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My intuitive impulse is in favor of legalization of all drugs, but you have to realize that what you’ve advanced isn’t a very economically detailed idea. You probably realize that the negative externalities associated with high rates of hard drug usage are severe (and they could potentially end up being more coercive and authoritarian than the prohibition of drugs), but perhaps you believe that your Pigovian solution of sin taxing legalized products will cut consumer demand. That would work fine with, say, firearms. But as hard drugs are physically and psychologically addictive substances, they’d be highly inelastic goods. First-year micro students typically laugh when they hear that cigarettes are technically classified as “necessities” because of their low elasticity, but it’s a testament to the addictive nature of nicotine.
With the negative externalities imposed by widespread smoking already violating the libertarian non-aggression principle, legalization of hard drugs isn’t necessarily the straightforward libertarian idea you might think it to be.
"externalities" ... "more coercive and authoritarian" ... "your Pigovian solution" ... "the libertarian non-aggression principle" ...
What?