By: Ben Douglas
[I]f you look at the drug war from a purely economic point of view, the role of the government is to protect the drug cartel.
A core aspect of a sound methodology is that it seeks to develop an understanding of the nature of a problem before attempting to solve it. If a doctor does not first diagnose a disease, he can only treat the symptoms. All the while, the disease itself eats away at the patient, growing ever-larger and more unbearable. Most modern policymakers, and even many economists, are like the doctor who treats only the symptoms while ignoring the underlying disease. In order to avoid this fatal mistake, we must first analyze the nature and cause of the problems at hand. Quite often once this is accomplished, a solution will present itself.
A common argument levied against immigration, particularly the illegal variety, is that it breeds two devious classes of people: welfare bums and drug traffickers. Since we are examining immigration, the first thing we must do is determine if these problems are inherent to immigration or whether they are the result of other, external factors.
Let us deal first with the immigrant welfare bum—broadly defined here as someone who immigrates to a nation in order to leach off of its welfare, education and other publicly funded services at the expense of taxpayers without himself paying taxes. Under a policy of free immigration—that is, in the absence of government-imposed barriers to the free movement of goods, services, and capital (including the human variety) across borders—how would the problem of the welfare bum be dealt with?
First of all, free immigration does not mean that Medicaid, social security, government schooling, etc. should be awarded to immigrants. These constitute positive rights, or grants of privilege, and thus conflict with negative rights, or universal prohibitions on certain behaviors, such as rape and theft. Like all government programs granting positive rights, these programs subsist off of funds expropriated from the populace. In order to grant positive rights, the state must infringe upon negative rights and thus debase the meaning of rights altogether into an abstraction determined and granted by the state. This is the playground of tyrants.
Having addressed the illegitimacy of welfare, it should be noted that the immigrant welfare bum does indeed pose a grave problem—for the welfare state! Putting up barriers to immigration in response to a flood of immigrants is an economically detrimental response what is fundamentally a problem of incentives. The argument that immigrants are immigrating in order to take advantage of welfare does not attack the concept of free immigration. On the contrary, it is a direct assault upon the sustainability and morality of the welfare state.
Having identified this particular problem as clearly residing with welfare (not immigration), the solution clear: end all subsidies—here defined as government grants of funds or privilege—to immigrants. Subsidizing something will create more of it. Ending all subsidies to immigrants will remove the incentives for the lazy and incompetent—that is, for the welfare bums—to immigrate. Ideally, subsidies would be abolished for everyone, native and foreigner alike, but unfortunately it is politically unfeasible to stop funding programs that natural-born citizens have been paying into their whole lives (and thus justly feel entitled to). The least that can be done is to prevent those who have not cashed in from cashing out. Moreover, such a practice would limit immigration and should, therefore, mitigate the concerns of anti-immigration conservatives and nativists.
Having examined the evils of the welfare state, let us turn to the correlation between immigration and crime. Specifically, we will consider the root cause of drug-related crime along the southern border. Is immigration inherently conducive to criminal activity (particularly violence) or is it taking the blame for bad policy in other areas?
Attempting to fight a war on supply is futile for two reasons. First, the demand for drugs is inelastic. When a government tells its citizenry that it will imprison them for admitting to drug usage, users will understandably go about “getting high” in secrecy rather than admitting to a problem and seeking treatment. The drug problem is one of demand and must be treated as such. Caging human beings for consuming this or that substance listed as “controlled” under this or that statute is not only counter-productive in the sense that it leads to less treatment and more drug-related social problems, but also morally dubious because it results in the culprits of “victimless crimes” being imprisoned.
The second aspect of the futility of US drug policy results from the nature of a war on supply itself. When the War on Drugs is “succeeding,” supply goes down. When supply goes down, prices go up, thereby incentivizing more producers to enter the market, bringing the supply back up and prices back down. This is a war that cannot be won. The law of supply and demand, unlike the Controlled Substances Act of 1970, cannot be broken. Not even the federal government is as powerful as economic law.
Prohibition also creates the violence associated with drug production by driving the market underground and forcing producers (presently consisting of armed gangs) to utilize violence to capture market share rather than peaceful free-market practices that aim at pleasing consumers. Mexican criminals smuggling drugs into the US owe their lucrative professions to the US federal government. In the absence of prohibition, drug cartels would be out competed by legitimate companies dependent on consumer support for business (assuming they were not heavily regulated by the government). Presently, drug cartels are dependent on their ability to effectively utilize violence and subvert the law for business. This state of affairs is due solely to prohibition not to the nature of the substance being prohibited.
As a thought experiment, imagine Mexican alcohol gangs engaging in widespread criminal activity on the southern border. Is not the very notion preposterous? Alcohol is legal to produce, possess, and consume. As such, the production and distribution of alcoholic beverages resides overwhelmingly with semi-legitimate corporations that are dependent mostly on consumer favor to stay in business. One does not hear news reports of ongoing shootings and kidnappings between employees of Budweiser and Heineken. Such notions are laughable precisely because alcohol is not prohibited.
A brief digression is warranted here. The presence of modifiers in this paragraph such as “overwhelmingly,” “semi,” and “mostly” is due to the presence of government intervention in the industry. While there does exist a small black market for alcohol despite its legalized status, this is solely as a result of the heavy taxes and regulations imposed upon producers and consumers of the substance. Similarly, government meddling into this industry has driven out some elements of consumer sovereignty and made alcohol producers somewhat dependent upon government favor and protection to stay in business. Such is the nature of the “mixed economy.”
Dependency upon violent gangs for business, be they private or public, would be nonexistent in the unhampered marketplace where consumers are sovereign and peaceful exchange is the rule. The aforementioned modifiers could all be replaced with the term “completely” without reservation under such a state of affairs. Alas, the mixed economy preserves violence and threats of violence as valid business practices provided that they are performed through the intermediary of the state. Regardless, the tempering in violence that occurs as a result of legalizing an industry is irrefutable and infinitely preferable to prohibition.
But let us return to the alcohol industry. It was not always the case that this industry was peaceful. During the era of alcohol prohibition, the production, distribution, and consumption of alcohol resided necessarily with criminals. Murder rates rose dramatically during this period. Then there was the danger of alcohol poisoning. Prohibition made people sick—the bootlegged whiskies and so-called gins were not conducive to clean and pure alcohol. The liquor produced in hidden stills frequently came tainted with metals and other impurities.
The notion of such problems seems ludicrous today in the beer or wine industries. The manufacturer of such products—or any other ingestible product for that matter—would quickly lose the trust and therefore the patronage of consumers if its product was unsafe. Yet all of these prohibition-era issues are realities of life in much of the United States and especially along the southern border, only the substance in question is no longer alcohol but a variety of drugs currently controlled by the US federal government. Does the problem then reside with the free market—that is to say, with a lack of sufficient regulation of the movement of people and products along the border?
By no means! The problem resides with governmental planning schemes that shield people from the natural filtering mechanism of the unhampered market which peacefully weeds out firms unfit to satisfy consumers. Of all the methods governments utilize to intervene into the market, few are more harmful than outright prohibition. This was true for alcohol prohibition, and it holds true for drug prohibition. The Controlled Substances Act of 1970 has brought back all the familiar problems of the Volstead Act of 1919—overdosing on the part of users, unclean and impure product, and organized crime to name but a few.
I will leave the reader with one final point to consider regarding the war on drugs. Nowhere have I disputed the claim that any illegal drug (or alcohol, for that matter) is fundamentally “bad” from either a moral or healthful perspective. My arguments have been grounded in the positive science of economics, not the normative disciplines of ethics or law. Even granting the drug warrior that all currently illegal drugs are pure evil and that to consume any of them consummates a grave sin of the highest order, the solution is still to at least decriminalize them since this policy has been demonstrated both empirically and rationally to lower usage and its associated social ills. It thus holds the high ground on matters of morality and pragmatic utilitarianism, leaving no conceivable rationale not to decriminalize.
Thus we can see that the problems of the welfare bum and the criminal gang lie not with the practice of immigration itself, which is beneficial economically to the nation as a whole, but rather with the presence of coercively-funded government programs and prohibitions that attract the worst sort of people. Eliminating welfare, free government schooling, free medical care, etc. for the immigrant population would eliminate all incentives for welfare-bums to come to the United States without the need to impose constraints on those who would come here to work. Similarly, legalizing controlled substances would lift the industry out of the black market and drive violent drug cartels out of business. The solution is to allow more freedom, not less.
 Friedman, “Friedman & Szasz On Liberty and Drugs,” America’s Drug Forum
(Interview), 1991, http://www.druglibrary.org/schaffer/misc/friedm1.htm.
 I shall not make the case for the inelasticity of demand for drugs here. For this argument, see Cussen and Block, “Legalize Drugs Now!: An Analysis of the Benefit of Legalized Drugs,” American Journal of Economics and Sociology 59, no. 3 (July, 2000): 525-36, http://www.walterblock.com/wp-content/uploads/publications/legalize_drugs_now.pdf, p. 534.
 Thornton, “Alcohol Prohibition Was a Failure” (Washington, D.C.: Cato Institute, July 17, 1991) Policy Analysis no. 157 http://www.cato.org/pub_display.php?pub_id=981&full=1, fig. 4.
 For information on the success of decriminalization in Portugal and other European countries, see Greenwald, “Drug Decriminalization in Portugal” (Washington, D.C.: Cato Institute, 2009) http://www.cato.org/pubs/wtpapers/greenwald_whitepaper.pdf.