Jane Galt thinks (1) that the drug laws are a bad ided and that (2) the money laundering laws are an even worse idea, and show how much too far the drug war has gone.
Neither of those propositions is transparently false. The money laundering laws certainly demonstrate the Hayekian point Jane makes: the more ambitious a law is, in terms of changing behavior, the more additional laws it will need for its support.
But I don’t think it’s quite right to say, as Jane does, that the conduct forbidden by the money-laundering laws, when it comes to money withdrawn from banks by users of illicit drugs to give to sellers of illicit drugs, is absurdly remote from any actual social harm. One of the better arguments against the drug laws is the illicit enterprises they help create. The laws about reporting currency transactions are designed to impede the functioning of those enterprises.
(Note: While Jane is right that it would technically be a crime to “structure” transactions to avoid currency reporting even if the purpose of the transactions were entirely licit, the reports themselves are not matters of public record. Therefore there’s no actual reason for someone to conceal the cash he spends on his yacht or stamp collection from the IRS, unless he’s doing so to conceal the fact that either he, or the recipient of the funds, evaded or intends to evade taxation.)
Just about the only damage Rush Limbaugh’s drug use did to anyone but Rush Limbaugh and his intimates was the financial support it gave to the illicit drug trade. So his efforts to conceal the money involved were actually more proximate to social harm than his actual possession and consumption of boatloads of synthetic narcotics.
Cash creates the capacity for undocumentable transactions. That is highly convenient not only for drug dealers but for tax evaders, bribe-payers and bribe-takers, and anyone else whose sources of income are illicit.
Making it harder to acquire and spend cash is a reasonable approach to dealing with large-scale transactional crime. Whether the risk to liberty created by the resulting increase in state power is not, justified is a reasonable topic for debate. But I don’t think it’s as silly as Jane makes it out to be.