Friday, 15 April 2016

Doug Sellman jumps the shark (updated)

I don't expect much that is sensible from Doug Sellman on the matters of drugs and alcohol policy and I certainly don't expect good economics from him. But even by these standard Sellman has lost the plot in this article in the New Zealand Herald.

Sellman notes that the current policies with regard to alcohol and cannabis, are at opposite ends of a continuum. He claims that
Alcohol has a highly commercialised "free market" approach
Given all the regulations on alcohol calling it a "free market" may be going too far. It is however a legal market, thankfully. Sellman goes on to say,
At the other end of the continuum is prohibition, which exists for cannabis and all other recreational drugs (except tobacco).
And it is this prohibition that leads to many of the problems with drugs. The biggest boast organised crime ever got was prohibition. It was this that turned disorganised crime into organised crime.

Sellman goes on,
Excessive harm is caused at both ends of the continuum, where big business flourishes, one within the law and the other outside of it. Both share the goal of profit maximisation from supplying and selling as much of their drug as possible.
You men both groups want to give their customers what they want at a price they are willing to pay. The horror of it!

Later Sellman writes,
Behind the scenes, however, alcohol corporates target new young customers, avoid paying tax, schmooze politicians, and attempt to denigrate those who point out their devious tactics.
"Avoid paying tax", now I wonder where that idea came from. Many, (most?), industries "schmooze politicians". By schmooze - why that particular word? - I assume he means lobby. But somehow lobby doesn't sound as bad as schmooze. Does Sellman have any evidence for these claims? Don't Sellman and this drug and alcohol mates "schmoose" politicians when it comes to policy? Also for lobbying to work politicians have to be willing to do what the lobbyists want. If the politicians just said no the whole issue would go away.

Sellman continues,
The organised criminal cannabis suppliers also flagrantly target the young and avoid paying tax, but they don't try to pretend they are anything but gangsters making money out of drug dealing.
Indeed. But the reason that it is "gangsters" that are making the money out of drug dealing is simply because drugs are illegal. Legal, regulated, firms are just not allowed in the market.

Later we learn,
With change in the cannabis laws coming there is danger that a 180-degree switch might occur - from prohibition to commercialisation.
We can only hope. This would make dealing with the harms a lot easier to deal with. You are no longer turning those badly effected by drugs into criminals.

Sellman goes on to misunderstand basic economics.
Lobbying of our parliamentarians may already be under way by business leaders salivating at the new fortunes they anticipate reaping. This is especially so since the dramatic changes in the United States where four states now have laws allowing private businesses to supply and sell cannabis.
But if we had a legal competitive market for cannabis then in the process of trying to reap these fortunes they would force economic profits towards zero.

Sellman then says,
There are alternatives to a private business model, one of which is the establishment of state-owned enterprises.
Must we really point out  again all the problems there are with state-owned firms?

Then it is pointed out that,
With the Government taking control of drugs, the huge profit from sales goes back to the Government for the greater good. Black markets are undermined while health promotion can be genuinely undertaken at the point of sale, motivated by the fact the state bears the costs for harm from excessive use of these drugs.
But as noted above, with competition there will not be huge profits to make and given that state-owned firms are generally less efficient than private ones whatever profits there are would be less under government ownership. Also with private firms the profits that are made will be taxed. So there would be a trade-off between a higher rate of profit from a less profitable state-owned firm and a lower tax rate on the higher profits of  a private firm. Which would give the higher payment to the government is not clear.

Sellman ends by saying,
The continuance of rampant commercialisation of alcohol with the addition of an exuberant privately driven cannabis industry would be the very worst outcome of re-thinking cannabis law.
I can't help but think it would in fact be the best of all practical outcomes. The harms would be easier to deal with and we would have an legal, efficient industry.

Update: An interesting comment from the report "Public health and international drug policy" from the Johns Hopkins-Lance Commission on Drug Policy and Health, published (pdf) at the website of the Lancet on March 24, 2016.
Although regulated legal drug markets are not politically possible in the short term in some places, the harms of criminal markets and other consequences of prohibition catalogued in this Commission will probably lead more countries (and more US states) to move gradually in that direction—a direction we endorse.

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