The Problem with the War on Drugs

There was once a time when Americans were concerned about issues other than the global economic meltdown and journal reported on sex, violence, wars, and drugs. It's the latter that I will touch upon today.

Basic economics classes, and even advanced, teach that a market looks like the diagram below with supply and demand having relatively similar slopes.
In this graph, when supply is shifted to the left (supply decreases), quantity will decrease and price will increase by roughly the same amount. Likewise, when demand is shifted left (demand decreases), both quantity and price decrease by roughly the same amount.

The graph below is what the market for illegal drugs looks like. It has a highly elastic supply curve and a highly inelastic demand curve. The demand curve is steep because of the high incidence of drug addiction which makes drug users relatively unresponsive to changes in drug prices.
In this graph, when supply or demand is decreased, price and quantity will change asymmetrically. This is essentially the problem of the war on drugs.

We must first identify the objective of the war on drugs, which I believe to be decreasing drug consumption in the US (rather than simply increasing the price of drugs). The US has chosen to accomplish this by attacking the supply of drugs. Money is spent checking for drugs smuggled in through ports and the borders, and helping fight drug wars in Mexico. The US government seems set on curtailing the supply of drugs in the US with the intended result of reducing consumption. Unfortunately, the market doesn't allow for such policies to work.

Take the market for drugs shown above. As the US tries to reduce supply, the supply curve will shift left and we will get the resulting graph. Notice that the blue-shaded area is much larger than the brown-shaded area. When you attack a market on the supply side with an elastic supply and inelastic demand, price increases dramatically with a very little drop in quantity. This is essentially what is happening in the US.
If, instead, the US were trying to reduce the demand for drugs, we would get a situation such as the graph below. Quantity and price would both decrease, but quantity would decrease many more times the decrease in price. As identified above, this is the supposed objective of the war on drugs.

So why doesn't the government do this? Well, it could be that it is harder to reduce demand than supply such that a dollar spent will decrease supply by 10 units but only decrease demand by 1 unit, and therefore we would see an inefficient use of money.

The government has implemented some measures to deter drug use such as increasing penalties for persons caught with drugs but it is hard to say if these penalties are working. Since people are risk-averse (even those that use drugs), an increase in the penalty will not deter drug use as effectively as an increase in the probability of getting caught. To increase the probability, the government must hire many more law enforcement agents, which is an expensive process. Though, putting stoners in jail or prison can't be too cost effective either.