The GWOD: The Global War on Drugs.

The War on Drugs has looked like a Stage IV Vietnam for a while now. Since 1998, the number of people smoking “dope” (as we called it in my Ute) or snorting “blow” (ditto) has increased by fifty percent.[1] The number using opiates has increased by 200 percent. All the while, the government of the United States has poured in money in an effort to defeat the drug trade. Apparently, it isn’t working very well. It may not be working at all.

A central pillar of the war on drugs has been to restrict the supply in order to push up price. That, it was anticipated, would reduce demand. So, Peru and Bolivia send out their makeshift armies to destroy the coca plants in the fields. Stateside, however, the price has hardly moved for twenty years. Why? Apparently, in part, because the cultivation of coca has expanded so much that troops can’t destroy all of it. Instead, the stable price reflects the ability of the drug cartels to force the peasant producers to bear the costs of crop eradication.[2] If soldiers destroy a mountain clearing of coca bushes, then the peasant farming them is ruined. Other fields remain undiscovered and untouched. This suggests that the drug cartels encourage the planting of as much as twice as much coca as they will need, then use the capture of up to half of the growers as a way both to discipline the growers and to toss a bone to the police.[3]

Then, the price for raw coca paid to the farmer is so low that it is a small share of the total cost of production of cocaine for sale on the street. Most of the additional costs are incurred inside the United States. Pushing up the cost of coca leaf, even by 100 percent, would only raise the price of cocaine on the street by an infinitesimal amount.[4]

In contrast, spending a dollar on drug education in the US reduces demand about twice as much as a dollar spent on reducing supply in South America, while addict treatment reduces it by a factor of ten. Still, when’s the last time you saw a movie where the hero wore a cardigan sweater instead of camo? (OK, Robin Williams in “Good Will Hunting.”) Indeed, it is possible that marijuana legalization in a few Western states has done more damage to the drug cartels than has the DEA. Given that the cartels use their vast wealth to kill cops and to corrupt government, that’s a good thing.

This isn’t to argue that drugs are “good” for you. They aren’t, anymore that is alcohol, or tobacco, or going into a hospital.[5] All of which are legal, but regulated.

[1] Tom Wainwright, “If Economists Waged the Drug War,” WSJ, 20-21 February 2016.

[2] Apparently, in Economics, this is called “monopsony”: the ability of a single buyer to determine the price of a good without regard to normal market forces. “Monopoly” is the ability of a single seller to determine the price of a good without regard to normal market forces. Cool!

[3] To follow the Vietnam analogy, this amounts to faking the “body count” in order to meet the production targets. Odd to think of the US Army in the same terms as the Soviet economy, but there it is. On the other hand, one could follow the prostitution analogy. In the later 19th Century and afterword, city governments responded to prissy—generally female-headed– “Goo-Goo” moralist campaigns against vice by concentrating commercial sex in Red Light districts like the Tenderloin, the Combat Zone, and Storyville. Then they arrested, and fined or jailed, working girls and madams as a way of levying a tax on the industry and to render the workers docile. Ain’t capitalism swell?

[4] According to one calculation, by 40 cents on each $150 gram.

[5] Where you could—just imagining here—have nurses not read the chart of someone who had a Tram-flap reconstruction of a breast after a mastectomy and become angry that the patient has difficulty sitting up; or have someone come in for an infection, then leave a sponge in the wound, then leave another sponge in the wound after the patient had returned when the site blew up; or have a surgeon bolt from the operating room to his July 4th events without telling the family of the patient that she was going to die that night. I’m sure that this stuff never happens in real life.


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