Still Pushin' On The Couch Cushion

There's a good episode of Planet Money from Jan 27, 2010.  This Harvard economist, Jeffrey Miron, talks about the "concern" that legalizing drugs would make them way cheaper.  He believes that the prices would go down, but not quite as much as you think.

 Dude, don't let me forget to take a picture for my myspace.

He says that if drugs became legal, the suppliers would have to spend all sorts of extra money on taxes, lawyers, and compliance with regulations (guess what: he's a libertarian).  For example, he says they wouldn't be able to hire 10-year-olds to sell the drugs anymore.

Kenard reacts: You're gonna fire me? 

But one thing he's forgetting is how much of a hassle it is to deal with a drug dealer, that's one of those hidden costs that's not included in the price tag.  Economists would call this a transaction cost.

Imagine if you had to call a guy every time you wanted to buy a gallon of milk.  He'll take like two days to get back to you, when he does, he'll say he has to call his guy to see when he's getting more milk.  Three days later you finally go over to the guy's filthy apartment.  He only has a half gallon for you and its 2% instead of the skim you'd asked for.  You have to sit on his disease-ridden couch and laugh at his shitty jokes while worrying about getting scabies.   Then he'll be like:

"Hey man, wanna drink a glass of milk?"

And you don't really feel like drinking a glass of milk right then, you actually wanted milk five days ago.  But you don't want to be rude so you say yes.

"Dude, check out this glass...isn't it cool?"

 

There has to be some sort of classical conditioning effect to explain the stoner fascination with glass pieces.  'Man, this is like a maze where you can't even find the start and finish.'

He's talking about the glass that the two of you are both drinking out of, and it is "cool", as far as drink-ware is concerned, but it looks like it probably hasn't been washed in a long time.  After you're done with the milk you start wondering if its ok for you to leave now, or if this transaction is the guy's solution to the dual problems of being both unemployable and incapable of sustaining normal friendships.

"Anybody want a hamburger?"