On drugs policy, crime is the elephant in the room

The independent panel of scientists argues that various illegal drugs are less harmful than legal ones, or even horse riding. The chief gets sacked by the home secretary, and apparently the rest of the panel are considering their positions.

So why doesn’t the home secretary appoint a panel of independent economists to advise on drugs policy instead? At the moment drugs policy seems to be authored by a coalition of tabloid headline writers and frightened politicians.

An economic take would be a forensic and brutal assessment of some unpalatable trade-offs.

Despite illegality in almost every nation, the UN estimates 8 per cent of world trade is illegal drugs. It’s a massive number. It is as yet unclear how that held up during the post-Lehman collapse in world trade.

So the first point is that, despite the tens of billions spent on the “war on drugs” around the world, there’s little evidence that it is effective. According to the UNODC, between 1994 and 2008 opium production has surged from 5,000 to 8,000 metric tonnes per year (due to Afghanistan), and global cocaine production has stayed pretty constant at around 900 metric tonnes.

However much is being seized, there is a much greater capacity to produce. So the legitimate question here is whether or not the war on drugs is cost effective.

Drugs can ruin healthy lives. The UN estimates that there are between 18 and 38 million problem drug users in the world. Interestingly though, that is a small proportion of the 250 million who have used in the past year without it becoming a problem, according to the UN.

The big unknown is how much a more liberal drugs policy would increase usage and therefore health costs. If illegal drugs were legalised and then taxed – as argued by economists like William Buiter – there is a chance that the exchequer might not lose out. There’d be at least £1bn in VAT.

That is not to say that there would be no pain for families and some communities where use goes up. But this brings us to the elephant in the room: crime.

Home Office figures show that the UK illicit drugs market is worth between £4bn and £6.6bn. Class A drug use generates an estimated £15.4bn in crime and health costs. Crucially, between a third and a half of all “acquisitive crime” – that’s mugging, burglary, stealing – is drug related. That is an awful lot of pain.

I’ve seen it for myself in my hometown. No-one would want to be behind policies that led to an increase in the zombied frenzy of crack addiction. Nonetheless, by far the most painful manifestation of the drugs trade are the pensioners, young mothers and families who are harrassed, robbed and knifed by drug addicts looking for the money for their next fix.

So it is conceivable that there exists a drugs policy that minimises the costs of this type of crime, or even wipes it out altogether.

Economics is about trade-offs, about cost-benefit analyses. It is possible that different approaches to drugs policy could lead to less pain in communities afflicted by problem drug use, than the current approach.

But any move in this direction would require some mental dexterity currently absent in our politics, an ability to see beyond the binary world of being “soft” or “hard” on drugs. I can’t imagine a policy area where the frank assessment of independent experts, whether scientists or economists, is more necessary. But I’m not holding my breath.