In the course of my research last week on Turkey – which provided fascinating background information for my recommendation of Turkcell (TKC), the country’s largest mobile phone service company – I stumbled on the fact that Turkey is now the #1 source of legal opiates for the U.S.
Of course, it wasn’t always so.
Back in the 1960s, Turkey was the world’s biggest source of black market heroin. Every effort by the U.S. to persuade the government to crack down came to naught. Why? Because the Turkish economy was dependent on the stuff.
Then in 1974 the Turkish government began a licensing program that effectively took the criminals out of the opium business. Now there’s quality control. There’s reliable distribution. And there’s an annual income of $60 million per year, mainly from selling to U.S. pharmaceutical companies that turn the stuff into morphine and codeine.
Respected companies currently in the opium trade include Mallinckrodt, Abbott Laboratories, Purdue Pharma, GlaxoSmithKline, Johnson and Johnson and Johnson Matthey.
In fact, U.S. companies are now required by law to import at least 80% of their opium needs from two “traditional” producers, Turkey and India, thus protecting those economies from the more modern growers in Australia, Poland, Hungary and Yugoslavia. In Turkey, there is now minimal diversion of opium into the illegal market. The legal drug business is a very profitable business.
But then there’s Afghanistan.
In Afghanistan, the U.S. government has been waging a war against opium growers since the invasion of 2001. The cost of this battle against opium is about $600 million a year. And it’s not working.
In fact, opium production in Afghanistan hit record levels in 2006. The U.N. says production rose 49% to 6,000 tons, enough to make 600 tons of heroin. This year production is estimated to be up another 15%. Afghanistan thus supplies some 92% of the global heroin trade. Furthermore, some 2 million Afghans are economically dependent on the crop.
Like the Turks, the Afghans aren’t going to stop growing their most profitable crop. What’s worse, the fact that the U.S. tries to put these farmers out of business means they turn for support to the Taliban and Al-Qaeda, which then reap some of the benefits of the farmers’ cultivation!
So why not license the cultivation of opium in Afghanistan, too?
That’s the plan that was put forward several years ago by the Senlis Council, a European think tank focused on health policy.
According to Senlis, such a plan would not only reduce funding for terrorist organizations, it would legitimize a major portion of the Afghan economy, meaning it could be taxed. And it would reduce market prices for medical opiates worldwide, thus making them affordable to people in less-developed countries.
Critics of the plan – including the U.S. Department of State – argue that the legal market is not big enough to absorb the Afghan crop, that there is insufficient law enforcement in Afghanistan to implement it, and that similar efforts have failed in Pakistan and Bolivia.
But as a student of free markets, I know that an efficient legal market beats an inefficient black market hands-down, and that the invisible hand of the market tends to overcome obstacles in miraculous fashion. Bottom line, I have no doubt that legalizing the Afghan opium market would lead to a raft of worldwide benefits.
The biggest model is obvious.
We tried Prohibition in this country from 1920 until 1933, and what did we learn? That the demand for alcohol was easily filled by a thriving black market, which soon became dominated by organized crime.
When it was repealed, an obvious failure, John D. Rockefeller wrote, “When Prohibition was introduced, I hoped that it would be widely supported by public opinion and the day would soon come when the evil effects of alcohol would be recognized. I have slowly and reluctantly come to believe that this has not been the result. Instead, drinking has generally increased; the speakeasy has replaced the saloon; a vast army of lawbreakers has appeared; many of our best citizens have openly ignored Prohibition; respect for the law has been greatly lessened; and crime has increased to a level never seen before.”
Another parallel lies in the War on Drugs in the U.S., which cost the government some $12 billion in 2005. Far greater than that was the $30 billion it cost to incarcerate offenders. And what’s been the result?
1.5 million people in the U.S. are arrested on drug charges every year. Nearly half a million people are behind bars on drug charges, their lives and families ruined.
Yet drugs remain readily available to whoever wants them. Marijuana has become the U.S.’s biggest cash crop; you can buy it in most U.S. high schools. And only 20% of the cocaine and heroin shipped into the country gets intercepted by authorities.
The War on Drugs – just like Prohibition – is not working. Yet no national politician will stand up and admit it.
Milton Friedman, who passed away last November, was a longtime advocate of legalizing drugs, and he saw no progress on the subject in his lifetime.
But imagine the consequences if Washington would wake up and legalize marijuana just as it legalized alcohol.
First, thousands of cancer sufferers and other people with chronic pain would celebrate their ability to find relief legally.
Second, the executives at Phillip Morris – oops, Altria (not to be confused with altruism) – would celebrate, and then make plans to serve the market well.
And third, the illegal market for marijuana would disappear … yes, even if the age for legal use were set at 18.
Just look at alcohol and tobacco. Both are now legal for adult users, but not for children. And where’s the black market? Almost nonexistent. Can you buy moonshine whiskey or homemade beer or black market cigarettes in most high schools in America? No. Because the demand is satisfied by the legal producers.
Who all pay taxes.
Legalizing marijuana would not only create a great new source of revenue, it would also bring quality control to the industry, create thousands of new legal jobs, and – best of all – stop the practice of imprisoning people who were only working to make a buck by filling the market’s demand … which could save us many billions of dollars a year, reduce ancillary violent crime, return people to the labor force and make families whole again.
The case for legalizing harder drugs is not so clear, but I think starting by legalizing marijuana is perfectly logical.
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