Vice Squad
Tuesday, November 06, 2007
Vice Legalization as an Anti-Corruption Strategy

World Bank economist Branko Milanovic discusses all those corrupt countries out there with very poor governance. He sees the spread of corrupt countries to be connected with globalized trade and travel more generally. Thanks to globalization, "In corrupt states, profitability soars in the production of goods and services that are internationally illegal: drugs, sex trafficking, contraband weapons or cigarettes, or counterfeit goods." More trade allows further specialization in production, and some states specialize in the production or distribution of illegal goods, spurring capture of the state apparatus by organized crime. Hectoring politicians in corrupt countries to be more honest ignores the incentives created by these structural features:
A different approach is necessary: legalize the currently illegal activities like prostitution and drug use and modify the often draconian US and European immigration laws that stimulate human trafficking. If prostitution and drugs indeed became like haircuts and candies, their production would obey the same rules: Countries that export beauty services and confectionary products are not notably more corrupt than others.
Bad governance harms economic development. Drug prohibition leads to bad governance, even more so now that global trade has become much less expensive. Drug legalization, therefore, can promote economic development.

Thanks to SWOP East Sex Workers Outreach Project for the pointer.

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