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Tuesday, August 07, 2007

How to Beat Terrorists

Willem Buiter says we should legalize drugs if we want to disable terrorist networks:

Legalise drugs to beat terrorists, by Willem Buiter, Commentary, Financial Times (Free): The UK government is considering reclassifying cannabis from a class C drug to a class B drug, carrying higher penalties for using and dealing. As an economist with a strong commitment to personal liberty and responsibility, my preference would be to see all illegal drugs legalised. The only exception would be substances whose consumption leads to behaviour likely to cause material harm to others.

Following legalisation, the production and sale of these drugs should be regulated to ensure quality and purity. They should also be taxed, as are tobacco products and alcoholic beverages...; more money should be spent on the rehabilitation of addicts. Ideally legalisation should occur simultaneously in a number of neighbouring countries...

The principle-based argument for legalisation is that behaviour that harms others ought to be criminalised, not behaviour that hurts only the person engaged in it. It is not the government’s job to protect adults of sound mind from the predictable consequences of their actions.

If the public is ill-informed about the consequences of drug taking, there is an educational role for the state. Children should be protected..., as they are from tobacco and alcohol. ... Parents should be paternalistic, but when it comes to mentally competent grown-ups the state should not be. ...

A pragmatic argument against criminalising drugs is that criminalisation creates vast rents and encourages criminal entrepreneurs to use violence, intimidation, bribery, extortion and corruption to extract these rents. Another pragmatic argument is that it is pointless to waste resources fighting a war that cannot be won. The losing war on drugs wastes resources that could be used to fight terrorism and other crimes.

Another important argument for legalising, in particular, all cultivation of poppy and of coca (and their illegal derivatives) is that this would take away a vital source of income and political support for terrorist movements, including the Taliban and al-Qaeda in Afghanistan, and Colombia’s Revolutionary Armed Forces (Farc) and various paramilitary groups.

The United Nations estimates that opium production in Afghanistan grew to more than 6,000 metric tonnes last year with a value exceeding $3bn. ... A significant portion of the profits flows to the Taliban... They combine extortion and threats of violence towards the poppy farmers with the sale of protection to these same farmers against those who would destroy their livelihood, mainly the Nato allies and the Afghan central government.

Following legalisation, the allies in Afghanistan could further undermine the financial strength of the Taliban and al-Qaeda by buying up the entire poppy harvest. If a sufficient premium over the prevailing market price were offered, the Taliban/al-Qaeda middleman could be cut out altogether... Winning the hearts and minds of poppy growers and coca growers is a lot easier when you are not seen as intent on destroying their livelihood. ...

If opium and heroin were legalised, the allies’ stash could be sold to regulated producers/distributors of opium, heroin and other formerly illegal poppy derivatives. Our chemical and pharmaceutical industries, and indeed our cigarette manufacturers, would be well-positioned to enter this trade. The profits made by the allies on the sale of the stash could be turned over to the Afghan government. It surely makes more sense for the government to tax the poppy harvest than for the Taliban to do so.

So legalise, regulate, tax, educate and rehabilitate. Stop a losing war, get the government off our backs, beat the Taliban and deal a blow to al-Qaeda in the process. Not a bad deal!

I'm fairly libertarian on these issues. For example, I don't like seat belt or helmet laws for adults. The usual argument beyond the "preventing people from hurting themselves" case for intervention (which I don't buy - I think people are the best judge of their own utility) is that it imposes costs on the rest of us, e.g. a motorcycle wreck causes a visit to the emergency room and that raises insurance costs for everyone. But I would rather simply shift the entire cost to the individual in such cases with stiff penalties for failing to meet that obligation. Sure, there would be cases where people couldn't pay and the rest of us have to pick up the tab, but that's a price I'll pay to keep the government from telling me what to do. If people want to risk killing themselves riding motorcycles without helmets, it's not a choice I'd make and not a choice I hope they'd make, but if they want to take the risk, including the financial risk, that's up to them (we could have no helmet insurance so that those who don't wear helmets could share the financial risks among themselves and be ensured of covering the cost of an accident; similarly there could be no-seat belt insurance, though I'd have to think about whether this insurance should be required before allowing these liberties).

I feel the same about drugs, let people do what they want and if they cause problems, then hold them responsible for their behavior. If children are neglected, if accidents are caused, if health costs rise, if whatever, hold the individual responsible. I've never understood why one person's inability to control themselves should limit what others are allowed to do.

I know many of you see me as an advocate of government intervention, so let me add a few words about that becasue it is related, though this is a bit off the cuff. I think a key part of liberty, of freedom, is that everyone have equal opportunity (to the extent possible), and equalizing opportunity can involve government policies such as providing access to education, redistributing income, providing health care (especially to children), and so on.

More directly related to economics, I also think equal opportunity requires competitive markets and I am much more willing than those who identify themselves as libertarians to recommend that the government step in with a solution (perhaps market-based, but an intervention nevertheless). Similarly for other types of market failures beyond monopoly power, I think there is a role for the government to play to ensure that externalities are focused on the individuals who cause them (I am less free if I am required to pay  your bills), to provide public goods, to ensure that informational asymmetries are resolved (e.g. through truth in labeling laws, full disclosure laws in real estate sales), and so on. My difference with libertarians, I suppose, is that I don't think all these problems will correct themselves if left alone, at least not in the kind of time frame I have in mind, and I believe that government can do good by stepping in and correcting the problems. I see the government as a vehicle for attaining equal opportunity, freedom, and liberty instead of standing in the way of such ideals. The government should not always step in, and that shouldn't be our knee-jerk response to every problem. When the markets work, let them, and when the government does more harm than good by stepping in, it should leave things alone. But there is a positive role for government to play in many cases and we shouldn't have a knee-jerk reaction against it either.

    Posted by on Tuesday, August 7, 2007 at 01:53 PM in Economics, Market Failure, Regulation, Terrorism | Permalink  TrackBack (1)  Comments (29)

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