Please consider ‘Mexico eases drug possession law’:

The Mexican government has enacted a law decriminalising the possession of small amounts of drugs, including cocaine and heroin. Mexican prosecutors say the move does not amount to legalisation. They say it is designed to prevent corrupt police from seeking bribes from small-time drug users, and to encourage addicts to seek treatment. The move comes amid a drug war in Mexico that has claimed more than 11,000 lives in the last three years.

Those found in possession of the equivalent of four joints of marijuana, or four lines of cocaine will no longer be viewed as criminals. Instead they will be encouraged to seek government-funded drug treatment, which will be compulsory if users are caught a third time. The new law applies to a wide range of drugs, including heroin and methamphetamine.

Police bribes
The Mexican attorney general’s office says that, previously, individual police officers could choose whether to arrest or just caution small-time drug users, a situation which encouraged bribery. It is hoped this change will free up police time to tackle major drug traffickers. Since President Felipe Calderon launched his military crackdown on the Mexican cartels three years ago, almost 100,000 people have been detained on minor drug possession charges.

The vast majority are later released without charge. Despite this change in the law, the Mexican government says it has no intention of permitting full legalisation of drugs – which some analysts suggest is the only way to take the trade from the hands of criminal gangs. Mr Calderon has said that such a move would be “suicidal” for Mexican society.

It’s no secret that the fight against drug cartels and narco-trafficking has generally yielded only few positive results. In fact, BMI has long been covering the Mexican government’s war against the cartels and the political costs of drug-related violence in the Latin American region. However, the above reads a bit like something from a news reel in 1933, when Prohibition in the US was repealed.

Prohibition proved highly ineffective, doing little to put off alcohol consumption, which began to rise again as early as 1922 and would have most likely surpassed pre-Prohibition levels, even if the act would not have been repealed in 1933. Moreover, Prohibition gave rise to an infamous black market in the 1920s, controlled by the Italian and Irish mob of the day, producing such legends as Al Capone (or Scarface). In short, when the US government decided to intervene for the ‘greater good’ of its citizens, it ended up causing gang crime to soar, wasted tax payers’ money, and incentivised payoffs and bribe taking among officials (not unlike in Mexico).

Faced with these problems (on a massive scale no less), perhaps there may actually be something to the decision to decriminalise illicit drug consumption in Mexico. Indeed, libertarians would point us to the notion of state paternalism. This is the notion that the state adopts a family-like hierarchy, in which it undermines individual rights to act in the interest of its subjects. A present day example of this would be the government raising taxes on cigarettes and alcohol, arguing that consumers should be disincentivised due to the detrimental impact this has on health.

Governments seem to be getting away with it too, as there are growing signs that society seems to be looking for new ways to rid itself of moral responsibility, asking the state to declare war on obesity and smoking. There is even a form of soft paternalism, where people with gambling problems ask casinos to place them on black lists, only to try to get in through the backdoor afterwards.  Creating these ‘cast iron’ structures for society reminds me of Stanley Kubrick’s ‘A Clockwork Orange’ and Steven Spielberg’s ‘Minority Report’.

Libertarians argue for exercising one’s own moral muscle and taking responsibility for your own actions! To be sure, the famous libertarian and economist, Murray N Rothbard, actually referred to the above as a ‘totalitarian cage’, in which something is outlawed because it might lead to a crime. Rothbard argues:

…to outlaw something which might lead to crime is an illegitimate and invasive assault on the rights of person and property, an assault which, again, would far more justify the immediate incarceration of all teenage males.

Inciting Political Risk and Stalling Development
Libertarian views aside, there may actually be a strong case for decriminalising drugs in favour of political stability. Not unlike during Prohibition, the war on drugs has hardly been effective. The famous Plan Colombia during 2000-2006 saw the US spend some US$4.7bn on eradicating coca crop production, directly leading to the cultivation of the crop in Peru and Boliva – further destabilising those countries as a result. High-level corruption, drug smuggling operations and gang crimes continue to haunt most of Latin America, preventing many countries from enjoying political stability and attracting foreign investment (not to mention tourism).

The Economic Dimension
There is also a strong economic case for legalising and decriminalising narcotics. Economists such as Milton Friedman, George Akerlof and Vernon L Smith (among some 500 other economists) have suggested that in pure economic terms, the reduction of supply of narcotics, without a concomitant drop in demand will lead to higher prices. Simple. The higher profits generated by producers will merely encourage greater output numbers, generating higher revenues for suppliers and smugglers, in turn failing to produce a sustainable solution against illicit drugs. Moreover – this takes us back to the political risk dimension – narco-trafficking provides valuable revenue streams to listed terrorist and paramilitary organisations, fuelling the globalisation of and strengthening the ties between international organised crime and terrorism.

Finally, a 2008 study by Harvard economist Jeffrey A Miron estimates that legalising drugs would inject some US$76.8bn into the US economy – US$44.1bn would be saved from law enforcement, and some US$32.7bn would be raised in tax revenue. More and more surveys confirm that an increasing number of economists are pushing for a reform of government drug policy in favour of decriminalisation and legalisation.

There Are Benefits Too, You Know!
Though the final argument about tax intakes may not chime with libertarian views, it would be hard to ignore the immediate benefits of savings on law enforcement and weaponry in the fight against drug smuggling, particularly in Mexico’s case. Other obvious benefits, as is currently considered by investors following Mexico’s decision in August, are the tourism this will generate (look at Amsterdam!), and the lifting of restrictions to experiment with illicit drugs in medical research. And while drugs are certainly very harmful, the biggest victim of decriminalising narcotics may end up being crime itself. Perhaps the idea is not so crazy after all!