Ain't Nobody's Business If You Do



We don't seem to be able
to check crime,
so why not legalize it
and then
tax it out of business?
THIS IS A CHAPTER ABOUT money—what it costs us in good old Yankee dollars to enforce laws against consensual activities. We will not be exploring the cost in human suffering, the cost to our civil rights, the cost of our religious freedom, the cost to our moral character, the cost to our personal safety, or the cost to our human resources. This is a chapter about dollars and lack of sense.
We will explore not only what we spend each year enforcing laws against consensual activities, but also what we might gain if we brought the underground economy of consensual activities aboveground.
Let's start with what we spend on enforcing laws against consensual activities, and let's start with the easy figures. Because there's a war going on, we get wartime reporting (that is, lots of reporting) on drugs. Tens of millions of dollars are spent each year gathering, compiling, analyzing, and publishing drug statistics. The Department of Justice even has a toll-free number (800–666–3332). At taxpayers' expense, you can have all your questions answered about drug busts, drug laws, and the war on drugs' battle plan. Consequently, what we are spending on the consensual crime of drug use is easy to discover—sort of.

If you started a business
when Christ was born
and lost $1 million a day,
it would still take
another 700 years
before you lost $1 trillion.

The obvious figures are: each year we spend $13 billion at the federal level and $16 billion at the state and local levels to catch and incarcerate (and, to a far smaller degree, educate) drug possessors, users, manufacturers, and traffickers. That comes to $29 billion a year.

Although this is a staggering sum of money, it is only the amount spent by the Justice Department, law enforcement, courts, and correctional institutions—the nail 'em, impale 'em, and jail 'em people. What about the other governmental divisions?

Here the figures get murkier. Government bureaucrats don't like taxpayers calling up and asking such bothersome questions as, Where does the money go? Getting information, therefore, has not been easy. The agencies don't have it; don't know who has it; don't know where to get it; and why do you want it, anyway?

Stop wasting jail space on prostitutes, drug users and other victimless criminals. Even if we find it morally acceptable to imprison these people for choices they make regarding their bodies, we must realize that we simply cannot afford to continue clogging the court system and the prison system with these harmless criminals.
For example, how much of the $21 billion we spend each year on foreign aid, international financial programs, and diplomacy is used to persuade other countries to stop growing, manufacturing, and exporting drugs to the United States? Hint: almost all foreign aid to countries that even might produce drugs is tied directly to those countries' pledges to eradicate the drug menace within their borders. Shall we conservatively say $3 billion?
How much of the $4 billion Coast Guard budget is spent on intercepting drug-running boats? The Coast Guard claims about one quarter of that. Shall we take their word for it? Okay. Here's another $1 billion.
And then we have that great Black Hole of money, information, and proportion: the Defense Department. How much do the Army, Navy, Air Force, and Marines spend keeping America drug free? We know they're going to spend $260 billion this year on something, but how much of it will be fighting the war on drugs?
A clue comes from the 1993 Department of Justice publication Drugs, Crime, and the Justice System:

The Posse Comitatus Act of 1876, which prohibited military involvement in law enforcement, was amended in 1982 to allow State and local law enforcement officials to draw on military assistance for training, intelligence gathering, and investigation of drug violations. The amendment provided for the use of military equipment by civilian agencies to enforce drug laws.

In 1989, Congress enacted a law designating the Department of Defense as the lead agency for detecting and monitoring aerial and maritime transit of illegal drugs.

We have to pursue
this subject of fun
very seriously
if we want to say competitive
in the twenty-first century.
In Thailand, for example, the U.S. military supplies the Thai government with planes, reconnaissance equipment (for the airplanes), computers (to analyze the reconnaissance), and training (how to operate the computers that analyze the reconnaissance gathered from the equipment flown in the airplanes). What are they looking for? Poppy fields, the source of opium, the source of heroin. This scenario is repeated in country after country.
In the United States, military helicopters are engaged in low-flying surveillance looking for marijuana growing in backyards. Once the plants are discovered, ground-based law enforcement personnel arrest the owner, confiscate the owner's property, and practice the now-standard scorched-earth policy.
And then there's the military's war on drugs within the military. If, as reported by the Pentagon, the military spent half a billion dollars from 1980 to 1990 ferreting out homosexuals in its ranks (and we can add that $500,000,000 to the cost of consensual crime enforcement), imagine how much they spend eradicating the far more prevalent consensual activity of drug use. (The Defense Department's budget for military police, courts, and jails is separate from the Bureau of Justice's expenditures.)

State prison construction budgets
are up 73% since fiscal year 1987.
44 states are building new prisons
or expanding existing ones.

So, all together, what portion of its $260 billion does the Defense Department spend fighting the war on drugs? Let's say a very conservative $7 billion.

The war on drugs alone, then, is costing $40 billion per year. What about the rest of the consensual crimes? Here the statistics are not so readily available.

In some cases, information is simply not available. In the arrest statistics for consensual crimes, for example, only drug abuse, gambling, prostitution, drunkenness, disorderly conduct, and vagrancy are separated out. Homosexuality, adultery, bigamy, and polygamy are put into a category called sex offenses which includes arrests for any number of nonconsensual sexual activities. Further, consensual crimes are often hidden in other categories. For example, when two people agree to perform a consensual activity, they are sometimes charged with conspiracy to commit a felony. By charging people with conspiracy, the police don't have to prove the people actually did something, only that they conspired to do it. The word conspiracy has some fairly evil connotations. It simply means, however, agreeing to do something. So, if you agree with another person to engage in drug use, prostitution, sodomy, adultery, gambling, or anything else illegal, you can be arrested for conspiracy. You can also be arrested for conspiring to blow up a building, murder someone, or kidnap a four-year-old. It all goes under the general category of conspiracy to commit a felony. There are other terms that hide consensual crimes. Pandering (the charge Heidi Fleiss was arrested for) and racketeering are two favorites.

Then there's the category called All Other Offenses. Dumped into this category are 3,743,200 arrests—22% of the total arrests in 1994. What's in that category? After dozens of phone calls, I discovered the answer: nobody knows. It's a catch-all where violations of all local, state, and federal ordinances that don't fit into the Department of Justice's clear-cut categories are put. How many of those are consensual crimes—and what it cost to enforce them—is anybody's guess.

No government ever
voluntarily reduces itself in size.
Government programs,
once launched,
never disappear.
Actually, a government bureau
is the nearest thing to eternal life
we'll ever see on this earth!

Those who study such things and make professional guesses (expert opinions) estimate that between 4 and 6 million of the 15 million arrests each year are for consensual activities. Let's take the lower end of that range and call it 4 million.

We know that in 1994, 1,350,000 of these 4 million arrests were for drug offenses. We also know that the government spent $29 billion on those 1.35 million drug arrests. Therefore, we can conservatively estimate that it spends at least another $10 billion a year on the other million consensual crime arrests, trials, and incarcerations.

Adding the $3 billion of foreign aid and the $8 billion spent by the Coast Guard and the military on consensual crimes, it's fair to say that we spend $50 billion a year on prohibiting consensual crimes. In fact, it's almost certainly an understatement.

There are innumerable financial costs I'm not including in that $50 billion. Each year, for example, $10 billion in personal property is stolen and never recovered. As we shall see in the chapter, Consensual Crimes Encourage Real Crime, most of these thefts are committed by addicts to pay for the artificially inflated price of their drugs. Many of these thefts involve violence. According to the American Association for Public Health, violence in this country costs nearly $500 billion in medical care and lost productivity.

He uses statistics
as a drunken man
uses lamp-posts
—for support
rather than illumination.

There are two kinds of statistics, wrote Rex Stout, the kind you look up and the kind you make up. When we want to explore how much money the American economy loses each year by keeping the traffic of consensual crimes underground, you can make up as many statistics as I—or any expert—can invent. Surveys asking people to admit to criminal activity are notoriously inaccurate, and statistics given about some future event aren't really statistics, but projections, guesstimates, crystal-ball gazing, and blue-skying. Whether you see Blue Skies or Stormy Weather, it's still a weather forecast and, as Gordy, the weatherman on The Mary Tyler Moore Show, defensively asked, What do you think I can do? Predict the future?

Determining how much money is lost to the U.S. economy due to laws against consensual activities requires knowing two things: (a) How big is the underground of consensual crimes? and (b) How much bigger or smaller would this economy become if it were legalized?

Determining the size of the underground economy depends on law enforcement estimates and surveys. This is a problem. Law enforcement estimates go up and down depending on what law enforcement wants the estimates to show. When law enforcement wants more money, it gives estimates of crime so severe it would seem that, for the protection of all citizens, leaving one's house should be made illegal. On the other hand, when law enforcement wants to show what a stellar job it is doing, the crime wave of April becomes the pastoral of May.

The other way to determine the level of consensual crime activity is through surveys conducted either over the phone, in writing, or in person. Even when surveys are conducted anonymously, the person being surveyed hardly feels anonymous. An organization, after all, had to call or write you. It has your phone number or address. When you go in person to take part in an anonymous survey, you can hardly walk into the interview wearing a ski mask. (As these surveys sometimes take place in federal buildings, you had better not walk in wearing a ski mask.) Whether taking the survey by phone, by mail, or in person, the participant has every reason to believe that his or her identity is not entirely secret. Therefore, when one's responses could have criminal consequences, one tends to revert to self-protection and, quite simply, lie. Studies that asked about recent drug usage, for example, backed up by urine samples, revealed that only about half the people who had taken drugs (as revealed in the urine samples) admitted in the survey to having taken them.

As society has become
less tolerant of drugs,
people have become
less willing to report drug use,
even in anonymous surveys.

What does all this mean? It means we don't know how big the underground economy in consensual crime is. Looking at a number of studies, one begins to get an idea of at least a range of underground commerce. I cannot, however, in good conscience say, Because of this statistic, this study, this report, and this expert's opinion, we know the underground economy is . . . How can one make a prediction without accurate data? And how can we predict the future when we still disagree about the past?

For example, although most historians agree that alcohol consumption increased during Prohibition, there is a school of thought that says alcohol consumption decreased during Prohibition, and took quite some time after Prohibition to build up to pre-Prohibition levels. Therefore, to people who believe this claim, Prohibition was a success. This reconstruction of history seems to have been circulated by William Bennett while he was drug czar, as justification for (a) the drug war and (b) his czarship. Others who find it too inconvenient, uncomfortable, or time-consuming to re-evaluate their stance on drugs also bandy about the Prohibition-as-a-success argument.

Carlye said,
A lie cannot live;
it shows he did not know
how to tell them.

This view of history relies on official government statistics on the consumption of alcohol before, during, and after Prohibition. These figures, for the most part, did not track home brewing, bootlegging, allowing grape juice to ferment into wine (Bad, grape juice, bad!), using industrial alcohol for personal consumption, and importing alcohol from Canada, Mexico, and beyond the three-mile limit. About the only alcohol the government officially tracked during Prohibition was alcohol produced for medicinal purposes. While this was used for recreational purposes as well, it certainly did not reflect alcohol's complete recreational use. Prohibition ended as America was in the depths of the depression. Many people couldn't afford food, so it's not surprising they couldn't afford alcohol. The depression led directly to World War II, where sacrifices and shortages were commonplace, and a good deal of the drinking population (the young men) were shipped overseas where they did their drinking (or at least wanted to). Declaring that Prohibition worked is an example of using official—but drastically incomplete—figures to support a convenient point of view.

So, guess along with me as we try to determine what the underground economy in consensual crimes might currently be, what it might become if it were allowed to rise aboveground, and how much we can tax it (without driving it back underground again).

3,699 metric tons of opium,
14,407 metric tons of marijuana,
and 271,700 metric tons
of coca leaves
were produced worldwide in 1993.

We know more about the size of the underground of drugs than any other consensual crime. Experts testifying before congressional committees say that $1 trillion in drug money is laundered worldwide each year. It is estimated that 40%, or $400 billion, of this is laundered in the United States. The remaining $600 billion is laundered outside of the United States, but much of that $600 billion either could have originated in the United States, or could have been used by a middleman to purchase drugs bound for the United States. (The U.S. is the #1 licit and illicit drug market in the world.)

That's just the amount laundered. Drug money doesn't have to be laundered until some of the big guys want to spend the money in big ways on big things. Smaller amounts of dirty money pass between smaller players all the time. All these cash transactions are not included in the $1 trillion figure of laundered money.

Another indication of the plenitude of drugs and the volume of sales is that each time law enforcement announces a new record drug bust in which tons and tons of some illicit substance worth billions of dollars were seized—usually with a comment such as, "At least this poison won't find its way into the schoolyards of America"—the street price for that particular drug does not alter one cent.

Another way to estimate the size of the underground drug market would be to look at the value per pound of drugs seized and multiply that by the amount of drugs most experts claim is never detected. We would still get an astronomical figure. We can't pretend, however, that this would be the figure for drug sales if drugs were legal. The only thing that keeps drug prices high is that drugs are illegal. When legal, the marketplace will soon dictate the proper price. That people have been willing to pay outrageously inflated prices for drugs indicates they would also be willing to pay outrageously inflated taxes on drugs.

I believe in
getting into hot water;
it keeps you clean.

Yes, some people will abuse drugs (as they already do), and drug abuse will have its costs to society (as it already does). Drugs, however, unlike cigarettes, will be able to pay their way—and create a significant amount of government revenue besides. What pot smoker, for example, would not pay $5.00 for a pack of twenty neatly rolled joints, even if $3.50 of that went for taxes?

Currently, legalized gambling is a $300 billion industry. In terms of illegal gambling, the amount gambled on sports alone is estimated at more than $300 billion—$5 billion just on the Super Bowl. One can imagine the increase in aboveground gambling if there were casinos in all major cities, slot machines in bars, and video poker games at 7-Elevens. If gambling were legal, placing a bet on almost anything you wanted could be done over the phone, using your Visa or MasterCard. In New York, right now, you can make a phone call and bet on the horses using the charge card of your choice. All these activities are—like state lotteries and the stock market—above ground and taxable.

I'll tell you, it's Big Business.
If there is one word
to describe Atlantic City,
it's Big Business.
Or two words—Big Business.

Illegal gambling winnings traditionally go unreported and therefore untaxed. If all gambling were legal, honest people who win private wagers could remain in the good graces of their government by sending in a small donation from time to time.

Prostitution. Hmmmm. That's an interesting one. No one seems to even guess at the number of prostitutes, much less acts of prostitution by amateurs. The only state in the United States in which prostitution is even partially legal, Nevada, is very closed-mouthed about how much money prostitution takes in. It has a Brothel Association, and the man who is the head of it will talk to you (nice fellow), but how much the bordellos take in and how much they pay in taxes is treated as some sort of state secret. (Which, apparently, it is.)

What it comes down to is this:
the grocer, the butcher, the baker,
the merchant, the landlord,
the druggist, the liquor dealer,
the policeman, the doctor,
the city father and the politician—
these are the people who make money
out of prostitution.
A House Is Not a Home

To determine the national prostitution economy, we could take the number of arrests and multiply it by the number of clients the average prostitute sees between arrests, and multiply that figure by the average amount the average client contributes (financially, that is), and that would give us a figure. The problem is, most prostitutes I've talked with don't get arrested even once in a given year—most haven't been arrested at all. The number of clients between arrests, then, would be difficult to determine.

So what I thought I'd do is compare prostitution to an already aboveground industry that is similar to prostitution. We need to find an industry that projects a friendly image, satisfies a real need at a fair price, is conveniently located, and is designed for rapid turnover. The obvious answer: fast food. McDonald's alone pulls in $21 billion a year; Burger King, $6.4 billion. Even the slogans fit: We do it all for you and Have it your way. Then there's Wendy's (sounds like a bordello, doesn't it?) and Jack-in-the-Box. (I'm not saying a word—and I'm not even going to mention In-N-Out Burger.) Some innovative bordellos might, like the burger chains, offer drive-through service: pick what you want from a large illustrated menu, pay at window #1, pick up your order at window #2.

Of course, not everyone wants fast food. So, there are dining places from Big Boy's to Lutece that could be the inspiration for more substantial bordellos. There could even be a theme park, Bordelloland. (Disney's theme parks rake in $3.3 billion per year.) Also known as the Magic Fingers Kingdom, it could feature such attractions as Wenches of the Caribbean, The Haunted Whore House, The Gay Nineties Dance Hall, Chip and Dale's Chippendale Review, and the Mayflower Madam River Cruise. (I bet you thought this was gonna be some boring chapter full of numbers and statistics. I was going to do a whole thing here on Mickey and his dog Pimpo and Minnie Madam, but I think we've had enough silly puns for this chapter. Let's get on with it.)

That place [Disneyland]
is my baby,
and I would
prostitute myself for it.

Unlike drug prices, prostitution rates will probably not lower significantly with legalization. Illegality does not significantly increase the price of prostitution—just the risk to both prostitute and client. Also, if prostitution ever became acceptable, the amount spent on flowers, candy, and greeting cards would probably drop. The loss to these industries would have to be deducted from the increase to the aboveground economy caused by legalizing prostitution. Nevertheless, the economy, overall, would be ahead.

Drugs, gambling, and prostitution are the Big Three underground moneymakers in consensual crime. There would be, however, significant boosts to the economy if the stigma attached to the other consensual crimes were eliminated through legalization.

Removing the laws against and, over time, the stigma of homosexuality would cause more and more gays to come out—come out and spend their money. Cities with large gay populations such as New York, San Francisco, and Los Angeles don't just have gay bars, but gay restaurants, gay bookstores, gay mini-malls, gay clothing stores (which carry clothing that looks very much like the clothing the GAP will be selling six months later), gay gyms, gay coffee shops, gay video stores, gay supermarkets, and just about every other human gathering place you can name. West Hollywood, California, with a 30% gay population, has a gay hardware store and a gay Mrs. Field's Cookies.

I do not think
Cary Grant was a
homosexual or bisexual.
He just got carried away
at those orgies.
on the House floor

If gay marriages were legalized and bigamy and polygamy took off among heterosexuals (or gays), consider the boon to the wedding industry, already a $32 billion empire.

If we legalize—even encourage—transvestism, some people would be buying an entire second wardrobe. What a shot in the arm for the clothing industry. And shoes. Let's not forget shoes. Somewhere out there in America are any number of men, who, deep in their heart, want to be Imelda Marcos. And who knows how many women have Donald Trump's taste in suits? (His suits may not look good, but they're very expensive.)

And so on down the list of consensual crimes.

Another great advantage of moving an underground economy aboveground is that for every $50,000 you move aboveground, you create a new aboveground job (or move someone who is currently working in a non–tax-paying underground job into a tax-paying aboveground job). Removing the laws against consensual activities would create at least 6,000,000 new jobs (or turn 6,000,000 underground employees into tax-paying citizens).

In all (with high taxes on drugs, the spur to the economy, the 6,000,000 more taxpayers, and all the other factors discussed), my expert conclusion is that legalizing consensual crimes would add $150 billion in tax revenue to the government treasury. When we eliminate the $50 billion we are currently spending to enforce the laws against consensual activities, we're looking at $200 billion per year in increased revenue.

In 1950,
the average family of four
paid 2% of its earnings
to federal taxes.
Today it pays 24%.

And now for the bad news.

Much of the $50 billion we're spending to prosecute consensual crimes each year we are, in fact, not just spending but borrowing. The $50 billion gets tossed into our national debt. Since it's already topping $5 trillion, $50 billion more hardly gets noticed.

But, noticed or not, the national debt does command our interest—6% interest to be exact. To finance the annual persecution of 4,000,000 Americans and the incarceration 750,000 more, the government sells treasury bills, which pay, as of early 1996, 6% interest per year. Fifty billion borrowed for 30 years at 6% compound interest comes to $250 billion in interest—providing we pay it off in 30 years, of which there is no guarantee.

Those who bemoan the harm consensual crimes might do to their children should take a good look at the very real harm that will befall their children when the interest on financing this year's Inquisition comes due somewhere down the pike. For every year we spend $50 billion enforcing laws against consensual activities, we're adding an additional $250 billion to the next generation's pile of inherited woes. That's if interest rates stay at 6%. Every percentage point they go up adds $67 billion to the total bill.

None of this, by the way, takes into account how much we're spending to borrow the $150 billion we could be collecting in yearly tax revenues.

The blame for [the national debt]
lies with the Congress and
the President, with Democrats and
Republicans alike, most all of whom
have been unwilling to make
the hard choices or to explain
to the American people
that there is no such thing
as a free lunch.

So, our yearly grand total for enforcing the laws against consensual activities is $450 billion. If interest rates climb from 6% to 7%, it will come to an even half-a-trillion dollars a year.

That amount could be used in any of the following ways:

For seven and a half years
I've worked alongside
President Reagan.
We've had triumphs.
Made some mistakes.
We've had some
sex . . . uh . . . setbacks.

Rather than spinning our wheels asking what we can do to stop consensual crimes, why not direct all that creative energy toward how we can best spend that $450 billion?

Finally, consider that almost every consensual criminal who goes through the criminal justice system and is incarcerated for, say, a year, becomes a permanent negative economic unit. Most people in society are positive economic units—that is, they produce more in goods, services, or ideas than they consume. Negative economic units, however, are a drain on society, the economy, and the nation. An ex-con is essentially unemployable—especially during times of high unemployment. This forces the ex-con—in order to physically survive—to go on welfare, turn to crime, or both. Eventually, enough of these negative economic units become an economic black hole that, unseen, sucks the lifeblood from even the most productive economy. By turning ordinary consenting adults into criminals, we are creating millions of economic vampires.

We must be very careful that we do not unnecessarily create negative economic units. There will always be the criminals—those who go about physically harming the person and property of others—and they will need to be put away. Paying for this is part of the cost of living in a safe country. Each life destroyed, however, by the arrest, trial, and incarceration of a consensual criminal is an unnecessary permanent liability on our country and our economy. These people simply don't believe in the American dream anymore, know the American system is not fair, and are quite convinced that the entire system doesn't work.

We are not to expect
to be translated
from despotism to liberty
in a feather bed.

And why should they believe in the system? Each time, as a child or an adult, they pledge allegiance to the flag, they are promised liberty and justice for all. They used that liberty, and what did they get? Injustice. So much for the republic for which it stands. This psychic drain can be even more devastating than the economic drain, destroying the optimism, enthusiasm, and well-being of a nation.

The laws against consensual activities, then, hurt us all. Each life destroyed due to the enforcement of these laws is like a piranha. Alone, piranhas are relatively harmless. When enough of them combine, however, they can turn a cow into a skeleton within minutes. Imagine what they can do to the goose that laid the American Golden Egg.


Peter Mcwilliams Home Page

Order the Book

Copyright 1996 Peter McWilliams & Prelude Press

Site Credits