Tax the stoners! (and hookers!)

After writing this posting, it occurred to me that there's another huge sector of our economy which is currently tax-exempt, not because it has a legal privilege but because the whole industry is illegal: drugs. The consequences of our nation's draconian drug policy extend far beyond lost tax revenue, of course, to include the world's highest incarceration rate and the growth of organized-crime cartels powerful enough to threaten the governments of at least two large countries (Columbia and Mexico). To avoid the distraction of debating the harmful effects of harder drugs, my argument here is only for the legalization of the least harmful and most widely-used drug: marijuana.

Marijuana is less harmful than alcohol, not only because it is less injurious to the body, but because it is less able to unleash rage and violence (a big part of the social cost of alcohol is its involve-ment in various kinds of violent behavior such as domestic abuse, rape, brawls, etc.). We've already tried banning alcohol and found that the harm caused by doing so is much greater than the harm caused by accepting it as a legal product. Like today's drug laws, Prohibition fueled the growth of organized crime and an explosion of violence as powerful crime gangs fought over turf and openly resisted government authority. If Prohibition had lasted as long as the War on Drugs has lasted, it's not inconceivable that alcohol-fueled mafias would have grown so rich and powerful that they could threaten the stability of our whole society and government, as the drug cartels have done in Columbia and Mexico.

With marijuana, at least, we should do exactly as we did with alcohol. Don't "decriminalize" it. Make it a fully legal product, legal to produce and sell. Regulate its manufacture and sale the same way the manufacture and sale of alcohol is regulated. Tax it as alcohol is taxed. Allow advertising, restricted in the same ways as alcohol advertising is restricted. Let every grocery store in the land sell the stuff, right next to the beer and wine aisle. And if you catch someone selling one joint to anybody under 18, throw him in prison. Age restrictions on alcohol work because it's legal. The corner store guy who makes good money selling beer legally has something to lose if he sells the stuff to a kid. The pusher doesn't care, since he goes to jail if the cops catch him, regardless of the ages of his customers.

Would legal marijuana be problem-free? No. Legal alcohol isn't problem-free either. As with alcohol, more people would smoke marijuana if it were legal, and there would be various social costs. The point is that, as with alcohol, those costs would be far less than the danage caused by banning it. There's no such thing as a reform which has no bad side effects at all. But reform can replace a set of much bigger problems for a set of much smaller ones.

With harder drugs such as cocaine or meth, there's at least a real argument that they are so dangerous that we're better off banning them than legalizing them (and I think there's a case for putting cigarettes in the same category, though that's a whole other issue). But we could deal with those things much more effectively than we are now if we weren't wasting vast resources going after marijuana. And -- to return to my main point -- government efforts to fight the recession would be buttressed by the tax revenues that a legal marijuana industry would generate.

Finally, a similar case could be made for legal, regulated, taxable prostitution. I have no idea how large a legal prostitution industry would be or how much tax revenue it would generate, but it seems clear that there are currently some fairly large cash flows going untaxed in that area. Prostitution, too, is saturated with sleaze, hard drugs, criminal involvement, and terrible abuses of sex workers, precisely because it is illegal and therefore beyond the reach of the regulation and legal protections which the state can extend to other industries and their workers.

Obama ran for office promising "change". It was never very clear what that meant, but can we at least try for "change" in areas where established practice is flagrantly idiotic and counterproductive and can obviously never achieve its claimed goal?