When asked whether supply or demand was more important, the great British economist Alfred Marshall (1842-1924) responded by comparing them to the blades of a scissors.
“Which blade cuts the cloth, the upper or the lower?” he asked. U.S. policy makers should heed Marshall’s wise emphasis on both economic forces when they draft laws. Unfortunately, they often do not.
Drugs — both legal and illegal — and immigration are good examples of the ineffectiveness of sharpening one blade of Marshall’s scissors while ignoring the other.
The United States has struggled to stop its citizens from using drugs such as heroin, cocaine and marijuana for nearly a century, with particular emphasis on the “war on drugs” in the last three decades. Despite spending tens of billions of dollars, Americans’ use of these drugs, along with Oxycontin and home-brewed meth, has decreased little.
The vast bulk of expenditure at the federal and local level focuses on the supply side. We spend billions trying to eradicate cocaine and marijuana production in South America or interdicting drugs as they flow toward our country.
We don’t do much, however, to reduce the demand for drugs. Yes, we have TV commercials with sizzling eggs and we put DARE stickers on our bumpers, but any positive effects of these campaigns are washed away in the tide of popular acceptance of drug use. The frequency with which Jay Leno and Kevin Eubanks banter approvingly about drugs says much about how accepted drug use is in our culture. Moreover, we spend relatively little on drug treatment.
Marshall would tell us that attempting to stop drug use with the single blade of supply interdiction while ignoring demand is doomed to failure.
So are attempts to control illegal immigration with fences, battalions of Border Patrol agents and thousands of daily deportations. We don’t want to hassle employers and we fear a national work ID document program. Without any efforts to reduce the effective demand for work by illegal immigrants, however, we are just spinning our wheels.
Everyone decries the rising cost of prescription drugs. Responding with the Medicare drug benefit, we are establishing the most expensive new entitlement in 35 years. Northern states are eager to offshore the retail pharmacy sector to Canada. But no one considers demand factors in rising drug prices.
No, we don’t want to stop people from taking medicine they need. But few consider how the structure of U.S. health care and federal regulation thereof have stripped away every incentive to weigh relative costs versus benefits in considering which drug someone should use. Studies show that new blood pressure medications costing hundreds per month are little better than decades-old diuretics costing cents a day. No one, however, gains from considering whether a particular patient might be just as healthy on the older remedy.
One-bladed scissors: My mother, a less refined person than Marshall, would have bluntly compared them to mammary glands on porcine male livestock.
© 2004 Edward Lotterman
Chanarambie Consulting, Inc.