How drug legalisation could save Britain's economy

Legalising drugs in the UK could help solve the economic crisis while decreasing addiction. Why isn't the policy going ahead? Because it would be political suicide.
Stuart Rodger
27 October 2011

Given how relentlessly and ceaselessly we are told that Britain is on the verge of debt crisis – and that this can only be remedied with a programme of deep rapid public spending cuts – it’s a staggering fact that David Cameron is in fact exacerbating the very problems he claims he wants to solve. The coalition have had to downgrade growth forecasts several times over the past three quarters, began this financial year with increased borrowing, and unemployment has hit a 17-year-high at 2.57 million.


If taxed, the cannabis trade could bring in a billion

Cameronomics has been tried and tested in Ireland, Greece and Portugal: and it hasn’t worked. It ain’t working for us either. A far better way out of this financial hole may lie in an unexpected place: the drugs trade and its legalisation. No, you didn’t misread that - the answer to this problem may really lie in sparking up a spliff on the pavement outside your local café, Dutch-style.

But first, let’s get back to basics. Every debate about drugs policy must begin by acknowledging one hard, solid fact: the market for drugs is ineradicable. Thirty five per cent of the British population admit they have taken an illicit substance. Lothian and Borders Police have admitted that they have successfully hauled just 1% of all available heroin in their patch. (And that’s not a typo). The human desire to be intoxicated seems to be something deep and permanent within us – we apparently have an inherent hunger to lift our minds and bodies to an altered state.

By criminalizing these substances, what you do is transfer a huge, lucrative market into the black-market, where they become drastically more dangerous. Take Britain’s most widely used drug, for instance: cannabis. At least two independent scientific studies – by the Institute of Psychiatry and University College London respectively – have found that, while it is indeed true THC (the chemical that causes the high, giggly feeling) does cause psychosis in a small number of cases, cannabis contains another chemical, CBD, which has a powerful anti-psychotic effect (more powerful than many anti-psychotics, in fact). In the unregulated anarchy of the illicit drugs trade, however, cannabis is, according to FRANK, routinely cut with such things as boot polish and henna.

At the more hardcore end of the spectrum – heroin – the investigative journalist Nick Davies has argued that many of the negative consequences of heroin use are in fact consequences of prohibition - bar, importantly, addiction itself. In order to maximise profits, the drug is cut with such things as brick dust (which causes the venous gangrene so familiar in heroin addicts) and drain cleaner (which poisons). Clean opium can be seen as 'safe', and he gives plentiful historical examples to support the point. Indeed, Margaret Thatcher’s health advisor, Dr Clive Froggatt, was a heroin addict. 

And, because drug dealers cannot appeal to an army of accountants, lawyers and police officers to protect their property rights, they do it themselves, with guns, knives, and machetes. For an illustration of this phenomenon, look over the Atlantic, at Mexico, which one Wall Street Journal writer says makes ‘Chicago under Al Capone look like a day in the park’.

The answer is to legalise: to take drugs away from armed criminal gangs, and hand them over to doctors, pharmacists, and off-licenses. Far from being a commercial free-for-all, a legal model would have in place solid consumer protections, production-controls, and marketing-laws. The administrative costs would be negligible.

And here’s where the economics comes in. The first and most obvious saving to the Treasury would be in the tax revenue generated by cannabis sales: The Independent Drug Monitoring Unit estimates that combining the resin and herbal ‘skunk’ markets, based on a tax of £1 - £2 per gram, could generate around 1 billion of tax revenue annually. Transform Drugs Policy Foundation report that 4.036 billion goes on the criminal justice system every year (at least 50% of Britain’s prison population are in for drug offences) – a sum that would collapse under legalisation. The UK drugs trade constitutes a giant 6.6 billion pound market: an un-taxed vacuum in to which money is sucked.

Yet more savings could be found in a place in the world where the War on Drugs collides headfirst with the War on Terror: the war in Afghanistan. NATO is there – ostensibly at least – to dismantle Al Qaeda and prevent jihadist attacks on the streets of the west. Afghanistan – one of the poorest countries in the world, where 45% of the population suffer from malnutrition – relies on the opium trade for at least a third of its GDP. The west, as part of its strategy to cut off the supply of opium, destroys this vital source of income. Research by the International Council on Security and Development (formerly known as the Senlis Council) has shown that this radicalises the population, driving them straight into the brutal arms of the Taliban, thus making NATO’s objective of countering the insurgency significantly harder. ICOS, in their must-read report – ‘Countering the Insurgency in Afghanistan: Losing Friends and Making Enemies’ – show how, even within the framework of prohibition, Afghanistan could – along with Turkey and India - be granted a licence to produce and sell opiates to a world currently in acute medical shortage, thus putting Afghanistan on the road to economic stability.

So, while the potential savings incurred may not be a magic formula for cutting the deficit, together, they take us a significant way towards the 81 billion that David Cameron is hacking off the public sector. There would be a historical precedent for this. It is no coincidence that Alcohol Prohibition was ended in America in 1933, just four years after the Great Crash of 1929. US tax revenues collapsed by 60% over three years, and they desperately needed revenues to fund a Keynesian stimulus.   

Of course, many people have understandable concerns that, under legalisation, we will see a rise in addiction. What every advocate of legalisation needs to explain is how exactly it helps the bruised, broken human beings who we all see stumbling and shaking their way down the streets of Britain’s cities. Many parents who have, tragically, seen their children descend in a spiral of addiction are aghast at calls to legalise: their anxieties must be answered with a convincing response. 

The facts demonstrate that legalisation precipitates a dramatic fall in hard drug use. When personal possession of drugs was decriminalised in Portugal in 2001, use of heroin dropped by 50%. The EU country with the lowest level of heroin addiction is… yep, you guessed it: the Netherlands, a country where clean, safe heroin is prescribed by the health service, and cannabis is enjoyed recreationally in the legal market. Since 1971 when the Misuse of Drugs Act was passed in Britain, use of heroin has increased by 1000%. Sociologists have long recognised this phenomenon - called the Iron Law of Prohibition: criminalize a substance, and its use intensifies. Just like 1920s America; people stopped drinking beer and wine, and instead consumed the far more dangerous moonshine. It isn’t legalisation that acts as a ‘slippery slope’ towards the gutter – it’s prohibition.

Most politicians know all this. Countless former Home Office ministers admit that the war on drugs is a counter-productive failure after leaving office. Indeed, David Cameron himself, when he sat on the Home Affairs Select Committee in 2002, co-authored a report on drugs policy which stated that ‘there may come a day when the balance may tip in favour of legalising and regulating’. (Dave, that day has come).

So why don’t they do it? Simple: politicians believe it to be politically impossible. They think the tabloids will shriek and howl, and there would be a public outcry. But that’s why you, me, and everybody reading this have a responsibility to join the growing ranks of people – from former UN Secretary-General Kofi Annan to Dr Fiona Godlee, editor of the British Medical Journal – in helping turn the tide in the opposite direction.

This year marks the fortieth anniversary since President Richard Nixon launched the global war on drugs. Its forty years have been marked by an astronomical rise in addiction, brutal gang violence, and epidemics of disease and political corruption – hardly a cause for celebration. But the global financial crisis also gives us an opportunity: great crises can spur great changes. It isn’t going to happen by magic: politicians have almost never benevolently handed down progressive change. Progress is campaigned for, fought for, and won. The great paradox at the heart of all this is that we really can win the war on drugs – but only if we cease to fight it. The onus is on you to make that happen. 

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