WEDNESDAY, 18 January 2023: The Center for Market Education (CME) has published its Policy Brief Nr 3, Toward a Science-based Strategy to Harm Reduction: A Theoretical Introduction, authored by Dr Carmelo Ferlito, CEO of CME.

«The Generational End Game proposal has driven the discussion on harm reduction on an ideological level and therefore we felt it was very much necessary to publish a paper able to rebalance the debate, putting back science into the discussion, rather than ideology. Health is too a serious issue to be an ideological battleground», Dr Ferlito commented.

The paper points out that the proper way to address “pleasure consumption” should originate in a process of sound economic reasoning and trade-off analysis, rather than crusades in which the vision of policy makers replaces the free will of individuals. Following Ronald Coase’s analysis, in the presence of externalities we should not compare the actual market outcome with the idealistic vision proposed by rulers’ good intentions. On the contrary, a «better approach would seem to be to start our analysis with a situation approximating that which actually exists, to examine the effects of a proposed policy change and to attempt to decide whether the new situation would be, in total, better or worse than the original one. In this way, conclusions for policy would have some relevance to the actual situation». At the same time, it should be considered that any attempt to protect subject B from externalities produced by subject A will create an undesired harm to subject A in the form of a lesser degree of pleasure consumption.

The approach embraced in the paper is rooted in the idea that every human action, including policy making, is bounded by limits of knowledge that make it impossible for any given action to simply achieve the desired outcome. The complexity of individual actions and interactions between individuals unfolding in time should lead policy making toward humility and the recognition of the limits of any one individual’s knowledge, rather than toward the pretence of knowledge.

Furthermore, in the analysis we have showed how the traditional approach to externalities and pleasure consumption, grounded in prohibition and taxation, does not actually stop the consumption of “sinful products”. Taxation of sinful products 1) violates the principles of horizontal and vertical equity and 2) it is regressive. Both taxation and prohibition shift consumption toward lower quality and illicit products, leading to unemployment and lower fiscal revenues.

Thus, a proper approach to harm reduction, while respecting freedom of choice, should aim at nurturing an environment conducive to innovation, intended as the best way to promote the emergence of products that, while preserving the right to consuming pleasure, they allow to do so in a way which is gradually less harmful.

Such an environment is mainly built around the right set of institutions. In this regard, the paper analyses the situation of Malaysia at the light of the International Property Rights Index published by the Property Rights Alliance in Washington, DC. Malaysia, to nurture innovation as a strategic tool for harm reduction, needs to improve in terms of political stability, control of corruption, the process of registering properties, patent protection, and copyright protection.