I would be in favor of legalizing and taxing all vices to stimulate the economy. And here's why...

If all drugs are made legal, people that don't do them are not going to have a major epiphany along the lines of, "Well I have always wanted to try crack. Now that it's legal, I'm going to become a basehead that scores my next fix by prostituting oral sex." The demographics of drug use are not going to change. It's perfectly legal to get completely shitfaced drunk every single day. But people don't do it because they have common sense, care about their health, etc...it will be the same with legal drugs.

People that don't gamble are not going to suddenly feel the need to piss away all of their money. People that don't have sex with prostitutes are not going to run out and grab one up just because the risk of getting arrested is gone.

The exact same people will be doing the exact same things.

The only difference will be the piles and piles of legal revenue that we can use to help dig ourselves out of the hole. Prohibition does not work...it has been proven time and time again. There is big money in it for a select few, and that is one of the main reasons why these things stay illegal.

What do you think?

Update: November 03, 2009.
I am impressed. I didn't expect so many people to think progressively. If we used this post as a measuring stick, over 80% of people are in favor of legalization of everything. Very few people still seem to buy into the scare tactics propaganda, or fall for the slippery slope arguments implying that society would collapse if people were free to pursue their vices. We are a very different world than what we were twenty years ago. It's comforting to see how alike we all can think, even if we disagree vehemently on other matters.