The Benefits of Legal and Self Discovery

By: Alexander Cartwright ‘13
The committee on the Judiciary is currently debating a bill that would follow at least 12 states and several cities in outlawing the latest marijuana substitute, K2 or spice. K2 is typically used as incense, composed of herbs and a few synthetic compounds, and designed to replicate marijuana when smoked, except its legal. While banning a substance that people abuse may help some people, allowing K2 to be legal would incentivize producers to create safer versions, but the government does not know if the good of prohibition will outweigh the bad of a few people abusing drugs; in fact, it is nearly impossible for them to know the answer.
Over the past year and a half K2 has become an enormously popular marijuana substitute. As more people began using K2 instead of other drugs, we have learned some its negative side effects: high blood pressure, seizures, and hallucinations just to name a few. K2 users were becoming more and more frequent in hospitals, and when an Indiana 18 year old smoked enough K2 to have a hallucination that provoked him to end his life, law makers decided to capitalize on the opportunity to justify K2’s prohibition. K2 has taken at least three lives, and has sent hundreds to hospitals all while scientists know relatively little about the long term health effects of its synthetic compounds- is that enough to justify prohibition? At least 12 states and several cities think so.
Despite all the social ills the ‘drug’ seems to be causing, outlawing it will not deter consumer’s demand. Nor will outlawing K2 incentivize scientific research on its synthetic compounds so that we can fully understand their effects on our health. If left legal, entrepreneurs could try to profit from creating safer versions of K2, and competition between these producers would only lead to more effective, less harmful drugs. Competition in an illegal market would not be nearly as effective. Furthermore, prohibition will not stop consumer demand, and there is no reason why producers would not innovate a new, potentially more dangerous, substitute.
During the legislative process, our representatives will no doubt debate the costs and benefits to outlawing K2. Obviously, there are costs and benefits to allowing consumers to buy K2, but how do we know when the costs are high enough to outweigh the benefits and legitimize prohibition?
We have a mechanism for determining the best decision: competition. Nobel Prize Winning Economist F.A Hayek calls competition “a discovery procedure,” and he couldn’t be more correct. When we have a hot-dog eating contest, we do not know who is the best hot-dog-eater, (who can eat the most) so we have a competition. If we knew who the best hot-dog-eater was, then having a contest would be pretty silly, so we have a contest to discover who is the best- competition is a discovery process.
As elementary as competition seems, without it we couldn’t make every day decisions. Consider choosing between 2 brands of razors in Wal-Mart. By buying the razor that works best, I send a signal to all the razor companies about which price and razor characteristics I prefer. Being able to choose the best razor signals information about my preferences which producers use to make better razors and maximize profits. For example, I did not know that I really wanted the razor with the AAA battery that vibrates and shaves closer, but by watching my consumption patterns, corporations knew consumers wanted a close shave, and innovated a way to make that happen at a low cost. By allowing consumers and producers to exchange knowledge, competition literally leads to the creation of knowledge- about what products consumers will prefer. Without competition in the razor industry, there would be only one, un-innovative, razor on the market leaving me without the opportunity to choose the best product, and signal to innovators what kind of razor would be best.
Competition provides us with ever innovative and ever cheaper products, but it also provides us with choice, without which we couldn’t decide if something is best. Without competition, I wouldn’t know a 4-blade razor was the best choice not only because lack of competition does not give companies the incentive to innovate a razor with more than one blade, but also because there would be no 3 blade razor to compare it to- my friends majoring in philosophy would say that without a ‘contrast class’ we cannot say the buying the 4-blade razor is advantageous. In other words, the only reason I know the 4-blade razor is the best, is because I know it is better than the competing 3-blade razor.
Unlike the competitive market for goods and services, the government is by definition a monopoly. When the government creates a law, we simply can’t choose to follow one we like better since there could be legal consequences. As a monopoly, laws that our legislature creates are not subject to competition from other laws, and without competition- a discovery process- we can’t know if the government is making the best decision when it comes to weighing costs and benefits, like in the prohibition debate over K2.
The government does not lack innovative minds; in fact, I am sure congress will drag in a diverse group of experts to testify about K2. But, it will not matter how many experts testify in front of committees, how altruistic our representatives are, or even how well our politicians represent their constituents views, without competition they cannot ‘discover’ whether it would be best to outlaw K2- it’s systematically impossible.
Fortunately, introducing competition, the discovery process, into law is not beyond our experience or our established institutions. When judicial institutions, utilizing common law, make rulings that uphold old precedents or establish new ones, the law becomes better and better at executing its intended purpose. In the court room, judges are able to choose between the costs and benefits a law has imposed on both parties and make a ruling that establishes a precedent, or unverifiable principle that can perfected over time. Parties seeking to utility maximize by suing each other, and judges seeking to utility maximize by establishing the best precedent possible, will lead to better law. Different cases give judges the option to chose between what types of precedent should be created, and after many different cases judge’s choices create knowledge about what type of precedent works best. Furthermore, different precedents can apply to different districts, which allows for even more competition.
We can continue to scream our individual preferences to congress about what they should do, but systematically it is nearly impossible for them to make the best decision outside of pure luck. Should we legalize K2? I have no idea; in fact the knowledge we need to know too much such a decision might not even exist, which is why we need competition. Just as we use competition to discover the best ways to use allocate our resources, justice should be a discovery process too.