Who's the millionaire that Rand didn't like?

Jon,

Look at what happened when they made computers legal.

The price-per-kilobyte dropped by well over 90%. If we take the computer example, and apply it to the heroin example, then it's easy to see that there wouldn't be billionaire heroin dealers. That's argument # 1.

Well, okay, that one's not a really good argument. However, if we're raising our standards and only sticking to really good arguments, then we ought to research articles on drug decriminalization. Not arguments assuming heroin wouldn't be worse than alcohol (like you are trying to say).

Decriminalization would result in a huge spotlight shining on drug users. Right now, they're insulated from the public eye by social or legal necessity. So, it's true that "heroin’s market would shrink due to its inherent undesirability compared to alcohol." Pro-decriminalization articles are the first to point this fact out.

Oops, I wasn't supposed to say that, was I? I was supposed to shy away from the really good arguments. I'll try to do better next time.

Ed

Post 41

Tuesday, January 27, 2009 - 7:01am

Ed,

Did you follow along where I assumed the market for heroin would drop by 90% and your assertion that there would be no millionaires among the producers still comes out looking bad?

Find me a decriminalization that brought upon a 90% drop. America’s repeal of prohibition doesn’t do it (despite your previous enthusiasm for a comparative to alcohol.) Find something in reality to support what you say.

Post 42

Tuesday, January 27, 2009 - 8:00am

Jon,

Find something in reality to support what you say.

First of all, that's setting the bar pretty high, isn't it? I mean, I have to base my argument in fact instead of fantasy? Who are you to demand this of me?

:-)

Anyway, a lot of folks who tell you to point to something in reality which will remove their doubts -- because it's lit up with fancy neon signs telling folks how to think -- are just concrete-bound thinkers. Like Wittgenstein, they were dismayed that nature doesn't reveal herself without us having to think. In essence, their request: "Show me where it says ..." is a request for us to do their thinking for them. It's just like saying: "Show me where nature concludes that for us."

Now, I'm not saying that you're one of those kinds of folks -- folks who demand you hit them over the head with a pre-formed, ready-made conclusion, rather than with the proper premises that inevitably lead to that conclusion. Here are my premises:

1) heroin dealers are rich now, but not because they make a good product that most folks want
2) heroin dealers don't have a large market
3) heroin dealers are rich now because of artificially-inflated prices they are able to charge
4) in a free market, this artificial inflation will vanish
5) in a free market, the number of heroin suppliers will dramatically increase
6) in a free market, the information of how bad heroin can be for you will increase
7) in a free market, alternatives to heroin will increase
8) in a free market, the number of heroin users will not dramatically increase

Draw your own conclusion, Jon.

Ed

Post 43

Tuesday, January 27, 2009 - 8:45am

Some of your premises are just plain wrong. #2: The market is $65 billion annually, so define “large.”

Most of your premises are really predictions. Comparisons to what happened when other substances were decriminalized (such as alcohol) do not bear out your predictions. (Do feel free to find an example that DOES bear out your predictions, if you can find any.) For example, #5. Hasn’t happened with alcohol. What we have in alcohol is a few very large, profitable producers handling the lion’s share of the global market, not millions of moon-shiners putting each other out of business and seeing the alcohol market impossible to make money in.

Mostly, you seem to be still stuck on ‘prices will go down and no one can money in such an environment.’ You ignore that prices will come down due to lowered producer costs, preserving profit. You mention computers (!) as an example, ignoring that falling prices have not made it impossible to make money in the computer business.

Keep trying. I mean, start trying.

Post 44

Tuesday, January 27, 2009 - 10:37am

I believe Ed wrote, in his post, "heroin's market would shrink due to its [heroin's] inherent undesireability compared to alcohol." I don't see how this makes any sense. Alcohol is legal and available. If it is "inherently" more desirable than heroin, why wouldn't heroin addicts be buying and using the cheaper drug, alcohol??

Post 45

Tuesday, January 27, 2009 - 2:06pm

It would also help if you would distinguish between opium producers - farmers in asia - and heroin dealers - mobsters in urban East Asia and in the West.

Presumably what would happen is that small growers would lose market share to large growers. As it is now, since the crop is illegal, small growers who can more easily hide have an advantage. If growing is legal, economies of scale will lead to factory farming. How many mom and pop tobacco growers are there? The huge middle-man smuggling infrastructure will go away. Street dealers and user-dealers will disappear. No one will buy from a junkie friend with a connection when he can get pure product from a pharmacy. I can't imagine that there will be much call for niche markets. I don't recall any movie junkies ever saying they would want to pay more for smack with a nice "bouquet."

I think the heroin market would be much more analogous to the sugar market (sugar is sugar) than the alcoholic beverage market. Eventually, you will simply get a good reliable return on investment growing opium, as do the sellers of salt and aspirin. Profits will be made by cutting the cost of production, not by brand-name marketing. And of course, drugs will be taxed, taxed, taxed. Eventually you will have a few large stable producers as you do now with gasoline, aspirin and sugar, each making a small reliable profit and depending upon size for survival.
(Edited by Ted Keer on 1/27, 2:58pm)

Post 46

Tuesday, January 27, 2009 - 2:08pm

Tuesday, January 27, 2009 - 2:31pm

There are also the benefits gained through reduction of federal enforcement agencies, not to mention legalization would undoubtably lead to production shifting toward regions that are more stable, possibly into the country, as local production would be significantly easier than bringing the product in from Asia. That would further reduce the organized crime element and the smuggling element. It would also force those regions into sustainable staples that they can actually use.

Post 48

Tuesday, January 27, 2009 - 4:12pm

Why does anyone care how much a heroin producer would make if heroin was decriminalized?

Post 49

Tuesday, January 27, 2009 - 4:22pm

That's an interesting question, John. Maybe even more interesting than how much heroin dealers would make after legalization. Why don't you start your own thread and discuss it there?

Post 50

Tuesday, January 27, 2009 - 4:31pm

Seems a bit much don't you think Ted?

I don't see what difference it makes whether he would be virtuous or not. Either selling heroin is considered virtuous or it isn't. How much he makes would be a non-objective measure of virtue. Are potato farmers less virtuous than jewelers because they don't make as much money?

I do know criminalizing heroin is not a virtue. Whether someone chooses to produce or consume it is none of my concern.

(Edited by John Armaos on 1/27, 4:46pm)

Post 51

Tuesday, January 27, 2009 - 5:45pm

John,

I don’t care how much they would make.

Ted,

You raise an interesting question. I wouldn’t expect ho-hum commoditization. I have the impression that pre-ban use of branded products containing opiates ran far and wide from local anesthetic powders for toothaches to cough syrups. I would expect entrepreneurs to be at least as imaginative today as they were a century ago. I imagine branded products that flourish due to their safety features. (You mention sugar and other commodities, but M&Ms consist of nothing but commodities. Mars & Co. makes billions.)

Post 52

Tuesday, January 27, 2009 - 6:00pm

Ed,

There's something called "the price elasticity of demand," which determines how much a producer can charge for his product. The demand for a product like insulin is very price inelastic, meaning that if the price were to rise by a certain percent, the quantity demanded would fall by a lesser percent, because consumers would tend to pay the higher price rather than go without the product. So, in this case, the producer could increase his profits by raising his price.

Bottled water, on the other hand, would most likely be price elastic, meaning that if the producer were to raise his price by a certain percent, the quantity demanded would fall by an even greater percent. Unlike the supplier of cocaine, the producer of bottled water would lose money by raising his price.

What would the elasticity of demand be for cocaine? Would it be more like insulin or more like bottled water? Well, of course, it would be more like insulin; it would be price inelastic, because the users would be overwhelmingly addicts. That means that the producers of cocaine could charge a relatively high price and still get people to buy it.

The point is that if cocaine were legal, it would undoubtedly remain a profitable business.

- Bill

Post 53

Tuesday, January 27, 2009 - 6:01pm

There is a difference, of course, between opium and heroin. I wouldn't expect heroin itself - injected form - to become marketed based upon side effects like "taste." Not really opium either, although I could see it becoming, say, an additive in cigarettes.

I have not found opiates to be at all pleasant, and have been on a morphine drip and had pure morphine prescribed to me, which I found quite easy to stop using. I am not about to try heroin in order to make this discussion any more empirical.

Post 54

Tuesday, January 27, 2009 - 6:33pm

Jon L if you don't care how much they would make, why are you debating it with Ed?

Post 55

Tuesday, January 27, 2009 - 6:58pm

John, if you don't care what other people care about who will make what, then why do you ask?

Post 56

Tuesday, January 27, 2009 - 8:00pm

I think it’s a fair question, Ted.

John, I would answer that it started at the first posts to the thread. Ed asserted that pile-of-cash = virtue, and therefore qualms about any millionaire are categorically misplaced.

I offered televangelists and heroin business as counterfactuals to the assertion that every millionaire = virtue. And we’ve been arguing ever since.

Ed asserted that those in the heroin business could never stay rich, even if they could get that way. He said this must be so because the free market teaches us to be virtuous.

I just find it all so damn fascinating, that’s all. How could I not argue with him?

He likes it.

When I said I don’t care, I mean that it’s OK with me that televangelists and drug businesses will make money. I see no point in pretending that this is nothing to worry about because we can rule it out from the armchair. I was only arguing against that last part.

Post 57

Wednesday, January 28, 2009 - 9:52am

One of these days, Jon, I'm going to get up from my arm chair and sock you in the kisser ...

Post 58

Wednesday, January 28, 2009 - 10:03am

So did you ever get an answer to your original question?

Post 59

Wednesday, January 28, 2009 - 1:04pm