Cocaine prices per gram in selected American cities, 1999 and 2005.

1999.             2005.               Change in base price.

Seattle.                       $80-100           $30-100          -62%

Denver.                       $100-125         $100-125         0%

Los Angeles.               $50-100           $30-100           -40%

Dallas.                        $90-125           $50-80             -44%

Chicago.                     $75-100           $75-100              0%

Detroit.                       $75-100           $50-120           -33%

Atlanta.                      $100                $80-100           -20%

Miami.                        $40-60             $20-110           -50%

New York.                 $21-40             $20-25             -0%

There are a bunch of ways of cutting up this data, so to speak.

First, in 1999, cocaine was a glut on the market in New York, Miami, and Los Angeles. These were major cities with a large over-all market, ports of entry, and centers of a counter-culture. In contrast, it was hard to come by in Atlanta, Denver, Dallas, and Seattle. These were chief cities of “the provinces,” as the Romans would have put it. Six years later Seattle had joined New York, Miami, and Los Angeles as the capital cities of cocaine. This probably has something to do with the explosion of the computer and software industries in Seattle. Maybe writing software allows for blow in a way that designing airplanes for Boeing does not. Still, the “cocaine revolution” hadn’t reached Denver, Atlanta, and Chicago. These cities remained the ones with the highest priced (and thus least available) cocaine.

Second, even in two of the original core cities of cocaine consumption, Miami and Los Angeles, prices fell sharply. New York began with the lowest price and pretty much stayed there. Perhaps $20 a gram was the rock-bottom price for cocaine. Lots of people hustling on a big, but limited, market, all of them competing to deliver the best product to the most people at the lowest price. Adam Smith take note. Labor costs driven down to the subsistence minimum. David Ricardo take note.

Third, prices fell while the Drug Enforcement Agency was spending billions of dollars to drive up the price (and thus reduce consumption) through interdiction and eradication. Why didn’t this effort produce better results?

One reason is that cocaine producers in Columbia dispersed their coca-growing operations into more remote areas and spread into Peru and Bolivia as well. These are outside the range of US-sponsored eradication efforts. Production went up, not down.

Another reason is that, since the signature of the North American Free Trade Agreement (NAFTA) in 1994, there has been a huge increase in trans-border truck and vehicle traffic between Mexico and the United States. This made it much easier to move cocaine into the United States. One government policy warred with another government policy. The thing is that people trying to make money won in both cases. What’s more American than that?

Final thing to think about: 88 percent of cocaine moved through Mexico. Eventually, the Mexican intermediaries for the Columbians wanted a better deal. Much violence followed. (See: Narcostate with a State.)

Ken Dermota, “The World in Numbers: Snow Fall,” Atlantic, July/August 2007, pp. 24-25.