The war on drugs hurts businesses and investors

Forbes.com has published my op-ed with this title.
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Should the Western Hemisphere Legalize Drugs?

In an interview given by Guatemala's President Otto Perez Molina on Feb. 11, 2012, he said that he will bring up drug legalization at the Summit of the Americas in Cartagena, April 14-15. (Al Jazeera report on the interview). The Summit will be hosted by Colombia's President Juan Manuel Santos who has also expressed criticism of prohibition drug policy.

It would be a fairly pointless conversation if the question were limited only to changing the laws in Central America. Given the trans-national nature of the drug trade -- a fact recognized in over a century of international conferences and treaties on drugs -- it is hard to imagine a single nation reaping the full benefits of legalization by itself.

Nevertheless, The Atlantic Monthly's website has a post addressing the now "out in the open question" of drug legalization, narrowly entitled, "Should Central America Legalize Drugs?" Author Ralph Espach is the director of Latin American Affairs at CNA, a non-profit public policy think tank that for much of its history worked very closely with the Navy in analyzing challenges. It is reposted at InterAmerican Security Watch.

Espach picks up on President Molina's interview.

Molina was inaugurated in January 2012, pledging to wield an "iron fist" against crime. Major Mexican drug trafficking organizations are moving drugs through Guatemala and reportedly the Sinaloa and Zetas organizations are fighting for control of the staging areas. The capacity of Guatemala and other Central American states to combat the drug trafficking organizations is several order of magnitude smaller than Mexico's capacity. The susceptibility of the small Central American states to be overwhelmed by crime is far greater than that of Mexico. And as we all know, Mexico -- one of the largest economies in the hemisphere -- has been swept by and is being staggered by a still growing wave of violence and homicide since December 2006 when Mexico's President Calderon declared war on the "cartels."

Espach says legalization advocates have three objectives: obtain tax revenue from the drug trade, reduce the value of drugs and the revenues of criminal organizations, and reduce the violence carried out by the cartels.

He notes that legalizing drugs is unlikely to generate much tax revenue for Central American nations because their capacity to collect taxes generally is so feeble. Espach thinks that tax collectors definitely would not be effective in seeking revenues from the powerful criminal cartels.

Espach makes a classic mistake -- that legalization means turning the legal drug trade over to the gangsters who now run it now. Of course, there is no particular reason why a legal, heavily regulated drug trade would be an attractive business for criminals in contrast, say, to chemical processing, plastics manufacturing, sugar production, or any other legal business. The association of crime and drugs is an artifact of the law, not an immutable feature of the chemicals. Where, as Espach notes, tax collection is inefficient across the economy and the society, it not likely to be efficient for a legal drug industry either.

I suggest, however, that a higher order goal than raising tax revenue to seek in changing drug policy is to remove the drug business from the gangsters and the gangsters from the drug business which means separating them from the money flow and removing the causes for the violence. Legalization is a necessary, if not sufficient, step to do so.

Espach also notes that the cartels would not drop their other criminal enterprises of extortion, kidnapping, organized prostitution, human trafficking, etc. if drugs were legalized. I do not know anyone who argues otherwise. But there is a big difference in customer satisfaction with the cartel business model between those who buy drugs from the cartel and those who pay ransom. The victims of extortion are not inclined to help keep that business going as the hundreds of millions of consumers of drugs have been. Without the drug customers, the cartels have many fewer friends and customers.

Espach notes that the sky-high murder rates in Central America are not exclusively caused by the drug gangs' competition and related violence. That is also completely true.

These objections all fall into the classical objection to drug legalization. "Legalization won't completely solve all problems that have been associated with drug prohibition!" "Watch out, legalization is not a magic bullet."

Certainly there are some drug legalizers who oversell the benefits of drug legalization. Yes, sometimes one can't tell whether a slogan is a tongue-in-cheek bumper sticker or serious claim, e.g "Hemp will Save the Planet." Go ahead, be cautious. Whenever I know little about an issue, I am by nature skeptical of any approach that seems to make grandiose and exaggerated claims.

But most legalizers are much more sophisticated than Espach is giving them credit for. I think most of them make much more nuanced claims about how legalization will help public safety, if they are not trying to make a six second soundbite.

Ultimately, I completely agree with Espach's conclusion about the importance of the strengthening of public security and the rule of law, and broad economic and social reform:

Ultimately, drug legalization -- like the drug war it's meant to solve -- would succeed only if public security is fixed and would fail if it isn't. That means better-trained and -equipped police, new campaign finance rules, faster and more independent courts, and even improved prisons. It means addressing not just the problems in the police and courts but the widespread poverty, malnourished children, and poor education systems. It means creating transparency in the public sector, curbing corruption, and breaking the long-standing links between organized crime and politics. Without these enormously difficult steps, neither drug legalization nor any drug war are likely to solve Central America's problems.

Espach's last sentence is correct, and it applies to Mexico and Colombia as well. But I think it is essential to add that without drug legalization, accomplishing those "enormously difficult steps" will remain "enormously difficult."

It will be interesting to see how sophisticated we can make the conversations about drug legalization as we approach the Summit of the Americas.

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Eric Sterling on Canadian TV news

I was interviewed on CTV news from Canada regarding mandatory minimum sentencing. Click on the video viewer in the middle of the screen.

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Canada is repeating U.S. mistakes on drug sentencing

The Ottawa Citizen has published my op-ed this morning (Feb. 29, 2012) that warns, "Canada is repeating U.S. mistakes on drug sentencing." This prestigious newspaper is Canada's equivalent to The Washington Post.

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Alternatives to drug prohibition move onto international agenda

In mid-April, Western Hemisphere leaders will gather in Cartagena, Colombia for another Summit of the Americas.

Michael Shifter, President of the Inter-American Dialogue, notes that hemispheric leaders, such as host President Santos, Guatemala's new President Molina, and Mexico's President Calderon have been critical of the U.S. approach and may try to push some discussion of drug prohibition policy onto the agenda.

Calderon, of course, is from the right-center PAN. Santos, a former Defense Minister, was the candidate of the right-center National Unity party. And Molina is also from a conservative party. His drug policy critique was profiled in Mary Anastasia O'Grady's weekly column in the Wall Street Journal on Feb. 27, 2012.

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