So for example, the potential downside of legalizing drugs is a large increase in social disorder for at least a couple of generations (since the recognition and acceptance of the policy's failure would be retarded by generational inertia, whereas the negative effects would tend to build exponentially), with enormous cultural consequnces, whereas the upside is...somewhat easier access to marijuana for the middle class, and theoretically lower law enforcement costs. This absurdly imbalanced cost/benefit ratio is never referred to by libertarians--we're not even getting into practical issues with legalization, or the impact of even partial legalization on social mores. Atlas shrugs with lazy indifference at the prospect that anything could go wrong. Why if I get addicted to drugs, I'll just drive my Lexus over to rehab, problem solved!
I agree with the thrust of what you're saying but disagree with your example.
I think keeping drugs illegal will result in a large increase in chaos. Drug cartels profit specifically by the illegality of drugs, much like Capone's gang profited by the illegality of alcohol. Once they have enough cash from drugs, they become crime venture capitalists and start branching out into ohter things, like sexual slavery. When they amass even more cash, they start to rival the local government for power through bribes and intimidation (recall Pablo Escobar in the 90s).
Read "McMafia" by Misha Glenny, it explains this further.