Don’t forget the benefits

The past fortnight has seen a significant amount of discussion on the issue of drugs.   The Law Commission released a report stating that we need to limit the availability of alcohol, the government increased taxes on tobacco, and the police raided hydroponic stores to cut back on the medium term supply of cannabis.   Each of these policy actions took place under the guise of "minimising harm", but I suspect that each of these actions will only make our civilised society worse off.

Now don’t get me wrong, there are significant public and private costs from the consumption of drugs.   And in areas where the public costs are clear, policy intervention does make sense.  

However, the current government goal of "minimising harm" seems to imply that the personal costs of smoking, drinking, or even using currently illegal drugs should enter into the calculation about whether to tax or ban substance.   As long as the individual has information with regards to the risks involved, the personal costs of drug use are part of the price an individual is willing to pay in order to consume the drug.   Taxing or banning drug consumption on those grounds is equivalent to taxing or banning an ugly chair it is stating that the government wants to prevent something simply because it does not like the idea of it.

Let me elaborate.   The policy goal of minimising harm is straightforward enough; it involves the government taking on actions which will reduce the costs associated with the given action in this case drug use.

Pealing back the rhetoric behind any clamp-down on the use of drugs, there are three main harms that I would say justify a government controlling the use of addictive drugs.

1.      the use of the drug either hurts other people or leads to actions that hurt others.

2.      the use of the drug hurts the consumer in ways they do not account for when making the choice.

3.      the use of the drug costs society through other government polices (eg the healthcare system).

However, as the goal is minimising harm a broader definition of what are relevant costs appears to be creeping into government analysis.  The cost of producing the drug and the lost wages associated with a person turning up drunk to work are two examples of such harms.

The countervailing harms of drug control are costs that only appear because of regulation.   A specific example of these harms would be the creation of a black market for drugs, which in turn leads to more expensive and unsafe drug consumption for those who still consume.

It appears that, given these costs, policy wonks have come to the conclusion that they need to implement any taxes or regulation on the sale of a drug that will push its consumption down constrained solely by the fact that they don’t want a black market to exist.

However, this is a terrible policy goal as it ignores the benefits of consuming drugs.   Anyone who thinks that people who consume drugs, any drugs, do not gain some value from their consumption are oblivious to the people around them and are ignoring the fact that people can enjoy and appreciate different things.   Without taking into account the fact that people do enjoy consuming drugs, and that many individuals make a choice to consume drugs, we are immediately aiming at implementing policies that will make these people worse off.

It is for this reason that economists often put the self-harm a person does to one side when discussing policy.   The logic behind this is that, if an individual makes a choice to consume a given drug they are revealing that the benefit of doing so is at least equal to the cost in essence these personal costs are already part of the "price" of consuming the drug!  

If we refuse to accept this, and state that the self-harm is “irrational" it is important to ask "why?"   Does the person lack information on the harm of the drug?   Is the person in a situation where, given their interaction with others, they are vulnerable to drug abuse?   Even if these questions do reveal genuine problems, the answer is not to limit people’s choice, but to instead try to change the underlying situation that creates undue harm.

The justification for introducing a tax on drugs is an economic one, and this justification only holds when the drug takers actions have a negative impact on someone external to themselves.   If we believe that there are underlying issues that led to individuals "irrationally" moving towards drugs, then taxation is not the answer the focus here should be on community and social policy which can help people improve the quality of their choices.

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