Milton Friedman - Nobel Laureate in Economics and adviser to Ronald Reagan - supported legalizing and taxing marijuana. Stephen Easton's classic paper advocating marijuana legalization was published by the Fraser Institute. Why do so many right-leaning economists favour marijuana legalization?
Conservative economists typically believe that a person is a best judge of what is in his or her own interests. From this premise it follows that the government should not try to constrain or influence people's behaviour. Yes, marijuana use has well-documented negative side effects, from memory loss to male breast growth. Yet if fully informed individuals decide that these personal costs are worth accepting for the benefits that marijuana use brings, the government should respect that choice. As Willie Nelson says “I smoke pot and it is none of the government's business.”
This libertarian-type argument for legalization rests on two assumptions. First, a person's choices only affect herself. There is a case for interfering in the marijuana market if one person's use interferes with other people's enjoyment of life. For example, some claim that marijuana acts as a gateway drug, leading to increased heroin and cocaine use, and these drugs are dangerous. The standard response to this argument is that the criminalization of marijuana amplifies any potential gateway effects, by bringing people who are looking for a recreational experience into contact with drug dealers. My reading of the literature is that the worst that can be definitively said about marijuana is that it's as bad as alcohol and tobacco (see, for example, this study).
Second, the libertarian argument relies on the assumption that people are fully informed. Yet teens, in particular, are unlikely to be aware of - or may dismiss as pure propaganda - the studies linking marijuana use to increased risk of schizophrenia, for example.
Because of the possibility of some harm to others, and because of imperfect information, there is a case for discouraging marijuana use with taxation - just as taxation is used to discourage the consumption of alcohol and tobacco - and restricting the sale of marijuana to minors. A complete ban is not justified as long as the pleasure marijuana brings to users outweighs the harms it causes others.
A second reason why conservative economists often favour legalization and taxation comes is that, as economists, they see through framing effects. Criminalization and taxation are, in important respects, equivalent. They discourage marijuana production and consumption in the same way, by making it more expensive. For growers and consumers, criminal prosecution is just a cost of doing business. For example, if the probability of being caught in possession of marijuana is one in a thousand, and the fine if caught is $10,000 per ounce, criminalization adds $10 per ounce ot the cost of drugs: the probability of being caught times the fine if caught, or 1/1000*$10,000. As a first approximation, this is equivalent to a $10 per ounce tax:
(Note: I just made up those numbers - California's proposed marijuana legalization and control act proposed a $50 per ounce tax, Stephen Easton estimated a tax of about $7 per "cigarette" would be appropriate).
Now a tax and a ban are not precisely equivalent. For the homeless and hungry, finding the wherewithal to buy expensive, taxed marijuana may be difficult, but jail time is not much of a threat. Young teens, as minors, do not face the same risks of criminal prosecution as adults, thus criminalized untaxed marijuana may actually be cheaper for teens than legal, taxed drugs such as alcohol. People are notoriously bad at estimating the odds of low-probability events, so may over- or under-estimate the risk of detection. Prosecution is less effective as a deterrent to the risk loving segments of the population, such as (generally speaking) young men. While, on aggregate, taxation and prohibition may have similar deterrent effects, the impacts on specific groups will differ. Yet these differences may, especially with regard to teens, strengthen the case for legalization and taxation, rather than weaken it.
A third reason why conservative economists often favour legalization is that they believe in incentives. Criminalizing an activity does not stop it from happening - people simply weigh the risks and the rewards. Growing marijuana is a lottery: if you're arrested, you lose; if your plantation is undetected, you win, and make super-normal profits to compensate you for the risk you've taken. Those profits continue to attract new growers. As Steve Easton argues:
In Canada, and more specifically British Columbia today, as with alcohol nearly a century ago, marijuana is too easily produced and exported to be controlled with the tools available to law enforcement in a free society. The return on investment is sufficiently great so that for each marijuana growing operation demolished, another takes its place.
Because marijuana is so easy to grow, and so profitable, preventing its cultivation is a losing battle.
Another reason for conservatives to favour legalization and taxation of marijuana is that they do not like paying taxes. Criminalization costs. According to a 2005 US study, legalization would save state and local governments $5.3 billion annually in reduced enforcement costs, while the federal government would gain another $2.4 billion federally. Locking up people for possession of a small amount of marijuana is a waste of resources, and good fiscal conservatives deplore waste.Taxing marijuana would be a money-maker: $6.2 billion annually, if marijuana were taxed at rates similar to those on alcohol and tobacco, according to this same 2005 report.Those revenues could be used to reduce deficits, or fund reductions in the taxes paid by conservative economists.
Conservatives have lots of good reasons to favour legalization. The people who should be fighting legalization are the small scale growers: little family-run organic pot farms wouldn't stand a chance against industrial scale agri-business.