Legalize it, don't criticize it

Economist Tyler Cowen, who writes Marginal Revolution, which I have been reading for the past 3 months has just blogged about a radical suggestion help stimulate the troubled economy. Short on funds at the moment? Just legalize illegal practices like these ones to generate some stimulus!

1. Drugs: I think this might be a big one. An article in the Economist puts the entire illegal drug trade at $320 billion a year. But President Obama doesn't think legalizing marijuana will help the economy much.
2. Guns
3. Prostitution (except in Nevada)
4. Gay prostitution (even in Nevada)
5. Gambling
6. Trade with Cuba: Congress and Obama are current in talks of possibly lifting the trade embargo and lift travel restrictions to Cuba. But it's not like the embargo has accomplished its goal of democracy and human rights in Cuba.
   
7. Liberalized immigration
   

Illegal practices clearly generate a lot of money that could be counted in GDP if they were legal. If I was the government, I might think about legalizing these (in this order: 6, 5, 2, 1, 7, 3, 4) and then taxing them like crazy to make up for the deficit.

However, there is the issue of morality. Most, if not all, of these are considered repugnant by society's standards. If we are so desperate to get out of this economic hole and legalize some of these, then there's a chance that these societal taboos won't carry as much moral repugnance as they once did. If we legalized prostitution for purely stimulus reasons (the economic kind) and after legalized prostitution served its pragmatic purpose, it wouldn't be as looked down as it was and it would be hard to make illegal again. So there's a moral consequence with this possible source of stimulus funds. In a sense, once you go crack you can never go back.

But will it be so bad that we get to that point? I'll leave that to time.

Jess Ramos '09