The Economics Behind the U.S. Government's Unwinnable War on Drugs

By Benjamin Powell

The late Nobel Laureate James Buchanan was known to say, "Economics puts limits on people's utopias." Unfortunately, the advocates of the U.S. government's war on drugs have failed to appreciate the economics underlying the drug war that makes their utopian vision impossible to achieve through drug prohibition.

Although the Obama administration has softened the rhetoric of prior administrations by talking about treatment rather than an "enforcement-centric 'war on drugs' approach," enforcement budgets remain large and penalties for distribution severe. As for legalization, the administration claims that "drug legalization also runs counter to a public health and safety approach to drug policy. The more Americans use drugs, the higher the health, safety, productivity, and criminal justice costs we all have to bear."

Regarding violence, in a recent speech in Mexico, President Obama stated, "Much of the root cause of violence that's been happening here in Mexico... is the demand for illegal drugs in the United States." However, Mr. Obama failed to specify whether the cause of the violence is drugs per se or the fact that drugs are illegal.


Economics is a science of means and ends. Thus, the question for economics is whether the means—drug prohibition—is effective in promoting the ends of greater health, safety, and productivity, as well as lower violence and criminal justice costs.

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