The History of the War on Drugs in America

The topic for my project will be the War on Drugs, which effectively began with the passage of the Controlled Substances Act of 1970, and the market for illegal drugs that has subsequently emerged from its policies. Analysis of the current structure of the drugs market coupled with the measured costs and benefits of relevant policy will make it possible to determine whether society would be better off if drug exchange and use were made legal; this can be done by comparing the operating costs and related externalities of the War on Drugs to the total social cost - the private cost to the user and any externalities, presumably negative - of drug use itself.

In 1970, the Controlled Substances Act was passed by Congress as a part of the Comprehensive Drug Abuse Prevention and Control Act. This law was aggressively pushed through Congress to attack the production, consumption, and allocation of drugs-largely because of Republicans' promise to crack down on crime during a turbulent time in America's history during campaigning. Drugs were widely viewed as contributing to the social and moral decay that was behind the recent jumps in the crime rate: Violent crimes rose from 29.9 per 1,000 in 1967 to 39.8 per 1000 in 1970 (Infoplease 1). The CSA created the framework for modern-day government intervention in the world of drugs, banning their recreational use entirely, and creating the Drug Enforcement Administration, charged with enforcing the Act, which currently has over 11,000 employees. The CSA created a system that groups every known substance into one of five schedules. These constantly updated classifications essentially represent, in descending order, the threat that its member drugs pose to the welfare of society. MDMA, heroin, and, curiously, marijuana are listed in schedule one. Drugs in the first schedule are explicitly stated as "having no accepted medical use in treatment in the United States" (DEA 1). The enacting of the law was extremely controversial because no constitutional amendment had been sought to explicitly grant the federal government the authority to make drugs illegal, as was done during Prohibition.

Another huge impact of current policy in the War on Drugs has been mandatory sentencing laws for drug offenders that have created a huge surge in the prison population and considerable externalities. These laws, which were established in 1986, force the courts to determine the length of drug-related prison sentences based solely on three criteria: the type of drug found, the amount of drugs in the offender's possession, and the number of the offender's prior convictions (Risley 1). In their 2003 paper, "An empirical analysis of imprisoning drug offenders," Steven Levitt and Ilyana Kuziemko gauge the effect of a 15-fold increase in the number of prisoners convicted on drug-related charges from 1980 to 2000. An important conclusion found in the paper was that, since prison cells have a supply that is nowhere near perfectly elastic, the increase in the number of drug-related convictions causes the early release of many other criminals; the authors call this the "crowdout effect." They estimate that this effect is about fifty-three percent for all crimes, meaning that "for every two new prisoners sent to prison, one represents a real increase in the prison population and the other displaces an existing prisoner who is released early" (Kuziemko and Levitt 19). My policy project will view this displacement as an enormous - and often-overlooked - negative externality caused by current drug policy that works under the assumption that imprisonment of criminals is hugely beneficial for society. Drug use is frequently viewed by policymakers as being littered with negative externalities, while the substantial external costs imposed by the drug laws themselves are sometimes neglected; I will attempt to integrate the effects of this crowdout externality into the total operating cost of the War on Drugs to make cost-benefit analysis more accurate.

Perhaps the most difficult problem in making informed policy decisions regarding drugs is the dearth of quality data that measures the true behavior of an underground market that facilitates exchange, for the most part, in secret. Official budget numbers given by the government can, however, provide some insight into just how much it costs to disrupt this market in the current landscape. In 2005, the explicit cost of the War on Drugs was just over 12.6 billion dollars on the federal level. The largest portion of this funding - just over five billion dollars - was allocated for reducing demand for drugs through systems of treatment and prevention; domestic law enforcement was the second most costly division, requiring 3.3 billion dollars (Office of National Drug Control Policy 3). This number may be too low for several reasons, most notably because it does not include: the lost utility for drug users who lose access to drugs; the forgone wages of those who were employed at the time of their arrest on drug-related charges; the opportunity costs of resources - time especially - for affected members of law enforcement and government; and the negative externalities associated with imprisonment.

Economic research on the subject has concluded that the demand for drugs is largely inelastic; thus, the government's approach through its War on Drugs policies - raising the market price of drugs with measures aimed at curbing demand and restricting supply - is not the optimal course of actions if individuals' behavior will not be substantially influenced by the resulting change in price. In their 2006 paper "The Market for Illegal Goods: The Case of Drugs," Kevin Murphy and Gary Becker conclude that the more inelastic the supply or demand for a good is, the higher the marginal social cost will be for reducing its production through measures that focus on enforcement and punishment for those involved (Becker and Murphy 38). This research will be integral in determining whether the total welfare for society would be improved with legalization. This can address a main concern that many opponents of legalization have: that drug prices would immediately plummet after the huge increase in supply when made legal, leading to a drastic increase in the number of drug users. If the demand for drugs is inelastic, then this drop in price would not cause the substantial increase in consumption that many fear.

The United States' experience with alcohol prohibition during a 13-year stretch ending in 1933 creates an interesting comparison for the current state of illicit drugs in the country. Almost ubiquitously seen as a failure, the Prohibition period is an integral part of many arguments for legalization of drugs. In their book Drug War Heresies, Robert MacCoun and Peter Reuter describe this sentiment: "The prohibition of psychoactive drugs cannot be justified through a cavalier assertion that they are dangerous, not in a nation that allows the promotion and distribution of alcohol and cigarettes and views its Prohibition as an unmitigated failure of government intrusion into private conduct" (Maccoun and Reuter 10).

The policy of alcohol prohibition, however, was vastly different in its composition and structure than the current War on Drugs policies are, so comparison between the two is not without its flaws. For one, alcohol had been legal, and widely used, for hundreds of years before Prohibition was enacted; thus, people had substantial experience with it and, as demonstrated in "A Theory of Rational Addiction" by Gary Becker and Kevin Murphy, past consumption has a tremendous effect on current consumption if the good is addictive (Becker and Murphy 20).

Another clear problem with the Prohibition comparison is that only the buying and selling of alcohol were illegal during the period-not possession or use. Still, current drug policy relates more strongly to Prohibition than any other event in this country's history. The dramatic rises and falls in the crime rate that correspond almost perfectly with the passage and repeal of Prohibition are powerful evidence, even if their roles as direct causes cannot be entirely proven (Levitt 3).

Even though it is not entirely unprecedented, the War on Drugs has proven to be a very difficult and complex issue for policy analysts. The policies enacted have created a black market for illegal drugs whose behavior is not easily measurable; this is a huge problem for legislators because it is this market that the heavily funded policies are trying to manipulate. Ultimately, the War on Drugs is concerned with limiting access to illegal drugs by reducing demand and supply-this will raise the price of drugs and, ideally, prevent their consumption. There is no disagreement over this issue of high price reducing consumption; however, the cost effectiveness of the program is directly called into question, bringing up legalization as a possible option. The first step to making the correct decision on this issue must be to compare the social cost of drug use with the economic costs of operating the War on Drugs; an analysis of these costs will make it possible to conclude whether current government action on the issue is sufficient or if change, possibly in the form of decriminalization or legalization, is needed.

WORKS CITED

Becker, Gary S., and Kevin M. Murphy. "A Theory of Rational Addiction." Journal of

Political Economy 96.4 (1988): 675-700.

Becker, Gary S., and Kevin M. Murphy. "The Market for Illegal

Goods: The Case of Drugs." Journal of Political Economy 114.1 (2006): 38-60.

"Drug Abuse Prevention and Control" U.S. Drug Enforcement Agency, DEA Controlled

Substances Act. 10 February 2006. < http://www.usdoj.gov/dea/pubs/csa.html >

Kuziemko, Ilyana, and Steven D. Levitt. "An Empirical Analysis of Imprisoning Drug

Offenders." Journal of Public Economics 88.9-10 (2004): 2043-66.

Levitt, Steven D. "Review of Drug War Heresies by MacCoun and Reuter." Journal of

Economic Literature 41.2 (2003): 540-4.

MacCoun, Robert J., and Peter Reuter. Drug War Heresies: Learning from Other Vices,

Times, and Places. Cambridge; New York and Melbourne: Cambridge University

Press, 2001.

National Drug Control Strategy: FY 2005 Budget Summary. Office of National Drug

Control Policy. 10 February 2006.

< www.whitehousedrugpolicy.gov/publications/policy/budgetsum04/index.html>