George on drugs

Almost all is sensible except:

His report does raise one good argument, however. At present the trade in class A drugs is concentrated in the rich nations. If it were legalised, we could cope. The use of drugs is likely to rise, but governments could use the extra taxes to help people tackle addiction. But because the wholesale price would collapse with legalisation, these drugs would for the first time become widely available in poorer nations, which are easier for companies to exploit (as tobacco and alcohol firms have found) and which are less able to regulate, raise taxes or pick up the pieces.

I\’m not quite convinced. The wholesale price of drugs in their country of production (ie, before they\’ve had to cross a border, their first serious contact with prohibition) is already very low.

I can see that the retail price will fall with legalisation, but not sure about wholesale.

4 thoughts on “George on drugs”

  1. There’s a thought. how much does opium (and derivatives) cost in Afghanistan- and how many Afghans are addicted?

  2. Pat: indeed, cocaine base is very cheap on the streets of Lima, which has a gigantic addiction problem.

  3. Why would the wholesale price in the country of origin go down? Can anyone explain how this might happen? (Note I do not think it would, I’m just making sure there’s not a mechanism I’ve not thought of!)

    Tim adds: 1) It’s not exactly legal to produe drugs in most countries. So there would be a lowering of the risk premium.

    2) Economies of scale in a legal business?

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