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Making An Economic Case For Legalizing Drugs

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IS IT 4:20 ALREADY?
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Public debt is the topic of much conversation, with California, Illinois, and New York up there with Afghanistan and Iraq at risk for default.

In the run-up to California's November 2 vote on Proposition 19, a ballot initiative that would legalize marijuana, Jeffrey A. Miron, a Senior Fellow at the Cato Institute and the Director of Undergraduate Studies in the Department of Economics at Harvard University, who also happens to have a Ph.D. in economics from MIT, along with co-author and doctoral candidate Katherine Waldock, published a superb white paper called "The Budgetary Impact of Ending Drug Prohibition."

"Legalization would reduce state and federal deficits by eliminating expenditure on prohibition enforcement — arrests, prosecutions, and incarceration — and by allowing governments to collect tax revenue on legalized sales," Miron and Waldock argue.

The report concludes that drug legalization would:

Reduce government expenditure about $41.3 billion annually.

Roughly $25.7 billion of this savings would accrue to state and local governments, and roughly $15.6 billion to the federal government.

About $8.7 billion of the savings would result from legalization of marijuana, $20 billion from legalization of cocaine and heroin, and $12.6 billion from legalization of all other drugs.

Miron and Waldock further point out that:

Legalization would also generate tax revenue of roughly $46.7 billion annually if drugs were taxed at rates comparable to those on alcohol and tobacco.

About $8.7 billion of this revenue would result from legalization of marijuana, $32.6 billion from legalization of cocaine and heroin, and $5.5 billion from legalization of all other drugs.

Right now, some of the strongest opposition is coming from the beer distributors lobby, which is obviously concerned about competition, although companies like Frito-Lay, Pizza Hut, and  McDonald's should be thrilled with the possibility.

But hell--why would you take a Harvard professor's word for it?

The good folks at Taiwan's Next Media Animation have laid it all out for you in one minute, 38 seconds:

POSITION:  No positions in stocks mentioned.

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