The media needs education on the economics of the drug trade

Marcela Sanchez has an interesting article in today’s Washington Post: Bolivia’s Morales Wants to Expand Coca Use
The article covers most of the salient points about the issue that have been covered here and elsewhere, but glaringly absent is any understanding on the part of Ms. Sanchez of two critical points regarding cocaine trade:

  1. Cocaine eradication and interdiction does not work.
  2. Demand for cocaine is relatively inelastic.

If you understand these two simple facts (and these are not just opinions, they are demonstrable and provable), then parts of her article make no sense. Such as:

One might say that by arguing that more cultivation is needed, Morales is already recognizing defeat in efforts to stem the supply of coca leaves for the illegal market. Also, it seems naive to think that encouraging coca growers to produce crops for products yet to be marketed would be any more successful than crop substitution has been for overall reduction of illicit coca use. Meanwhile, drug traffickers, with their highly sophisticated means for developing and delivering their product worldwide, would be the first to profit from increased production.

The flawed assumption here is that the production of legal coca will somehow bail out the traffickers who have not been able to produce enough cocaine on their own or allow them to vastly increase their market. But the economics of the drug trade do not support this assumption.
Additionally, it is ridiculous to assume that marketing of new products must occur before their production (ignoring the fact that Morales has been working on international allowances, discussion of new products and working to give farmers some hope simultaneously). And dismissing the effort as one as likely to fail as other crop substitutions shows ignorance of the culture.
Morales is attempting to develop a unique market for a product that his people are particularly well-suited to supply. That deserves both support and kudos. If he is allowed by the international community to do this, it will improve the health of the legal economy in Bolivia, while reducing the fiscal power of the drug traffickers as an overall percentage of the country’s “actual” GDP.
Marcela needs to go back to school.

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