Gresham’s Law and the War on Drugs

I just finished watching passions run high in three YouTube clips from 1988. Libertarian Presidential candidate Ron Paul and two others were on the Mort Downey Jr. Show and when I say passions ran high, I do mean high, very high. The subject was the War on Drugs, with Ron Paul et al for legalization and almost everyone else, including the host, for keeping illegal drugs illegal. This happens to be a topic I’ve been trying to get a handle on of late. Maybe I’ve just gotten used to the idea of certain drugs being illegal, maybe I’ve fallen for the propaganda I know is out there, but anyway it is something I haven’t really been able to form an opinion on. However, I do have an opinion on another fairly hot-button issue and that is the war on Honest Money. So I would like to try to form an opinion on the drug issue by considering the template that defines the money issue. One very important rule that explains the money thing is Gresham’s Law: Bad money drives out good. Or, as refined by Dr. Gary North, “…bad money drives out the good money only when the government says the two are equal in value, and enforces this decision with the threat of punishment.” (“Honest Money,” Christian Liberty Press, p. 53) In other words, the currency artificially overvalued by a government will be spent (circulated) while the artificially undervalued currency will be hoarded (not circulated). Can this principle be applied to drugs? Bad behavior drives out good. Or taken a step further, punishing bad behavior drives out good behavior. Making drugs illegal instantly classifies a whole bunch of behaviors as “bad” and this drives out the good behavior that should be a reward in and of itself but no longer is. Now that bad has been defined as using drugs, good comes to mean not using drugs while real goodness continues unnoticed, sort of like honest money being hoarded. So it seems to me that Gresham’s law does apply here and in dealing with the problem of drug addiction we’ve traded civility, compassion, individual responsibility and self-restraint for crime and punishment. The good has been driven out by the bad. And just as the badness of bad money only gets worse, so too will the badness of bad behavior when it comes to drugs only get worse over time. On a positive note, just as sound money will mend the economy so will good behavior mend the soul. This process will naturally reassert itself once we effectively tell our governments to stop meddling in our affairs, be they economic transactions or helping one another through the rough spots in life. Author’s note: For the reader’s interest, a comment on this article, which originally appeared at “TheLawOfIdentity.org Reason, constitutional government, sound money” on September 2nd, 2007, provides a link to a debate on the Gold Standard between Congressman Ron Paul and Charles Partee, member of the Federal Reserve Board of Governors. The debate was part of the Capitol Hill Gold Conference, held in Washington DC in November 1983 and hosted by the Ludwig von Mises Institute.