the bottom 1%

Libertarian economist David Henderson explains how ending the War on Drugs will lift people out of poverty.

We hear a lot about the top 1%. We don’t hear a lot about the bottom 1%. There are about 313 million people in America today. 1% of 313 million is 3,130,000. In our prisons today are 2,200,000 people. So the people in prison are 2/3 of one percent. And their wages are typically about 23 cents an hour. They are, essentially, the bottom 1%.

Many of them are there for violent crimes, theft, fraud, and other such things. But hundreds of thousands of them are there for buying, selling, or producing illegal drugs. The drug war has put them there. And we taxpayers are paying $30,000 a year and more to keep them there.

So let me get this straight: high-income people are paying lots of taxes so that the government can put poor people in prison and keep them poor or put non-poor people in prison and make them poor.

We hear the occupy people advocate taxing the top 1% more. I’ve got a better idea: let’s tax the top 1% less–they’re already paying a disproportionately high share of taxes–and let a few hundred thousand of the bottom one percent out of prison and out of their grinding poverty in prison.

David Henderson, “The Bottom One Percent“, Econ Log, 29 April 2012.

The incarceration rate in the United States is the highest in the world. This human tragedy in caused, in no small part, by the War on Drugs. It is time to decriminalize victimless crimes.

I do not agree that the top 1% are “paying a disproportionately high share of taxes”, but want to point out that drugs can be legalised without changing the tax code. Taxes and drug legalisation are related, however, for two reasons.  First, maintaining prisoners in jail is costly for taxpayers. Second, and more important, ending prohibition creates opportunities to tax drug consumption (witness the examples of tobacco and alcohol).

3 Responses to “the bottom 1%”

  1. Eric Olsen wrote:

    Hi Larry,

    Interesting Thought du Jour — as always. Recently I came across a few articles related to a recent book published in July 2011. Perhaps you are already familiar with it. The book is: _Drugs and Drug Policy: What Everyone Needs to Know_ by Mark Kleiman, Jonathan Caulkins and Angela Hawken. Dr. Kleiman is professor of public policy at the UCLA Luskin School of Public Affairs. Dr. Caulkins is Stever Professor of Operations Research and Public Policy at Carnegie Mellon University. Dr. Hawken is associate professor of public policy at Pepperdine University.

    The authors state they are against both the War on Drugs and legalization, and claim that there is a third way. While the examples they cite in the WSJ article below are interesting and intriguing, it’s not clear to me if they could be applied at a national level in the US (the examples they cite would, I believe, all need to be adopted and applied at the state and local levels) and to what extent they could actually be effective in taking out the violence of the drug trade in Mexico or in Central or South American countries.

    Here is the article the authors wrote that was published recently in the Wall Street Journal:

    http://online.wsj.com/article/SB10001424052702303425504577353754196169014.html

    Here are two recent opinion pieces on the subject by George Will, drawing heavily from the book:

    http://www.washingtonpost.com/opinions/would-drug-legalization-do-more-harm-than-good/2012/04/04/gIQANg46vS_story.html

    http://www.washingtonpost.com/opinions/should-the-us-legalize-hard-drugs/2012/04/11/gIQAX95QBT_story.html

    Here is a quote from the WSJ article by Kleiman, Caulkins and Hawken, claiming that there is a third way to deal with the drug situation:

    “Fortunately, there are things that we already know how to do that work demonstrably better than our current antidrug regime and avoid the predictably dire consequences of legalization. These practical measures can’t abolish drug abuse or the illicit markets, but they could shrink those problems to a manageable size.

  2. Eric,

    Thanks for the suggested readings, which I had not seen. I will consult them and post anything of general interest.

    I am not sure what a feasible ‘third way’ might be. Jails could be emptied by using fines, community service, etc. as penalties rather than incarceration. But the illegality of drugs would still make it attractive for criminal gangs to supply recreational users. In contrast, if governments treated all drugs the same way they treat tobacco and alcohol, the trade would not attract criminal gangs, even with high consumption taxes.

    There is one alternative to legalisation that works, and that is the Singapore model. In Singapore there are no users of recreational drugs, other than tobacco and alcohol. The reason is very simple. Anyone caught with possession of even a small amount of an illegal substance, if convicted, is sentenced to death by hanging. This is the only sentence allowed by law. There is no appeal, and judges can show no mercy. This type of law, I suspect, would be very effective in the US. It would certainly reduce the prison population! But I doubt it is one of the ‘practical measures’ promoted by Professors Kleiman, Caulkins and Hawken.

    Larry

  3. Kleiman, Caulkings and Hawken recommend legalisation of drugs, combined with policies to discourage their consumption, including prohibition of marketing. This is not a ‘third way’. Tobacco is a very dangerous, very addictive drug, yet possession and use of it is legal almost everywhere. The fact that tobacco is legal does not stop governments from prohibiting all forms of advertising or levying stiff taxes on its consumption. The same would be true for “hard” drugs. Kleiman et al confuse legalisation with freedom to market drugs.

    Also, currently there are heavy penalties for driving while under the influence of alcohol. Similar laws could discourage driving while under the influence of marijuana and other drugs once these substances are legalised.