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May 06, 2009

Three Points on Decriminalization

Legalization proponents claim that legalizing will lead to 1) increased taxes as more economic activity (which should be taxed, if the rest of us are paying) will be taxed, and 2) crime rates will fall. These points are strongly debatable.

First of all, drug dealers are already required to report their ill-gotten income to the IRS. Even if they don't say how they acquired their loot, they're still to declare it. There is no exception for criminally-earned income. Ask Al Capone.

So the idea that just because drugs are now legalized -- or even merely decriminalized, which still makes them contraband -- will suddenly cause millions of drug-dealers who pay no (or almost no) income tax to start offering the government a strict accounting of their revenue seems, what's the word, fanciful.

To get that kind of compliance, and to cause a sea-change in the thinking of the under-the-table drug traders into on-the-books tax payers, would require a fairly massive and aggressive detection and enforcement effort by the IRS, which would, I imagine, approximately rival the level of police intrusion that we'd supposedly no longer experience in a decriminalization regime.

Next, the idea that criminal drug-dealers will suddenly become law-abiding drug dealers is perplexing.

Let me explain. Drug dealers do not deal drugs because it's a family tradition, like alfalfa farmers in Montana. They do not choose to deal drugs because they just love dealing drugs.

They are criminals, by choice. They have chosen to deal drugs, choosing that particular trade, over other criminal activities, not over legal activities.

What they are after is money. The choose to smuggle, manufacture, and sell drugs because it makes them a lot of money. And even though this money comes at a high non-monetary cost -- namely, intrusive investigations by cops, bizarre personal lives, and the prospect of spending many years in jail -- they've chosen this profession. The monetary benefits, they've decided, outweigh the non-monetary costs of obtaining the money.

Now, legalization opponents often suggest that drug dealers who make large profits on their product will simply continue selling drugs in a decriminaliztion regime, despite the fact that profits will drop to normal levels. Like, what a shopkeeper makes, maybe 6-10% profit on any particular item, rather than the 200-1000% profits they currently enjoy in a regime of criminalization.

This is silly. The drug dealers are drawn into the trade by the profits, not the product. They are willing to risk prison in order to get those profits. They became drug dealers in the first place for those profits.

In a decriminalization regime, such profits-at-the-expense-of-lawbreaking types will not, by and large, simply start selling legalized pot at small 6-10% mark-ups. If they were content with such mark-ups, they could have just bought a 7-11 franchise, or opened up a comic-book shop. They didn't. And they didn't, of course, because they want the profits. They don't care about the drugs per se. They have chosen a profession in which they're willing to make huge profits in exchange for risks to their freedom and lives.

The option of selling legal, normal-profits good was open to them, as it has been open to everyone. They chose against it. If they were content with this level of small profit for lots of work, they could have just opened a hardware store after making a certain level of money in the drug trade. By and large, they don't currently do so, so they won't do so if drugs become an good which earns a more typical profit level.

Which means that the criminals now selling high-profit contraband will not now suddenly turn to selling normal-profit legal goods. Again, they always could have done that; they chose against it. Instead they will turn to other huge-profit criminal activities, whether selling other contraband or heisting your TV out of your home.

To some extent, I guess, there will be "layoffs" in the criminal sector, because a nation can only support so large of a criminal industry (and will only permit so large of a criminal industry). So there may be some reduction in criminal behavior -- but many, perhaps most, of our current criminal class which just happens to be in the drug trade will turn to other criminal activities which afford them the profit levels they seek. If pot no longer offers those profits, they'll turn to importing women into forcible prostitution or armed robbery. Or whatever. What they won't do is become respectable businessmen, making normal levels of profits at the costs of lots of work and financial risk.

Because, again, they always had the option to a toy store. They didn't, not because they're so in love with the profession of the drug trade, but because they're in love with earning profits their legitimate skill-set and abilities wouldn't normally entitle them to. The one part of the skill-set they have, the one thing that makes them money, is the willingness to kill and beat people who threaten their trade, and their willingness to be killed or imprisoned in pursuit of that trade. Their skill-set, in short, is mostly the acceptance that life is cheap, and that is ultimately what makes them their nut.

And the legalization of drugs will not change this. They will not become more skilled in legitimate ways than they were before; their stock in trade will continue to be violence and a willingness to break laws and chance jail. And they will simply migrate to other criminal endeavors.

One last point: Legalizing drugs does no eradicate the black market. It merely shrinks it. There will continue to be a large black market of illegal drug dealers who sell to prohibited persons -- namely, kids and young adults who aren't allowed to buy drugs legally, everyone from 10 - 21.

Yes, I suppose we would free up resources to better combat this smaller, more manageable black market. But the black market doesn't disappear; it never does.

As legalization opponents say themselves: Criminalizing a drug doesn't get rid of it, it simply increases the profit margin on trading in it. And thus we will still have plenty of illegal dealers, and still have a robust (if diminished) trade in illegal drugs.

These points don't make the case against decriminalization; but is nevertheless important to debate in terms of reality, not the unicorns-and-ice-cream fantasies the decriminalization proponents usually offer.

Kill the Gangs and the Mexican and South American Narco-Lords? This is another benefit of legalization, it is contended -- make drugs legal, and the profit margin drops to a small level, and you effectively put the big organized crime groups out of business. And the smaller ones too.

Is it true?

No. Or rather, sort of yes, but mostly no.

The mob may have become very powerful in the US because of prohibition, but it didn't go out of business after prohibition ended, did it?

What they did was turn to -- or re-emphasize, I guess -- extorting money from now-legal alcohol sellers, including restaurants, and, well, any other business in their "territory," even if such business had never enjoyed the mob's supplies of alcohol or protection from police.

In New York City, for example, for the entire twentieth century just about every business has paid the mob extortion-money. Only recently has this massive illegal, enforced-through-violence tax begun to be rolled back by police. I'm pretty sure it still exists, though in a smaller form, and perhaps most are free of it.

How they did it was simple: In addition to straight-up "protection money" backed by threats -- pay us or we burn down your store -- they enforced an illegal monopoly on garbage carting. Businesses had to pay to tote their own garbage, and the mob owned all of the private garbage haulers. (Or reached agreements with those it didn't own, extracting money from them as well through threats.) Each area of the city was carved up into regions "owned" by one family or one gang or another; businesses had to pay mob-owned or mob-dominated garbage haulers to truck their refuse away.

And as it was an illegal monopoly, enforced by violence and threats of such, people were forced to pay far more for this service than they would have in a non-monopolistic regime.

Businesses couldn't contract with non-mob haulers without facing property destruction and fires, or worse; and outside, non-mob owned haulers couldn't come in without seeing their trucks sabotaged or their drivers beaten.

And thus did the mob continue to extract money from businesses that were once illegal, like speakeasies, but were now legitimate, legal bars, and from other businesses that had always been perfectly legitimate, and owed the mob nothing at all, not even by dint of history.

Yes, money gives criminals power and the ability to use violence. But criminal power and the ability to use violence also makes money.

Gangs and Mexican drug cartels have the latter. Even if you take away some of their money via legalizaiton, they're still going to turn to the illegal rent-seeking of extortion.

Farmers in Mexico currently paying protection to narco-lords aren't suddenly going to stop feeding the naro-lords with money. So, maybe now it's legal -- so what? Alcohol became legal in the US eighty years ago and it's only in the past 20 years the government has begun to dislodge the the mob from extracting extortion-taxes from businesses.

So those farmers are still going to pay protection to the narco-gangs. Before, the protection was provided against government seizure; now it's going to be more direct. Pay us, or we'll burn your fields ourselves.

In addition, start-up growers, even in America, can expect rent-seeking from gangs and the mob who are used to getting paid a tax on drugs, and aren't going to give that revenue stream up just because it's now legal to grow and sell them.

Will organized crime be hurt? Yeah, a bit. But they are in the business of crime to make money, not sell drugs, and if drugs are legal, they'll just turn to other ways of generating the income they've come to rely on. Just as they did in the US.

Once organized crime is in a business or a territory it's extremely hard to get it out. They already have all those crooked cops and judges on the payroll; those assets aren't going anywhere soon.

So yeah, there will be some benefit in starving the beast of money if you made drugs legal; but not nearly as much as some propose. You might diminish the power of gangs and organized crime families by half-- but no more than that.

Again, same point: Someone used to making his money easily, through violence or crime, doesn't give up on that easy living just because you changed the law. They find new ways to make that money easily.

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posted by Ace at 05:21 PM

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