8.29.2012

Supply and Demand for Illegal Drugs

What happens when a government makes it illegal to sell a high demand good? Distribution of that good goes underground to black markets, which tend to be defined by secrecy, crime and a lack of control and taxing ability. The Netherlands is providing a great example of this phenomenon currently which drug war proponents in the US and elsewhere should probably pay attention to.

Amsterdam, in particular, has been known as a haven for the European traveler looking for a redlight-drenched good time. One of the vices visitors had grown accustomed to was the coffee shop, essentially locations where marijuana was available. Under this regime, transactions occured in the open, were regulated and taxed and led to tourism revenues. Unfortunately, with these benefits came some crime including traffic violations and vandalism. Therefore, government officials have made it illegal for non-Dutch residents to visit coffee shops.

As a result, underground drug dealers have taken to selling marijuana, not only to tourists, but to residents who don't want to go through the hassle (and visibility) of documentation. Coffee shop revenues are down, tourism is down, and tax revenues have declined. And, while I haven't seen statistics on this yet, it stands to reason that the crime associated with illegal drug sales will take on a slightly different flavor than vandalism and traffic violations.

There are those who are against drug use. Some such individuals can provide very good reasons why drug use is bad, how it can hurt society and why it shouldn't occur. However, as a practical matter, drug use is going to occur; maybe it is best to figure out a way to manage this use without solutions centered upon pushing it into the shadows...

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