Friday, April 03, 2009

Drugs and the Economy

IOZ asks us not to make drug legalization, which is about liberty, into a macroeconomic issue. He's right but he's wrong. As far as macroeconomics goes, the benefit is not that marijuana could be taxed, and I fully agree that there's no reason to go that route. But legalized pot would 1) Create jobs for entrepreneurial marijuana growers and 2) increase the working population because fewer people are being arrested. Think of it as equivalent to increased immigration--yes some populists would argue against it (perhaps not in this case since these pot users are American), but an increased labor supply increases demand as well as supply. Furthermore there would be fewer taxpayer dollars spent on the counterproductive drug war. Even if pot were not taxed at all it would be a free lunch in terms of GDP. Not an enormous jump for macroeconomic growth, but a positive nonetheless.

I still recommend remembering that the right to ingest into your own body what you choose is principally an issue about liberty and privacy, not economics. Will Wilkinson says it as powerfully as possible.

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