Late last week there was a list circulating in libertarian circles about illegal markets that would stimulate the economy if they were legalized. The items were… predictably libertarian: gambling, drugs, immigration, and the handful of sex-work tasks (gay prostitution in Nevada, prostitution everywhere else) that aren’t or aren’t yet legal. Matthew Yglesias says he might support some of the proposals but doesn’t think they’d have the effect economic-oriented advocates of legalization claim. (Emphasis his.)

With regard to things like drugs and prostitution, bringing some transactions that are already happening into the above-ground economy would certainly boost our GDP measurements. But these are transactions that are already happening. Shifting them from the illicit to the licit economy doesn’t actually change the fact that there are already people in America earning a living as prostitutes or pimps or drug dealers.

He said it here.

That sounds about right. In fact my instinct would be that given the extraordinary margin between the real cost of drug production and black-market prices, legalization would strongly contract their component of real GDP. (Ear nose and throat doctors pay $7/gram for cocaine; even eye-popping cannabis bud costs only dollars a pound to grow.) That’s actually a good thing: the biggest drug dealers on the planet are convenience-store clerks dispensing tobacco and alcohol but, surprisingly, none of them can afford Glock bullets let alone Glocks, few of them can afford car fresheners let alone cars, and as far as I know no child, anywhere, past maybe age 4 sees 7-11 clerks as glamorous, romantic, let alone emulatable role models. Drug-dealing themes are a major component of popular media. Convenience-store clerks have two movies Clerks and Clerks II. (But… but… even then the drug dealers in the two Clerks movies, Jay and Silent Bob have four movies about them!) But I digress…

I can’t be sure how much legalizing the rest of adult sex work would change the economics, but like Yglesias I think it would mostly shift numbers from the off-the-books ledger to on-the-books. Otherwise? On the one hand I’d imagine pimping would evaporate — legal bodyworkers like massage therapists and chiropractors somehow manage to stay healthy, wealthy and wise without them. And without the “opportunity cost” of arrest and jail time, not to mention the threats of unreportable rape, robbery, assault, murder, and police shakedowns sex workers could change when and how often such work was performed and therefore possibly what they would charge and/or what customers would be willing to pay. Again, though, it seems pointless to speculate without sounding like a bad case of Male Answer Syndrome.

But really, in the case of both drugs and sex work, my interest isn’t really in the direct economics at all but the potential for risk and harm reduction: if a drug habit cost only dollars a day instead of tens or hundreds the vast amounts of collateral losses of life, property, and security would be mitigated, and if a drug habit cost only dollars a day gangs would have very little incentive to have turf wars period let alone turf wars over schools and parks. Similarly if sex work was legitimized there would be diminished opportunities for pimps, serial killers, corrupt cops, and whatever fraction of customers are dishonest or violent to abuse sex workers. Oh yeah, and to put the two together, to the extent that pimps and traffickers actually do use addictive drugs to enthrall involuntary sex workers, the availability of legal drugs at dollars a day would undercut that little avenue as well.

And to touch briefly on the other mainstream libertarian issue, as researcher and author Laura Agustín says over and over international and national migrants often accept sex work when they might ordinarily not because a) social and economic opportunities at home are so bleak the work seems worth it compared to the alternative of staying home b) because they migrate without documentation they have few opportunities for other employment, also c) once they become illegal migrants they’re often at the mercy of the same pimps, criminal customers, corrupt cops, and twilight conditions that make life so perilous for illegal domestic sex workers.

My points being, then, that a) regardless of economic arguments drugs, sex work, and immigration are socially entangled and b) our decisions to keep them illegal keep increase that entanglement and keep the activities closeted in ways that obstruct use of social as opposed to law-enforcement policies.