The economic impact of drug legalization always sparks debate, and a commonly cited name is Harvard economist Jeffrey Miron. He has a new paper out where he estimates that the legalization and taxation of all drugs would decrease government costs by $48.7 billion and increase revenues by $34.3 billion, which means we are foregoing a total $83 billion. The paper also includes a state-by-state breakdown for those interested.

He calls his estimate a conservative ballpark that only addresses the impact on the governments budget. A much more difficult, but I would guess economically more important, impact is the effect on the population’s productive ability; what economists call human capital. Short sighted analysis focuses on the productivity impact of a more drugged up country. I think those impacts would be absolutely dwarfed by the human capital destruction that occurs when you send a young man or woman to prison for a drug charge, both the short-term lost productivity and the long-term damage that is done to their productive ability.

Nonetheless, Miron’s numbers are an important fiscal impact ballpark to have.

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