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First off, let me say that I have never been with a prostitute (paid for or not paid for) and do not ever plan to, so I believe I have an unbiased opinion on the subject or legalized prostitution.
I do feel that prostitution should be legal in all states, provided that some measures are taken to ensure that all "transactions" are disease-free. Here are some of my reasonings:
1) If a person wants to spend their hard-earned money on sex they should be allowed to. Sex 'for free' is legal, so if someone wants to pay for something that is otherwise free then they should be allowed to.
2) If a person wants to allow their body to be used for money, they should be allowed to. Stripping is legal, phone sex is legal, why shouldn't prostitution be legal (if regulated)?
3) If prostitution was legal, it would free up police officers/undercover agents/what have you to focus on other things. Although it would take some government funding to ensure that prostitutes are "clean" and regulated and all, but I think the costs incurred now to fight prostitution would more than offset any costs to regulate it.
4) If prostitution was a recognized profession, there might be less welfare cases. I am sure there are some (if only a few) people on welfare who have morals and would not break the law by selling their body to put food on the table, so they accept welfare.
5) The state/county/city could take a cut of prostitution profits (like they do for most gambling venues) to provide for more funding for government programs/projects.
Don't know what made me think of this . . . boredom I guess