America’s prison population stands at 2.3 million people, with 451,000 of those incarcerated for a non-violent drug offense. In 2017 just under 660,000 people were arrested for possession of marijuana.  These statistics should be astonishing, but in the America of 2019 many of us have become almost numb to the situation because the effects of the war on drugs are all too familiar. Clearly, there’s a human cost of the War on Drugs. But we’re not in a good position to measure that, and so we’re left to calculate the financial cost. The results of those calculations may be surprising, especially when the ripple effects are taken into account. The Cato Institute estimates that the federal government spent $3.96 billion on drug prohibition in 2015. The states are spending as much or more; in 2013 the American Civil Liberties Union estimated that the direct cost of enforcing marijuana laws was $3.61 billion. (The Cato Institute report offers a higher estimate of state spending at $6 billion. While the ACLU took this into consideration along with other sources it chose a mid-range estimate instead.) The $3.61 billion figure included $1.75 billion just for police, but also $1.37 billion for judicial and legal expenses and $0.5 billion for corrections expenses. But the headwaters of this stream of costs is the steady flow of money spent on policing – without arrests clearly none of the other costs would be incurred. Figure 1 displays per capita expenditures on police for marijuana enforcement on the horizontal axis, with the expenditures for judicial/legal and corrections plotted in relation to this, with a line fitted to each to capture the general tendency of spending in the latter two areas to be correlated (unsurprisingly) with the first. As the graph shows, for every $100 a state spends on policing marijuana laws, on average it spends another $66 on judicial and legal matters and $25 on corrections.     

Per Capita Expenditures on Marijuana Enforcement by State Per Capita Expenditures on Marijuana Enforcement by State
These costs, though not without their own difficulties in measurement, are more or less direct costs of enforcing anti-marijuana laws. The indirect costs may be even more difficult to estimate, and we won’t try to estimate them all. But let’s take a look at just one: what’s the opportunity cost of not investing that money elsewhere? What benefits are we foregoing by spending that money on something more productive than arresting people for possession? Here you’re probably thinking “There’s no way in today’s political environment we could ever agree on what to do with that money.” Refunding it to taxpayers would be one popular option, but just as many people would want to divert the money to some other government program. There’s no way we could figure out something to do with that money that would generate agreement among liberals and conservatives, Democrats and Republicans and Libertarians, is there? Actually, there just might be.

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America's Infrastructure Crisis

The Booth School of Business at the University of Chicago conducts a periodic survey of a panel of economists selected to represent the entire political spectrum. The survey questions for June of 2017 included one asking members of the panel to agree or disagree with the statement “The US should increase spending now on roads, railways, bridges and airports (including new projects, maintenance or both).” Just under 80% of the panel – liberals, conservatives, centrists – either agreed or strongly agreed with this statement. (See Figure 2.) It’s not hard to see why. Federal and state budgets have postponed dealing with America’s crumbling roads, bridges, electrical grids, water systems, etc. for years, and as a result, America’s infrastructure received a grade of D+ from the American Society of Civil Engineers in its 2017 report card. And this comes with a clear cost to businesses and households, such as wear and tear on vehicles, lost time due to congestion, power outages, water problems, etc. The AFSC report card provides two critical estimates here: $3.32 trillion will be required over a ten year period to get America’s infrastructure into good shape, but failure to act will result in $3.955 trillion in lost GDP, for the above reasons and more, over a ten-year period. Assuming the costs are spread over ten years, this means that investing $332 billion a year in infrastructure would yield a benefit of $395 billion in GDP, or a return of 19% each year, a pretty healthy number. And yet despite this seeming urgency and the obvious benefits of infrastructure investment, most of these needs are unfunded. The ASCE report estimates that only $1.88 trillion is funded, leaving a $1.44 trillion shortfall, or $144 billion per year. True, the money saved on enforcement would only be a drop in the bucket compared to the infrastructure budget gap ($7.57 billion in combined federal and state enforcement money is only about 5% of $144 billion) but any incremental investment should provide a return of at least 19%. So diverting marijuana enforcement funds to infrastructure investment would improve GDP by $9 billion, a net return on that $7.57 billion of $1.43 billion dollars – just one of the hidden opportunity costs of enforcement. (This is all summarized in Figure 3.)

There Are Better Ways To Use The Money

Even if you haven’t been persuaded that diverting marijuana enforcement money to closing the infrastructure gap is a good and politically feasible idea, this example nonetheless exposes some of the hidden opportunity costs of enforcing anti-marijuana laws. So every time a state considers budgeting another $100 for policing marijuana, whether people realize it or not it’s essentially committing itself to another $66 in judicial and legal spending, $25 in corrections spending, and $19 in lost productivity due to diversion of that money from investment elsewhere – a total of $110 in additional costs that might not be immediately apparent. Add that to the human cost we’ve left unmeasured and the case for continuing to enforce the prohibition on marijuana becomes harder and harder to justify.   

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