Drugs - the solution

[Pat Riley]

IHaving legalised hashish on the train is not going to make the general public very happy, I shouldn't think.

Ya'd need to rethink that one, splifflink.

 

[Jack o'Clubs]

Is it still a major problem? I'm just asking.

You've not been to any Asian country recently... Smoking rates are astronomical. Look at a long term chart for BATS - it's not Europeans giving up smoking that have caused the share price to go up 7x since 2000...

 

[new_trader]

https://reportingproject.net/underg...gling-still-booming-&catid=3:stories&Itemid=1

Cigarette smugglng by organised crime is a major problem. That's why the 'legalise it' brigade is fundamentally wrong - assuming governments will need to tax it (at least in part to fund the health services who will have to pick up the pieces from wider drug use), then there will always be a criminal who sees smuggling as a way of making a buck. And those individual criminals are soon pushed out by organised crime.

Talk about missing the point....

Criminals are involved in all kinds of stolen and counterfeit goods. That doesn't mean that those goods should be outlawed to prevent crime.

I am talking about affordability from the final consumer's perspective. Tobacco is so cheap that someone would need to be utterly destitute to resort to stealing to support their addiction to tobacco. I can't envisage street crime being reduced significantly if tobacco was outlawed, but I can safely say that the price would skyrocket if it was. THEN there would be more more crime if someone was really desperate for a smoke.

By the same token, if illicit drugs were legalised then free market forces would bring prices of those drugs way, way down probably to the equivalent of the price of aspirin.

The price of illegal drugs is high only because of the added risk premium.

 

[Jack o'Clubs]

Talk about missing the point....

...

The price of illegal drugs is high only because of the added risk premium.

Yes I think you have missed the point, at least you acknowledge it.

Legal drug + tax = illegal drug street price. Therefore i) people will still turn to crime to finance a habit as the price won't change much for being legalised and ii) if organised crime can undercut the legal price and still make a turn, it will, and will still cause a problem.

You can see that most clearly in the real world in the price of an eighth in Holland from a 'coffeeshop' vs. streetprice in the UK. They're more or less the same. And illegal hash is still a big problem in Holland.

 

[hhiusa]

IF you choose to interpret what I said in that way so be it but I can assure you that is not what I meant.

Legalise, or not, will not make much difference. All it does is toss the ball around for solutions that are not there.

Legalising, IMO, condones it. I don't want that, either.

The US, via the CIA, started the arms for drugs trade in the sixties. It has spread all across the US and is, now, well established on our side of the Atlantic, too.

That is where the genie left the bottle. Burning the poppy fields in Columbia at this stage of the game is like pissing on a bonfire.

Talk about speculation, the CIA started started the arms for drugs trade.
Cite your sources.

 

[new_trader]

Yes I think you have missed the point, at least you acknowledge it.

Legal drug + tax = illegal drug street price. Therefore i) people will still turn to crime to finance a habit as the price won't change much for being legalised and ii) if organised crime can undercut the legal price and still make a turn, it will, and will still cause a problem.

You can see that most clearly in the real world in the price of an eighth in Holland from a 'coffeeshop' vs. streetprice in the UK. They're more or less the same. And illegal hash is still a big problem in Holland.

You are saying that I would pay the same price for 'street' aspirin as I would if I bought it in the pharmacy even though it is legal? Same with 'street' tobacco? The price would be the same as it would be at the supermarket? So what incentive is there to buy those products on the 'street'?

I KNOW there are incentives for criminals selling stolen or illegally manufactured/counterfeit goods, any goods, whether they are legal or illegal. But a criminal wouldn't stay in business for long if they sold those goods at the same price as they could be purchased legally on the high street.

The reason illegal drugs are expensive is because of the risk premium. A consumer has no choice but to buy them illegally from a dealer. They can't go to a pharmacy on the high street.

This is basic economics, there is no argument! The price of illegal drugs would come down if they were legalised.

I was approached in Hong Kong many times to buy 'copy' watches...Rolex's etc. and the prices were massively marked down from the original. Obviously not the same quality. But I've never in my life, in all the cities I've visited, ever had anyone try to sell me a product on the street at the same price I could buy it from a high street store.

 

[Jack o'Clubs]

The reason illegal drugs are expensive is because of the risk premium. A consumer has no choice but to buy them illegally from a dealer. They can't go to a pharmacy on the high street.

This is basic economics, there is no argument! The price of illegal drugs would come down if they were legalised.

So what's your explanation as an economist for why the price of an eight of hashish in a legal coffee shop in the Netherlands is the same as the street price in the UK?

Legal drugs will be sold for approximately the old street price. It's up to the illegal trade what they do about that to stay in business, and how much they need to undercut to stay in business. But fundamentally a user won't see a big price cut for the drug being legalised and so any associated criminality to fund the habit will remain.

 

[Jack o'Clubs]

You are saying that I would pay the same price for 'street' aspirin as I would if I bought it in the pharmacy even though it is legal? Same with 'street' tobacco? The price would be the same as it would be at the supermarket? So what incentive is there to buy those products on the 'street'?

This is basic economics, there is no argument! The price of illegal drugs would come down if they were legalised.

Transcript from recent PBS programme on effect of marijuana legalisation in the US - the new legal price is higher than the old street price:

RICK KARR: One of the benefits attached to legalization was that it would eliminate the black market. But that market is still thriving, according to a 39 year old marijuana grower who asked us to call him John Doe and to conceal his identity because he sells on the underground market.
The illegal trade is doing especially well in black and Latino communities, and he says it works the same way it did when pot was illegal.
JOHN DOE: You have that one guy, that guy that shines, that’s the Robin Hood of the neighborhood. This man supplies a little ghetto area. Simple as that. Breaks his own pound into little ounces and helps everybody in his community. So they can afford it with him. That’s how it’s happened.
RICK KARR: Yeah. And that’s how it happened before, too.
JOHN DOE: Yeah. Yeah. Nothing’s changed.
RICK KARR: John Doe says low-income buyers turn to the black market because prices are higher at legal retail stores. There’s conflicting information, but an ounce of pot on the black market can cost as little as 180 dollars. At the store Andy Williams owns, you have to pay around 240 dollars for an ounce.
That’s partly because the price includes a 15 percent excise tax, a 10 percent marijuana tax, the state sales tax, and Denver’s marijuana sales tax.

 

[new_trader]

So what's your explanation as an economist for why the price of an eight of hashish in a legal coffee shop in the Netherlands is the same as the street price in the UK?

I have to take your word on the street price of hashish in the UK :whistling
You aren't saying the same thing as I am. I am saying that there is no way, no how, no why that if hashish were legalised in the U.K its street price would be the same as the pharmacy price...THAT is what I am saying.

Legal drugs will be sold for approximately the old street price. It's up to the illegal trade what they do about that to stay in business, and how much they need to undercut to stay in business. But fundamentally a user won't see a big price cut for the drug being legalised and so any associated criminality to fund the habit will remain.

Really? You are convinced that an addict would be prepared to pay the same price for drugs from an illegal street dealer as they would buying from a high street pharmacy? They would risk being arrested and/or buying dangerously cut drugs for absolutely no economic benefit whatsoever. If that's what you believe then there is nothing I can say to change your opinion.

 

[Jack o'Clubs]

I have to take your word on the street price of hashish in the UK :whistling
You aren't saying the same thing as I am. I am saying that there is no way, no how, no why that if hashish were legalised in the U.K its street price would be the same as the pharmacy price...THAT is what I am saying.

Ok, we are saying slightly different things, I don't disagree with your comment. My point is that the new legal pharmacy price will be about the same as the old street price and so the overall impact of drug habits' harm on the community won't radically change. The 'new' street price will be a bit lower than that for the reasons you give, but it won't hugely change the incidence of petty crime etc. The US's experience so far with legalised marijuana, as per my other post above, seems to bear that out.

 

[new_trader]

The 'new' street price will be a bit lower than that for the reasons you give, but it won't hugely change the incidence of petty crime etc. The US's experience so far with legalised marijuana, as per my other post above, seems to bear that out.

I disagree, the Denver experience doesn't prove much. Naturally if the Government legalised drugs but then wanted to control the use by replacing the risk premium with a tax, then I agree, the price won't change much, if at all. However, the Government can't be half hearted about what they want. Either legalise it or don't. It wouldn't make sense if they legalised drugs but then tried to prohibit the use through punitive taxes...but then again, that's Government for ya!

You could easily replicate the experience in Denver using any product to prove that Government price controls create a black market. This is observed throughout history. Even recently in Argentina, toilet paper was being sold on the black market.

You would have to ask yourself: Would you deliver 1kg of sugar from point A to point B for the same price as delivering 1kg of cocaine the same distance?

My guess is your answer is no. Either you wouldn't do it at all, or, you would assess the risk of being caught and going to prison and put a price on that risk. You do this all along the chain from producer to consumer and it adds a huge premium to illegal drugs.

There is no way anyone can realistically argue that the price of drugs would not be reduced significantly if they were legalised. There may still be a difference between 'street' price and pharmacy price but both would be a tiny fraction of the illegal price.

 

[Jack o'Clubs]

There is no way anyone can realistically argue that the price of drugs would not be reduced significantly if they were legalised. There may still be a difference between 'street' price and pharmacy price but both would be a tiny fraction of the illegal price.

I don't think that you can realistically argue that any government considering legallising a drug wouldn't add some degree of 'sin tax', health service hypothecation, or excise duty which would significantly offset whatever price reductions came from the actual legalisation and removal of risk premium. Forget the US example if you wish, but look again at the long standing legalisaton of dope in the Netherlands vs its illegal position in the UK. The prices are more or less the same.

 

[Pat Riley]

Price of Marijuana

1.United Arab Emirates$110.0 per gram
2.Brunei$73.8 per gram
3.Japan$68.4 per gram
4.Cyprus$39.7 per gram
5.Israel$28.5 per gram (User Submitted) | $1.5 per gram(UN)
6.Estonia$25.15 per gram
7.Finland$23.2 per gram
8.Australia$22.9 per gram
9.Singapore$22.1 per gram
10.Norway$22.05 per gram
11.Ecuador$20.0 per gram
12.United States$20-$1,800 per ounce
13.Romania$18.9 per gram
14.Ireland$15.9 per gram
15.Latvia$15.9 per gram
16.Lebanon$15 per gram
17.New Zealand$14.3 per gram
18.Sweden$13.8 per gram
19.Lithuania$13.5 per gram
20.Greece$13.2 per gram
21.Czech Republic$13.0 per gram
22.Hungary$12.0 per gram
23.Germany$11.5 per gram
24.Italy$11.3 per gram
25.Poland$10 to $20 per gram(User Submitted) | $6.6 per gram(UN)
26.Mongolia$10.0 per gram
27.Austria$9.7 per gram
28.Belgium$9.7 per gram
29.Switzerland$9.6 per gram
30.France$9.3 per gram
31.Croatia$7.9 per gram
32.Netherlands$7.5 per gram
33.Portugal$7.3 per gram
34.Costa Rica$7.0 per gram
35.Jordan$7.0 per gram
36.Montenegro$7.0 per gram
37.Bulgaria$6.8 per gram
38.Moldova$6.8 per gram
39.South Korea$5.0 per gram
40.Spain$5.0 per gram
41.United Kingdom$4.4 per gram
42.Indonesia$4.0 per gram
43.Thailand$3.3-$66 per gram
44.Ukraine$3.2 per gram
45.Turkey$2.2 per gram (User Submitted) | $6.6 per gram (UN)
46.Bolivia$2.85 per gram
47.Egypt$2.7 per gram
48.Georgia$2.5 per gram
49.Chile$2.0 per gram
50.Venezuela$1.9 per gram
51.Honduras$1.8 per gram
52.Jamaica$1.4 per gram
53.Argentina$1.3 per gram
54.Bangladesh$1.3 per gram
55.Albania$1.3 per gram
56.Serbia$1.3 per gram
57.Zimbabwe$1.0 per gram
58.El Salvador$1.0 per gram
59.Paraguay$1.0 per gram
60.Philippines$0.9 per gram
61.Myanmar$0.8 per gram
62.China$0.8 per gram
63.Haiti$0.6 per gram
64.Dominican Republic$0.5 per gram
65.Colombia$0.4 per gram
66.Brazil$0.3 per gram
67.Kenya$0.2 per gram
68.Nigeria$0.2 per gram
69.Guatemala$02. per gram
70.South Africa$0.1 per gram
71.India$0.08 per gram

 

[Pat Riley]

Now I have no empirical research data ta back this up, but lookin at that list, I'm thinkin there's a LOT more crime of all sorts in the countries toward the bottom of the list (where the smoke is relatively cheap) than the top. Even adjusting for PPP.

 

[Jack o'Clubs]

Now I have no empirical research data ta back this up, but lookin at that list, I'm thinkin there's a LOT more crime of all sorts in the countries toward the bottom of the list (where the smoke is relatively cheap) than the top. Even adjusting for PPP.

LOL - where did you get that list. Makes my point even better that UK (illegal) is considerably cheaper than Netherlands (legal). Or that Singapore (death penalty) is about the same price as Norway (slap on wrist). What risk premium new_trader?

 

[Pat494]

Aren't you guys forgetting the health risks associated with illegal drugs which may have other additives like floor sweepings etc. ?

 

[new_trader]

LOL - where did you get that list. Makes my point even better that UK (illegal) is considerably cheaper than Netherlands (legal). Or that Singapore (death penalty) is about the same price as Norway (slap on wrist). What risk premium new_trader?

So you actually think that comparing the price of marijuana in different countries is ceteris paribus? A person in Kenya deciding whether or not to buy a joint is facing the same conditions as a person in the U.K. You think there are no other factors, such as demand, that affect prices, the only thing is whether or not they are legal? Is it a surprise that the richest countries are paying the highest price? Do you think a person in the U.K faces the same choice as those in poorer countries - Starve or get high?

I will ask you, one more time: Would you deliver 1kg of sugar from point A to point B for the same price as 1kg of cocaine?

 

[Jack o'Clubs]

So you actually think that comparing the price of marijuana in different countries is ceteris paribus? A person in Kenya deciding whether or not to buy a joint is facing the same conditions as a person in the U.K. You think there are no other factors, such as demand, that affect prices, the only thing is whether or not they are legal? Is it a surprise that the richest countries are paying the highest price? Do you think a person in the U.K faces the same choice as those in poorer countries - Starve or get high?

I will ask you, one more time: Would you deliver 1kg of sugar from point A to point B for the same price as 1kg of cocaine?

what is it about the internet that turns a light hearted discussion about a subject in 'The Foyer' (so not even about trading...) into a magnet for argumentative anal retentives? I've better things to do, signing off....

 

[Splitlink]

Talk about speculation, the CIA started started the arms for drugs trade.
Cite your sources.

http://en.wikipedia.org/wiki/CIA_involvement_in_Contra_cocaine_trafficking

 

[Jack o'Clubs]

what is it about the internet that turns a light hearted discussion about a subject in 'The Foyer' (so not even about trading...) into a magnet for argumentative anal retentives? I've better things to do, signing off....

My bad. It seems I'm the argumentative anal retentor. I'd missed the implicit humour, sorry n_t

I probably could do with a joint...