Pubdate: Fri, 30 Jan 2004
Source: Times, The (UK)
Copyright: 2004 Times Newspapers Ltd
Contact:  http://www.the-times.co.uk/
Details: http://www.mapinc.org/media/454
Author: Graham Searjeant, Financial Editor

NO PLACE FOR BUSINESS IN WHITEHALL'S DRUGS MIND GAMES

LITTLE exercises the liberal mind more creatively than reconciling
impossible contradictions. To the rest of us, it often seems like the
right hand not knowing what the left hand is doing. But that can
underestimate the subtlety of those who devise policies.

For them, it seems perfectly reasonable to lecture us on the need to
save for much bigger pension pots, and at the same time to reduce
those pots by 5 billion pounds a year, plus compound interest for up
to 40 years. There is renewed talk of forcing people to save, a
measure that would undoubtedly be followed by further tax raids.

Regulators are firmly instructed to cut the prices of gas, electricity
and water to the lowest level at which supplies will be sustained.
Other policies demand that prices be put up again to cut consumption
and protect nature.

In these cases, there is at least one common thread. Savers, investors
and companies should not make any more money out of these activities
than is absolutely necessary. If possible, these economic activities
should be conducted without anyone making any profit.

That is also about the only thing all parties concerned with currently
illegal recreational drugs agree on. A liberal society cannot
effectively deter users by law. If the authorities want to crack down,
they can only target those who supply what, in spite of the evidence,
so many people still seem to insist on demanding.

At the opposite end of the spectrum, those who want prohibition laws
to be abolished on libertarian grounds, also want regulation to
prevent commercial production and sale. Green Party members, for
instance, envisage social smoking of cannabis at Amsterdam-style drug
cafes, with the proceeds used to finance local community projects.

 From yesterday, cannabis (other than cannabis resin) has been
downgraded under the Misuse of Drugs Act 1971. Instead of being Class
B, where it ranked alongside amphetamines but below cocaine,heroin,
and Ecstasy, to Class C, where police do not normally arrest people
for possession in private. The perception that cannabis was no longer
very illegal persuaded ministers to place advertisements to say the
contrary. At the same time, substances tagged 'date rape' drugs were
made illegal, as were several more varieties of steroids recently put
on the International Olympic Committee banned list.

Any confusion is intentional. The Office for National Statistics most
recently estimated that one third of men below 25 have used cannabis
within the previous 12 months, along with one in five young women.
However, cannabis was not redesignated on social grounds, or to win
votes. The change was made to improve relations between police and
groups of young men and to free police time for more serious crime (as
well as to fill in more forms monitoring and comparing the
effectiveness of different speed cameras). The change is not expected
to have much impact on the cannabis trade, which remains wholly illegal.

People trying to open a new bank, savings or investment account may
have mixed feelings about this. Under bureaucratic new
money-laundering regulations, they are liable to have to produce
multiple official evidence of who they are. This is not merely
inconvenient for consumers. Taken with other controls, it raises costs
and deters innovation in financial services. Another layer of
procedures, monitoring and dedicated managers is being grafted on to
the compliance system, data recording and marketing
supervision.

As long as we have a large, profitable but illegal trade in all manner
of prohibited drugs, however, regulations against money-laundering are
likely to fail. They will be just costly gestures that make the
economy work less efficiently.

No one knows how big the UK drugs trade is. It is illegal so it is not
publicly recorded. Estimates tend to reflect the attitudes of whoever
is making them. A Home Office study a couple of years ago suggested
that annual sales of cannabis alone were about 1.5 billion pounds. A
consultancy called the Independent Drug Monitoring Unit (IDMU), which
advises courts, puts cannabis at 5 billion pounds. Others, not
inclined to underplay the issue, suggest 8 billion pounds, with a
further 6 billion pounds for cocaine and heroin.

Taking the IDMU figure, it seems likely that the trade in all the main
illegal drugs is about 1 per cent of gross domestic product. That is
comfortably more, for instance, than pre-duty sales of beer.

The cost of keeping this trade illegal, without taking effective
measures to eliminate it, is heavy. The profitability of the trade is
based on the product being addictive and the trade illegal.

This combination keeps prices of some drugs so high that most addicts
cannot afford to buy them regularly. A vast load of petty,
fear-inducing and unsolved crime is committed by consumers. Producers
are probably responsible for an equally high proportion of serious gun
crime, which is expensive and extremely hard to prosecute
successfully.

The entire industry pays no tax. If it did, income tax might be cut by
up to two pence in the pound and still raise as much revenue.

Potentially, all the money raised in this trade might need to be
laundered. The supply chains are so long that it is hard to say how
much money sticks where. Doubtless, however, many cash businesses
exist that would not be worth running if they were not used to launder
drug money. Regulations on banks are unlikely to make much difference
at this level. The illegal drugs trade is also ideal for transferring
funds across the world for nefarious purposes, including providing the
funds for many terrorism groups.

As cannabis slides down the legal scale, prices have been falling.
That reduces crime, especially among soft drug users. As with
electricity (or Ecstasy), however, you would expect a fall in price to
increase sales, which is the main drawback of making the drug fully
legal and commercial. These compromises may satisfy refined Whitehall
intellects. They still make no sense. 
- ---
MAP posted-by: Richard Lake