economy of regulation is fragile: once a legal
industry is created, it will organize to undercut
restrictions that reduce its profitability. In the
half century after repeal of Prohibition, the al-
cohol industry successfully pushed for a more
permissive system with lower taxes. Besides, it
is unclear whether, in a highly regulated re-
gime for selling addictive drugs, the govern-
ment would be part of the solution or part of
rience of the states that have created lottery
monopolies for themselves. In search of reve-
nue, they have aggressively advertised lotteries,
inviting the poor and those with gambling
problems to spend more on the game.
cigarette smoking, has its origins in adoles-
cence. State-based paternalism in the name of
protecting the young against their own bad
judgment is a well-established tradition. The
decision to raise the legal drinking age to 21
reflects a view that even those aged 18, 19 and
20 need protection from themselves. Given
that most drug use begins before age 21, and
that some share of those who start will be-
come addicted in ways that only an econo-
mist could call "rational," legalization poses
contemplate.
genuinely agnostic. My principal concern is
ing the issue. In weighing the pros and cons,
three factors are salient.
strongly suggests that legalization will result
in an increase in both drug use and addiction.
But past experience offers little basis for even
crude estimates of the increase.
would fall sharply: most of the adverse conse-
quences crime and disease are largely a re-
sult of the circumstances of drug use in an
environment that keeps prices high and nee-
dles dirty. But what if the increase in heroin
addiction were 500 percent? That figure
sounds high, but even with an increase of that
magnitude, three times as many Americans
would be addicted to alcohol as were addicted
to heroin.
city collapse and, of course, law enforcement.
But Rosalie Pacula, a senior economist at the
RAND Corporation, reminds us that the cost
to new addicts could be very high. For exam-
ple, she estimated that the total cost of meth-
amphetamine use in the United States was
$23 billion in 2005 more than half of which
was borne by users suffering the intangible
burdens of addiction. The bottom line, then:
legalization might well reduce the net harm
to society, but that is hardly a certainty.