Government Should Resale the Drugs

TUCSON, Arizona (AP) -- Federal agents have seized nearly $5 million in illegal drugs this week on the border in the Nogales area, authorities said.

The above was the headlines this week. Now the question is, what should they do with the drugs. Destroy them?

Plan A. What is the effect of destroying the drugs. It removes them from the street, potentially putting upward pressure on the prices. Higher prices increases the incentive for others to enter the trade. The more drugs taken off the street, the more incentive for new drug entrepreneurs.

Plan B. The government should resale the drugs. Check them for safety, that they are good quality drugs. Put a seal on them verifying their quality. They could even mark them up some because of the seal. Putting the drug back on the street has several important effects: 1) it keeps the supply of drugs constant, 2) the police make money to fight drugs, and 3) it cuts the drug dealers out of their revenue. In short, apply this system effectively and it makes drug selling unprofitable.

Well, what about the people using the drugs. Well, for the most part, they just keep on using the drugs. Demand is inelastic meaning the demand is not altered much by price. In either case, whether the police put the drugs back on the street or not, the use of drugs is not altered. Temporarily there could be a lowering of inventories, but drug supplies will soon make more to fix the shortfall in inventory to make sure it doesn’t impact their customers.

Ok, Plan A is what we have been trying for 30 plus years. It’s called the Drug War. We have proven that it doesn’t work. Of course, the other half is that we treat people with a drug problem like criminals, unless they are alcoholics, in which case we name clinics after them.