Careful what you wish for…

There’s a bit of a move recently to claim a victory in the drug war, particularly regarding cocaine.
First you have Bolivia’s drug war wins U.S. approval — an article about how the United States has determined that Bolivia has contributed enough to the worldwide drug war disaster, after all, to continue to get big payoffs from American taxpayers. This is merely part of the annual dance of the U.S. tying foreign aid to countries’ agreeing to be accomplices in the drug war.
Then you have Uribe Claims Success in Drug War as He Pushes U.S. on Trade — more of the same dance. This time, you have Uribe pointing to arrests of drug traffickers as proof of Colombia’s worth in getting a massive free-trade deal.
But now it gets a little interesting.
High U.S. cocaine cost shows drug war working: Mexico

MONTERREY, Mexico (Reuters) – Mexico’s attorney general said on Friday fewer drug-related killings at home and rising narcotics prices in the United States showed his government is winning the war against cartels. […]
Cocaine and methamphetamine prices are rising across 8,000 U.S. towns and cities and purity is falling, showing fewer drugs are getting into the United States, he added.
“Average wholesale prices for cocaine have risen from $17,000 (per kg) the end of 2006 to almost $30,000 last month,” Medina Mora said at a news conference in the northern Mexican city of Monterrey.

And, of course, you have the drug czar getting excited about all this…

A counterdrug intelligence community collaborative analysis recently reported a striking development in the decades-long battle against cocaine: according to law enforcement and intelligence sources, many cocaine markets across the United States have been experiencing reduced availability at the wholesale level, with reverberations affecting retail sales in many U.S. cities.

Expect the drug czar to play this up quite a bit.
The reality is that any shortages or price increases that actually exist are likely to be a blip — a short term realignment of black market leadership and/or trade routes. That’s the way market forces work. Supply always manages to meet demand. If you close off a trade route, then another one is found, or an official’s corruption point is found.
But let’s say, for argument’s sake, that there could be an extended reduction in the availability of cocaine in the United States — that is, after all, a stated part of the mission of the DEA (“reducing the availability of illicit controlled substances on the domestic and international markets”)
What if the DEA was successful? What would happen with a cocaine shortage?
Of course, price goes up — everyone understands that. But what happens next? Everyone who has been using cocaine suddenly decides not to do it any more? Not on your life.
Price elasticity: For those who didn’t sleep through economics class, you know that elasticity refers to the change in quantity demanded relative to the change in price. The DEA would like to believe that cocaine is very elastic– that an increase in price will cause people to no longer demand it.
The truth is that most products have a range of elasticity within different user groups. For the casual, non-problematic user of cocaine (who makes up most of cocaine users, but consumes a smaller portion of the total) the price may be relatively elastic. If the price goes too high, he’ll stop (or, more likely, substitute). However, for the heavy cocaine user (minority of users, but consuming the majority of the total quantity), price is likely to be very inelastic.
A price increase for the heavy cocaine user simply means that their already stretched financial resources will be pushed even further, causing them to go to extraordinary lengths to get the money to purchase their drugs (and you know what that’s likely to mean).
So, once again, you have the drug warriors attempting to accomplish the worst possible scenario — driving away the non-problematic users, and making the problematic users more problematic — the very opposite of what a sane policy would do.
Substitution: Here’s the other challenging, and often unpredictable, aspect of external interference with supply and demand of illicit drugs. In most cases, people don’t stop using drugs if the price of a drug goes to high — they merely switch to another one.
Methamphetamine, for example, is largely a substitution drug. The intense crack-down on prescription amphetamines and the prices of other drugs created a demand for this cheap, dirty drug.
And even if it was theoretically possible to dramatically reduce the long-term availability of all illicit drugs (and it isn’t), people would find something else. Invent a new drug. Sniff glue (or like the two kids who died in my high school huffing kerosene).
And the DEA and the drug czar should maybe wonder what drug might be the substitution of choice in the current situation, if there really is a shortage of cocaine — perhaps some drug that’s being over-produced somewhere in the world.
Careful what you wish for. And learn the basics of economic principles.
The DEA and the Drug Czar (and, in fact, the entire drug war apparatus) are kind of like the underpants gnomes of drug policy.

  • Step One: Reduce availability
  • Step Two: ???
  • Step Three: Drug-free America
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