A 2005 cost-benefit analysis of marijuana prohibition by Jeffrey Miron, a Harvard economist, calculated that ending marijuana prohibition would save $7.7 billion in direct state and federal law enforcement costs while generating more than $6 billion a year if it were taxed at the same rate as alcohol and tobacco. The drug czar’s office says that a gram of pure cocaine costs between $100 and $150; a gram of heroin almost $400; and a bulk gram of marijuana between $15 and $20. Those transactions are now occurring off the books of business and government alike.

Image Credit... David Sandlin

As the history of alcohol prohibition underscores, there are also many non-economic reasons to favor legalization of vices: Prohibition rarely achieves its desired goals and instead increases violence (when was the last time a tobacco kingpin was killed in a deal gone wrong?) and destructive behavior (it’s hard enough to get help if you’re a substance abuser and that much harder if you’re a criminal too). And by policing vice, law enforcement is too often distracted at best or corrupted at worst, as familiar headlines about cops pocketing bribes and seized drugs attest. There’s a lot to be said for treating consenting adults like, well, adults.

But there is an economic argument as well, one that Franklin Roosevelt understood when he promised to end Prohibition during the 1932 presidential campaign. “Our tax burden would not be so heavy nor the forms that it takes so objectionable,” thundered Roosevelt, “if some reasonable proportion of the unaccountable millions now paid to those whose business had been reared upon this stupendous blunder could be made available for the expense of government.”

Roosevelt could also have talked about how legitimate fortunes can be made out of goods and services associated with vice. Part of his family fortune came from the opium trade, after all, and he and other leaders during the Depression oversaw a generally orderly re-legalization of the nation’s breweries and distilleries.

There’s every reason to believe that today’s drug lords could go legit as quickly and easily as, say, Ernest and Julio Gallo, the venerable winemakers who once sold their product to Al Capone. Indeed, here’s a (I hope soon-to-be-legal) bet worth making: If marijuana is legalized, look for the scion of a marijuana plantation operation to be president within 50 years.

Legalizing vice will not balance government deficits by itself  that will largely depend on spending cuts, which seem beyond the reach of all politicians. But in a time when every penny counts and the economy needs stimulation, allowing prostitution, gambling and drugs could give us all a real lift.