From Wikipedia article “Argument for and against drug prohibition”. Extracted March 20th, 2010: “Experts like Andreas von Bülow and Milton Friedman concede that almost every serious crime of terrorism is funded by illegal drugs but they don’t agree that prohibition can reduce these phenomena. In fact the prohibition protects the drug cartel insofar as it keeps the distribution in the black market and creates the risk that makes smuggling profitable. As former federal narcotics officer Michael Levine states in relation to his undercover work with Colombian cocaine cartels,
“I learned that not only did they not fear our war on drugs, they counted on it to increase the market price and to weed out the smaller, inefficient drug dealers. They found U.S. interdiction efforts laughable. The only U.S. action they feared was an effective demand reduction program. On one undercover tape-recorded conversation, a top cartel chief, Jorge Roman, expressed his gratitude for the drug war, calling it “a sham put on for the American taxpayer” that was actually “good for business”.
Critics of drug prohibition often cite the fact that the end of alcohol prohibition in 1933 led to immediate decreases in murders and robberies to support the argument that legalization of drugs could have similar effects. Once those involved in the narcotics trade have a legal method of settling business disputes, the number of murders and violent crime could drop. Robert W. Sweet, a federal judge, strongly agrees: “The present policy of trying to prohibit the use of drugs through the use of criminal law is a mistake”.
When alcohol use was outlawed during prohibition, it gave rise to gang warfare and spurred the formation of some of the most well known criminals of the era, among them the infamous Al Capone. Similarly, drug dealers today resolve their disputes through violence and intimidation, something which legal drug vendors do not do. Prohibition critics also point to the fact that police are more likely to be corrupted in a system where bribe money is so available. Police corruption due to drugs is widespread enough that one pro-legalization newsletter has made it a weekly feature.
Drug money has been called a major source of income for terrorist organizations. Critics assert that legalization would remove this central source of support for terrorism. While politicians blame drug users for being a major source of financing terrorists, no clear evidence of this link has been provided. US government agencies and government officials have been caught trafficking drugs to finance US-supported terrorist actions in events such as the Iran-Contra Affair, and Manuel Noriega but the isolated nature of these events precludes them from being major sources of financing.”
Richard M. Ebeling. “The Economics of the Drug War.” The Future of Freedom Foundation. April 1990: “It is a fundamental principle of economic analysis that markets are demand-driven. This means that whenever profit opportunities are present, producers will have incentives to bring forth the supply to satisfy consumers’ desires. The larger the profits to be earned, the greater the incentives and the bigger the supply forthcoming over time. Under conditions of competition, a producer can continue to make profits only if he successfully uncovers new market opportunities, e.g., either discovers improved methods to lower his costs of production, or discerns new consumer demands of various sorts that others have failed to see. The only other method by which existing producers can secure profits is through protection from new competition by government laws and regulations.
Illegal drug dealing is a government-protected monopoly, and this is the real source behind America’s drug problem. Those who passed the drug laws in the United States did not have this as their intention, but it is nonetheless what the economist calls “the unintended consequence” of government intervention. The only way to enter the market is as a criminal. The only way to gain a market share of the business is to make a deal with the existing drug dealers or to gun some of them down in a “turf fight.” The only way to stay outside the hands of the law is to pay bribe money to law-enforcement agents and government officials or set an example for the others by occasionally killing one of them.”