The economics of The Wire

Speaking of low wages for unskilled workers (were we? I hear you cry. Well, I was.) I must now confess that I have only lately come to The Wire. Yes, I am one of those unlucky souls who is late to every trend--you have only to look through my wardrobe or my collection of home electronics to get a good sense of what is just about to go out of style. I haven't seen a movie in six months.

Stop looking at me like that, okay? I'm a very busy person.

Mmm, where was I? Ah, yes, The Wire. Like everyone else, having just finished watching the first season, I am utterly besotted. Unlike everyone else, it inspired the following question, upon which I mused for a good part of yesterday. What would happen to the economy of the Baltimore housing projects if drugs were legalized? Would it ultimately be better or worse for the people there?

There are, of course, a lot of negative effects of the drug trade in the inner city. For one thing, because contracts can't be enforced by law, they get enforced by interpersonal violence. For another, dealers sell a lot of their product to locals, which certainly doesn't improve their life prospects. Then there are all the kids who end up with wasted lives, dead or in jail, because of the war on drugs. Sudhir Venkatesh's work, which Levitt and Dubner covered in Freakonomics, implies that drugs pull kids in the inner-city out of low wage work into even lower wage work--the average drug dealer makes less than minimum wage. (My cousin, who is finishing her PhD in criminology, tells me that this is true of all non-white-collar crime.) But a few drug dealers make a lot of money, which encourages them to play the lottery rather than slugging it out as a fast food worker or baggage handler and hoping to move up.

It is very hard for me to imagine that, on net, legalizing drugs wouldn't do good things for the inner cities.

However, I presume that the trade does bring in a fair amount of money from outside, sustaining the local economy. The immediate impact of legalization would be to throw a huge number of otherwise unskilled people out of work. Many of them have criminal records and no education to speak of, making them barely employable, if at all. On the presumption that drug sales would be licensed and regulated, I'm pretty sure that current drug kingpins wouldn't be allowed to own . . . er . . . recreational pharmacies.

Like the mafia after prohibition, I assume that either the gangs or the individuals would mostly move into other, less lucrative forms of crime--there are hardly any unions left worth taking over, and the casino business is spoken for. That means the both the inner cities and other places would probably see a spike in interpersonal crime (though possibly counteracted by a fall in crimes committed by drug addicts). And the inner cities might become, for a time, even poorer than they are now--although in one sense richer, since they wouldn't have to endure the violence created by the drug trade.

Over the longer term, one would hope that absent the lure of the really big money at the top, kids would look for legal work, and stay in school. But in the short term, the effects seem considerably more mixed. Or so my first thoughts run, anyway. What do y'all think?

Update: This seems on point

Stop Snitching 2 begins with a nod to the controversy created by the original. "Let me clear something up," Bethea says, filmed while sitting on the staircase of his studio in West Baltimore.

He says, "People are surviving the only way they know how." That's why, he says, there's a strong feeling that drug dealers should not give police the names of other criminals in an effort to save themselves. That's why, he says, a little boy is shown with a gun.