felony convictions and 10 percent of state prisoners, compared to 10 percent and less than 2 percent, respectively, for marijuana, which is consumed by maybe 26 million Americans a year. Cocaine and heroin, though much less popular, also account for a bigger share of the U.S. black market's estimated dollar value—$87 billion vs. $18 billion.

Miron and Waldock's paper considers only the budgetary impact of repealing drug prohibition. Many other costs of the war on drugs—including the basic loss of control over one's body and brain, the erosion of Fourth Amendment rights and other civil liberties, interference with religious rituals and medical practice, black market violence, official corruption, lives disrupted by arrest and incarceration, terrorism subsidized by drug profits, and deaths and injuries from tainted or unexpectedly strong drugs—are not so easily expressed in dollars.

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  1. Surprise! An organization with unknown means of funding comes out in favor of stopping protecting children and other people from drugs.

    Let me know when an objective source like ONDCP, which doesn’t rely on questionable private donors, comes to this conclusion.

    1. Re: Hobie Hanson,

      An organization with unknown means of funding comes out in favor of stopping protecting children and other people from drugs.

      Placing people in jail for drug use is protecting them from drug use?

      1. Well, if Bush and Obama had been thrown in jail for their past drug use, it sure would have protected us.

        And like, for the children, or something. 9/11.

    2. Unknown means of funding?


      Take a look at the latest report from 2009, starting with page 48 if you want to begin to learn from where their funding comes.

    3. Are you seriously suggesting that the Office of National Drug CONTROL Policy doesn’t have a dog in the fight? If prohibition ends, their jobs go with it.

      As an aside, if you’re so profoundly supportive of continuing the drug war, please explain the following:
      (1) THC, the active ingredient in marijuana, is a Class 3 narcotic when synthetically made. This means it’s got a recognized medical use. THC, when produced naturally through marijuana, is classified as a Class 1 narcotic, meaning no recognized medical use. How is the same drug a legitimate medical Rx if produced through one means but not the other?

      (2) Why is it that states with decriminalization (e.g. Portugal/Holland) have lower drug overdose rates, drug abuse rates, and drug related costs than the United States? As a subquestion, why do fewer teenagers in Amsterdam smoke marijuana than in America?

      (3) If marijuana really has no legitimate medical value, why not allow for a double blind study, a practice that the FDA has categorically rejected and halted a number of times?

      Finally, (4) if it’s really about protecting kids from drugs, why do we still sell adderall,ritalin, and other opiate derived pain killers that are abused and sold? If banning drugs worked so well, why not ban these?

      1. Re: Jeff,

        Are you seriously suggesting that the Office of National Drug CONTROL Policy doesn’t have a dog in the fight? If prohibition ends, their jobs go with it.


        You hit the nail in the head.

  2. For God’s sake, drugs are bad and destroying our communities. We need more SWAT units. The debate is over.

    Threadjack attempt:

    The people’s favorite libertarians, and probably the most famous libertarian in the world just might not be a libertarian. This is shocking news!

    1. Bill Maher was never a libertarian. He just didn’t want the collectivist Nanny State to take away his drugs and sex. All that other stuff, monitoring, redistribution of wealth, social engineering, is all good to him.

      1. Practically everyone is somewhat libertarian. It’s just a matter of degree. Sometimes when people write “libertarian” they’re referring only to radical libertarians, other times not.

  3. “ONDCP”

    Old Ninny Dunce Cap Posse?

    1. Fucking Acronyms, how do they work?!

  4. Did they count/speculate about the second-order savings – reduced spending on police, elimination of productivity lost due to productive citizens being jailed, that kind of thing?

    1. What would that do for GDP overall?

      1. Late to the party, but I was going to write about that. Imagine adding 400,000 people to an economy. Even if they only got burger-flipping jobs, say each person added $25,000 to the economy.

        That’s $10 billion dollars.

        There are other aspects, too. Our trade imbalance is under-reported due to the fact that billions of dollars go overseas to purchase drugs. While there’s no way we’re ever going to manufacture cocaine in the US (well – perhaps Hawaii), marijuana, opiates, amphetamines, hallucinogens could all be made domestically, stopping the outflow of an already weakened dollar.

  5. They must be assuming a pretty inelastic demand for coke and H if they think that legalizing MJ wont lead to people substituting.

    1. Absolutely, John; this is a point I often feel has been overlooked: once cannabis is legal, I’m sure we’ll find a lot of that happens. Many who get caught up in complications and have difficulties with drugs (a relatively small minority of people who use officially bad drugs, I should hasten to add) use alcohol, which is a genuinely (not just officially) bad drug, as a substitute. As soon as access to cannabis becomes less complicated, I’m sure we’ll see a lot of people using it as an exit gateway drug – a role which alcohol has been unable to satisfactorily carry off.

      In time, I believe, once it’s efficacy becomes clearer to a wider spectrum of health (service) professionals, programmes will be devised and implemented to take most efficient advantage of this aspect of the healing power of cannabis.

      Sorry, Big Pharma, you’re time is up. You’ve had your fun (and made lots and lots of money) now get out of the way! (Why, oh, why can’t they make a graceful exit and die back with dignity? All Things Must Pass, after all.)

  6. The war on drugs has been more harmful than the drugs: in money, personal tragedy, official corruption, militarization of policing, wrongful convictions, theft by forfeiture, and prosecutorial misconduct and abuse

  7. WastingtonDC: Solid article, and truth telling, as it is noted that we spend over half a trillion taxpayer dollars yearly, to establish and enforce a public employee union guarantee of 17,000 percent profits, untaxed, for any prohibited drug the billionaire drug cartels can smuggle into our country. It is of primary importance to know, and deal with the facts, that the drug war on our children, by the cartels and our public employee unions, and the police and military of drug exporting nations, is far and away more expensive, in lives and treasure, than the piddling hundred billion or more that could be saved on pot legalization alone. There was no mention of the uncounted and inestimable added human and societal costs of graduating those tens of thousands of our feckless, albeit non-violent offending children from shorter, or longer sentences in career criminal academies, also known as larger cellmate’s bed partner obedience schools. I cannot remember any article by a sapient person that has ever argued that those subjected to same sex rape, or afforded career criminal advisors on how to become serious criminals, get strapped up, and work the drug markets, as violently as necessary, to pay for their cravings, are successfully cured of their mistaken views on drug consumption hobbies. Permanent loss of driving privileges, contact with minors, or any machinery operator’s licenses, with bio metric non driver identification cards for all persons purchasing formerly prohibited drugs produced by licensed and taxed firms in America, and sold only through competent licensed pharmacy outlets would eliminate the untaxed billons flowing to the producer cartels, and their deadly American vendors. The pharmacy personnel would not have 17,000 percent profit incentives to hook more children, or move them up to more profitable, deadly and addictive drugs. It would remove the profit motives for the murders of 26,000 humans, as experienced around the southern border impact zones in the past five years. It would also end the war on our children in short order, as the sane ones, or most of them, would rather give up their right to get high, before they’d risk losing any chance to ever drive another car. That said, allowing public employee union memebers to take unaccounted for cash, cars, et al, from those even remotely involved in drug use, with their teams allowed to buy toys for the SWAT team boys and girls with their patently illegal seizures, is only slightly removed from New Orleans, NJ, et al public employee union members selling the drugs, or transporting them to favored drug dealers, for personal profits as reported in media, and anecdotally on the streets, for years. It may be perfectly reasonable to open up free fire zones outside CONUS, that is outside the continental limits of the US, and US law, to train anti terror snipers whilst killing foreign cartel members, or downing ships, submarines and aircraft clearly hauling drugs into America. It is entirely different to allow wholesale use of quasi-constitutional methods that violate American’s constitutional privacy rights, and take their property, lives and posterity, often without the formality of a criminal conviction. Worse, vulnerable non violent offender citizens are thrown into the briar patch, with utterly violent criminals, before and after conviction, by authorities admittedly unable to protect them from rape, murder and life destroying brutalisation by deadly violent prisoners, or too often, by public employee union members too long exposed to the same deadly violent prisoners. If we cannot provide non violent youths equal protection under the law, as in affording them the same ease and comfort enjoyed by Bernie Madoff, in his tennis camp, then we should not be allowed to incarcerate them at all before conviction, nor to place them in any situation after conviction, for even an hour, in which any violent offender could harm them. We can afford to fine them heaviy, and replace their driver’s licenses with drug impaired non driver identification cards. We cannot afford to put them in general populations of prisoners that will rape and mutilate them, at their pleasure, for fun or profit. Pay the costs of safe accomodation for non violent prisoners, or fine them, bracelet their ankles, and send them home to support themselves, or waste their families resources.

    1. Wow, you need to use paragraphs. Most of us recognize the WOD as the utter insanity it is, but you have to ask yourself what happens to all the vested interest in it. Can you imagine the impact on the unemployment rate if all those people dependent on the WOD and the enforcement and prosecution of vice “crimes” in general for their livelihood had to find honest, useful employment.

      I know I have said it before, but the truth of things counts for nothing in the end. And I have also said before that the war on drugs is working just exactly as it is supposed to be working. It is accomplishing exactly its actual intended purpose – it is funneling money from the pockets of taxpayers to the pockets of those who have found a way to profit from the hysteria over drug use.

      1. Broken windows.

      2. It is accomplishing exactly its actual intended purpose – it is funneling money from the pockets of taxpayers to the pockets of those who have found a way to profit from the hysteria over drug use.

        It’s more important purpose has always been to help assholes get elected.

        That purpose may be coming to an end.

  8. Never really thought about it that way. Makes sense dude.


  9. All (yes, all) the polls now have prop 19 winning in CA… I love the show-down with the feds this instigate.

  10. This is my nomination in the Arguments in Favor of Registration and Licensing of Keyboards contest.

    1. . . .that is, the single-paragraph comma plantation offered by Mr Lomax is my nomination.

      Pretend you’re a Chicago voter, and the Enter key is your ballot . . .vote early and vote often!

  11. The Conservatives sent a message to the Republicans by withdrawing their support in the last election and fighting hard against RINOs in this year’s primaries. It pushed the Republican party closer to their philosophy. When will the drug legalization crowd go after the DINOs?

  12. Alcohol prohibition in the US run from 1919 to 1933 – Now google ‘The Great Wall Street Crash’ and see when that happened!

    During alcohol prohibition, all profits went to enrich thugs and criminals. Young men died every day on inner-city streets while battling over turf. A fortune was wasted on enforcement that could have gone on treatment. On top of the budget-busting prosecution and incarceration costs, billions in taxes were lost. Finally the economy collapsed. Sound familiar?


    If you have liberty then expect prosperity, but there’s most definitely no chance of prosperity without liberty.

  13. Part of an editorial from El Diario of Juarez City, after one of their reporters was gunned down by aleged gangsters:

    “We bring to your attention that we are communicators, not mind-readers. Therefore, as workers in information, we want you to explain to us what you want of us, what you want us to publish or stop publishing, what we must do for our security.

    “These days, you are the de facto authority in the city, because the legally instituted authorities have been able to do nothing to keep our co-workers from continuing to fall, although we have repeatedly asked this of you. Consequently, facing this undeniable fact, we direct ourselves to you, because the last thing we want is that you shoot to death another of our colleagues.”

    From: http://www.lewrockwell.com/reed/reed187.html

    The so-called War on Drugs, being carried out by the Harvard graduate (Master of Public Administration) presidente Felipe Calderon, as a way to appease the imperial forces of the US FedGov who has, in the past and present, hinted at intervening militarily in Mexico.

    Shame on you all, for allowing this destructive war to happen in my country. SHAME ON YOU, ALL.

    1. What good is misery if you can’t share it with your neighbors? By the way, I don’t accept the blame anymore than you accept the blame for what is happening in Mexico. There powerful vested interests who are devoted to keeping the drug war going. For all our self righteous talk about land of the free and liberty for all, most Americans feel and in fact are powerless to make any meaningful change in the way this country is run. People kid themselves that they have a voice. They do not.

  14. To Jeff:

    Netherlands had lower drug rates to begin with–rates went up following decriminalization. If the policy is so great, why were so many coffee houses shut down?

    No one here so much as mentions higher social and health care costs from increased drug use and addiction, DUIs, lost workplace productivity, child abuse, etc.

    Does Legalizing drugs mean prescription drugs of abuse should be available on demand too then? ALL drugs sold over the counter? And these would be available to all ages? Since drug use starts in teenage years and reaches its peak at 25, if you believe in an age restriction as with alcohol, wouldn’t this continue a black market as the demand would be high for those ages? Wouldn’t we still need law enforcement. Alcohol related arrests are higher than marijuana arrests, partly because of higher use.

    And how would you regulate the purity and safety of these drugs? Would you have warning labels, or is that too much regulation?

    Were these factored into this equation?

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