Tuesday, March 23, 2010

Supply and demand for recreational drugs

Secretary of State Hillary Clinton is in Mexico today to discuss our mutual concerns about the violence associated with drug trafficking. Yesterday's WSJ column by Mary O'Grady does a good job of explaining the futility of drug prohibition in simple economic terms. Money quotes:

I suggest that one or two of Mexico's very fine economists trained at the University of Chicago by Milton Friedman sit down with President Obama's team to explain a few things about how markets work. They could begin by outlining the path that a worthless weed travels to become the funding for the cartel's firepower. In this Econ 101 lesson, students will learn how the lion's share of the profit is in getting the stuff over the U.S. border to the American consumer.

Marijuana use, through medical marijuana outlets and general social acceptance, has become de facto legal in the U.S., and demand is robust. The upshot is that consumption is cool while production, trafficking and distribution are organized-crime activities. This is what I called in a previous column, "a stimulus plan for Mexican gangsters."

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