Class #39 "Costs of Drug Wars/Taxes" (12/05/11)

Continued from last class, some costs of the war on drugs:

-the obvious cost of taxes needed to support all the people and equipment needed to fight the war. 

-But also the less obvious opportunity cost of all the people and money employed. they could be working on something like medicine or science or whatever, instead they are fighting a "War On Drugs"

________________________________________________________________________________

Exercise taxes on bubble gums.

-Taxes are not a cost, it is just moving money from one spot to another, taxes in and of themselves are not costly.

- However taxes create dead weight in the supply/demand graph, which IS A COST. The task is to make the dead weight as small as possible. 

- The goal of the excise tax is to target the suppliers, (the stores). But the actual cost ends up being shiftef 75% to the consumers, and 25% to the suppliers. 

Rizzo

-Daniel Gaona