RECONSIDER Tidbits

This article,  from a professor of economics in the Sellinger School of Business and Management at Loyola College in Baltimore, questions the need to increase funding for hospital emergency rooms to prepare for future terrorist acts. He offers a cost-effective solution.

The Other War
By Thomas J. DiLorenzo

[Posted November 19, 2001]

America's emergency room physicians met recently for their annual
convention and emerged with their well-scrubbed hands extended and begging
for government handouts. Terrorism, they say, means that taxpayers will
have to hand over additional billions of dollars to the emergency rooms of
America's hospitals.

Additional tax dollars would not be necessary, however, if government would
eliminate the main source of medical emergencies--at least in urban
hospitals:  the war on drugs.

A former MBA student of mine was the director of emergency medicine at a
large hospital in the city of Baltimore. He once told me that he and his
colleagues spent about 90 percent of their time treating the knife and
gunshot wounds of drug gang members. Drug war-related injuries are bound to
dominate the emergency room services of virtually all inner-city hospitals.
The incredible violence in America's inner cities that most Americans have
become numbed to is almost exclusively the result of the war on drugs.

None of this should be surprising. In a free and legal market, any dispute
between business associates can be settled through negotiation or, if that
fails, lawsuits. If one businessman defrauds another, he can seek to have
his property protected by the courts.

No such (relatively) civilized solution is available to illegal products. A
drug dealer cannot go to a judge and say, "Your Honor, I delivered one ton
of cocaine to Mr. Tucker here, and he refuses to pay. In the name of
justice, I want you to make him pay up."  Instead, drug dealers--like
alcohol dealers during prohibition--resort to the only means available to
enforce their business agreements:  violence.

There is an even more ominous dynamic at work here. Once violence becomes
the means by which one succeeds in illegal markets, the profits earned in
those markets will attract those elements of society who have a comparative
advantage in violence.  The most violent will rise to the top, as witnessed
by such characters as the Los Angeles drug gang leader known as "Little
Monster," who is an especially vicious killer.

Drug gangs are simply business partnerships, but unlike normal business
partnerships, they have great latitude in destroying their competitors by
violent means. If there are above-normal profits in the skateboard
business, for example, new competitors will materialize and compete for
those profits by offering lower-priced and/or better-quality skateboards.

Such entry cannot occur in the market for illicit drugs if the existing
gangs can literally murder the competition, which they often do. Moreover,
the police are often "silent partners" in such situations, since existing
drug gangs can become police informants and (anonymously) inform the police
of the new entrants into their business.

In legal markets, a brand name that is established by years of good
performance and competitive pricing is a valuable asset that can lead to
high levels of profitability.   In illegal markets, a brand name is earned
by acts of violence. Drug gangs intimidate potential rivals with their acts
of violence.

Moreover, there are economies of scale to such behavior. If a drug gang is
especially violent in Los Angeles, it will find it all the easier to enter
the drug market (and to face little or no competition)  in Chicago, St.
Louis, New York, or other cities because of the intimidation factor.

This monopolization of the illicit drug trade has also lured thousands of
children into the world of drug-related violence. With the extraordinary
money being earned selling illicit drugs, it is inevitable that young
children will be enticed by the money they can make as "spotters" (of
police) or "runners" (i.e., drug deliverers) for drug gangs.

To make matters worse, children under the age of 18 who are arrested for
violent, drug-related crimes are usually put on probation or released
outright to the custody of their parents. In some states, a jail term
cannot extend past age 17, even for murder. Facing little or no
consequences for their violent behavior, these children grow up to be the
most hardened, violent criminals in society, thanks to the war on drugs and
a buffoonish "juvenile justice" system.

The workload of hospital emergency rooms in America's cities could probably
be cut at least in half by ending the failed war on drugs. That would make
room for more genuine emergencies and reduce the financial burden on
taxpayers as well, since the big majority of hospitals are either
government-run or government-subsidized nonprofit hospitals. The cycle of
violence in America's cities would be reversed, property values there would
soar, and the lives of literally thousands of Americans would be saved.


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Thomas DiLorenzo is a professor of economics in the Sellinger School of
Business and Management at Loyola College in Baltimore, and is senior
scholar of the Mises Institute.  See his Mises.org Articles Achive.  Read
an interview with the author or send him MAIL.