Tuesday, August 17, 2004

Half Baked

Anita Hamilton, "This Bud's for the U.S", Time, 2004 August 23.
[The trade in marijuana] has led to an increase in drive-by shootings in Canada by rival dealers, and to "grow-rips," in which competing clans break into growers' houses to steal their crops, according to Canadian police. The body of the suspected ringleader of a trafficking group was found stabbed in the neck in a ditch in Coeur d'Alene, Idaho, in November 2002. "It's still a dangerous drug," says James Capra, the DEA's chief of domestic operations. "People are killing each other over it."
Oh, for f*ck's sake. People kill each other over diamonds. Does that make diamonds dangerous?
"If the perception is that it will be easier to get marijuana in Canada ... then it creates problems at the border," Paul Cellucci, U.S. ambassador to Canada, said at a Toronto Board of Trade dinner in February.
Now here’s a more subtle argument that gets to the heart of the matter. A situation where a commodity is criminalized in most countries but much more easily available in one or a few creates market distortions with predictable consequences. One is the almost inevitable development of an illicit trade.

Another likely consequence is what the Netherlands, under pressure from its neighbors, is now characterizing as the problem of “drugs tourism”. That consumers of a particular good in a particular country incur costs when their country criminalizes that good is not disputed. What is not often mentioned (perhaps it’s considered too obvious to bother acknowledging) is that endless waves of feckless youngsters out to consume a substance that knocks a couple dozen points off their IQs create negative externalities of their own. (None of which is to say that their tourist dollars don’t make up for it, just that there are negative externalities for the more liberal country.)

One can address the asymmetry by exerting pressure on the more liberal country to adopt the stricter country’s less tolerant approach, as the Bush Administration has done. Or one can address the negative externalities more specifically, such as the Netherlands’ trial ban on sales of ganja to foreigners in the border town of Maastricht. (As if that’s going to stop some entrepreneurial Dutchman from starting a “middleman” service.) Of course, the simplest thing would be decriminalization by the stricter country, eliminating the downward pressure on supply (and consequent upward pressure on price and profitability) that criminalization generates as well as the attraction to more unsavory elements of an in-demand commodity that cannot be legally traded. If the government is so inclined, it can regulate and tax the sh*t out of it.