Legalization of drugs — long an issue championed mainly by fringe groups — is rapidly moving to the mainstream in Latin America. Last week’s surprise statement by former Mexican President Vicente Fox in support of “legalizing production, sales and distribution” of drugs made big headlines around the world. Fox, a former close U.S. ally who belongs to the same center-right political party as President Felipe Calderï¿½n, rocked the boat at home by indirectly criticizing the very premise of Calderon’s all-out military offensive against Mexico’s drug cartels, which has cost 28,000 lives since 2006. Calderon immediately responded that he opposes legalization of drugs, although he has opened a dialogue with political parties about the future of his country’s anti-drug policies.
The left-of-center Party of the Democratic Revolution announced that it supports “de facto legalization” of drugs. Fox’s statement, first published Saturday in his blog, went far beyond a 2009 joint declaration by former Presidents Fernando Henrique Cardoso of Brazil, Ernesto Zedillo of Mexico and Cesar Gaviria of Colombia. In that statement, the three former leaders questioned the effectiveness of the U.S. war on drugs and proposed de-criminalizing possession of marijuana for personal use. While the three centrist former presidents’ proposal amounted to not prosecuting people for consuming marijuana, Fox’s proposal calls for legalization of all major drugs — the whole enchilada.
In an extended interview, Fox told me that he is making his proposal because drug-related violence in Mexico has reached intolerable levels, and because the experience of other countries such as the Netherlands has shown that allowing drug sales has not significantly driven up drug consumption.
“Prohibitionist policies have hardly worked anywhere,” Fox told me. “Prohibition of alcohol in the United States [in the 1920’s] never worked, and it only helped trigger violence and crime.”
Since possession of small amounts of marijuana has already been decriminalized in Mexico, what’s needed now are bolder steps, such as legalizing drug production and using the taxes it generates to fund anti-drug education programs, he said.
“What I’m proposing is that, instead of allowing this business to continue being run by criminals, by cartels, that it be run by law-abiding business people who are registered with the Finance Ministry, pay taxes and create jobs,” Fox said.
Fox called for a reversal of Calderï¿½n’s decision to send the army into the streets to fight the drug cartels because “the army is not prepared to do police work, and we are seeing day to day how the army’s image is losing ground in Mexico” as a result of this war.
Why didn’t you come out with this proposal when you were president? I asked. Fox responded that legalization was often discussed in Cabinet meetings during his presidency, but that the urgency of such a measure has increased since “because of the extraordinary cost we are paying in a drop in tourism, a drop in investments and a lack of attention to education and health.”
In a separate interview, White House drug czar R. Gil Kerlikowske told me that drug legalization is a “non-starter” in the Obama administration. Kerlikowske disputed the idea that alcohol prohibition drove up crime in the United States in the 1920s, arguing that there were no reliable crime statistics at the time. And he rejected the notion that there has been no major increase in drug consumption in the Netherlands.
“In the Netherlands, consumption did go up. In fact, the Netherlands has been in the process of closing down hundreds of the marijuana cafes that had been in existence because of the problems that are occurring,” he said.
My opinion: I’m not convinced that a blanket legalization of drugs would work because government regulation of the cocaine and heroin businesses in countries that already have high corruption rates would result in greater official corruption. On the other hand, it’s clear that after four years of Calderï¿½n’s U.S.-backed war on drugs, the cartels are smuggling more drugs, killing more people and becoming richer. Perhaps the time has come to take a step-by-step approach and start a serious debate about passing laws that would regulate legal production of marijuana, alongside massive education campaigns to discourage people from using it.
Then, we could see who is right and consider what to do next.
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Commentary Number 1
The question raised in this article is a complex one. Mexican President Felipe Calderï¿½n’s hesitancy at enforcing drug-legalization policies is understandable, as the legalization of drugs in a drug-war-torn country such as Mexico can be beneficial or adverse from an economic point of view. One might argue that such measures would bring about a series of negative externalities on the public such as harmful health effects. A majority believes that the legalization of drugs will increase crime rates; most people under the influence of narcotics are prone to violent crimes. However, the reasons ex-President Vicente Fox has for de-criminalizing drugs appear to outweigh the adverse effects.
The law of demand states that as price falls, the quantity demanded rises, and as prices rise, quantity demanded falls. This illustrates that legalization of drugs will reduce the profit criminals make. Every time the government takes hold of a drug dealer and the products he is selling, supply of the drug to the illegal drug market is reduced. If there is a reduced supply, there is an increase in price of the good. Drug-addicts are helpless, and thus they will buy the drug for the higher price, giving the criminal dealer more profit. Every time the government thinks it is winning its drug war, it is actually losing; the illegal state of these drugs aids the dealers, harming the government.
Price elasticity of demand of a good is a measure of the extent to which the quantity demanded of a good changes when its price changes. As is illustrated on Figures 1 and 2, due to the fact that drugs are a necessity to drug-addicts, they are willing to buy pretty much the same quantity of the drug at any price, thus making the price elasticity of demand of drugs inelastic (when the quantity demanded remains similar as the price changes). If drugs are legalized, the government can benefit from its demand price inelasticity by taxing on drugs, and thus making more profit that can be allocated accordingly.
Drug consumers will not care whether they are paying more than they should be and will buy the legal drug at the price it is sold legally. Other people will notice why the drug is inelastic, and will avoid them due to its addictive dangers. Thus, the absence of undercover drug dealing will show people the dangers of drugs and lead to consumers and producers providing less of the drug once the government starts taxing, thus leading to a smaller population using them.
The most beneficial aspect of drug legalization in Mexico would be taxing on the drug. As demand for drugs is inelastic, the tax revenue raised will be large. Additionally, the deadweight loss (fall in total surplus consumers and producers make) will be smaller as the consumers will not consume less at first even though producers will produce at a less quantity. These are shown on Figure 3. The consumers will pay more taxes as they desperately need to buy the drug, and eventually will try and consume less when they become financially diminished. They will seek rehabilitation, and thus shrink the market for drugs. If the government correctly uses the revenues raised by taxing on drugs to promote healthcare and drug rehabilitation, the Mexican economy can cause a decline in overall drug sale and use.
In conclusion, Mexico’s ex-President Vicente Fox should proceed with convincing the government to legalize drugs, as this measure will not only reduce consumption and production of these harmful products, but also promote society and the economy by raising revenue to enhance health and other aspects of the economy that need betterment.