By Eva Forslund
In fact, ending the United States’ war on drugs could be easy. In order to do that, however, we have to understand the way in which drug gangs, cartels, and trade work. The drug trade is a global market with a turnover of around 300 billion dollars a year. It is not a war to be fought, but a market to be tamed. To the extent the supply of drugs can be decreased, governments should focus on diminishing drug gangs’ recruitment bases. And where demand cannot be dampened, we should consider legalization. This article is a blueprint for how to make this happen.
Maybe the US is the country most oblivious to the notion that drug trade is a business, not an enemy of war. The US makes 1.7 million drug related arrests and puts quarter of a million people annually to prison for drug offences. The fight against the war on drugs costs 20 billion dollars a year at a federal level, and it does not stop at the national borders. The American Drug Enforcement Administration has large operations abroad: 90 offices in 72 countries, with many of those offices based in South and Central America. These offices often work to restrict the supply of drugs in the Americas, by destroying marijuana and coca crops (the plant that later becomes cocaine).
But what difference does this strategy really make? Not a large one, according to Tom Wainwright in his book Narconomics. Let us assume a cartel wants to produce one kilogram of pure cocaine. For this the cartel needs around 350 kilograms of dried coca leaves, which costs about 385 dollars to buy from the local farmer. After going through the refining process, customs, and various drug dealers, one kilogram of cocaine is sold at the US market for around 122 000 dollars. What would happen if there was a huge breakthrough on restricting supply of coca leaves, and coca leaves tripled in price? The coca leaves required for one kilogram of cocaine would instead cost 1155 rather than 385. This would lead to a 770 dollar increase on the retail price of 122000; one kilogram of pure cocaine would cost 122 770 dollars instead of 122 000 on the US market. One gram of cocaine would cost the American consumer 122.77 dollars instead of 122 dollars per gram. This is in no way an increase that will decrease the consumption of cocaine.
Even if the consumer price would increase dramatically (or at least more than 77 cents), it is unlikely that this would drive down consumption. Because of its addictiveness, the demand for drugs is what economists call inelastic. This means that when the price rises, people cut down on their consumption relatively little. An increase in price would, however, lead to an even more lucrative business, which would likely attract more people to enter the illegal drug business. A more effective way would be to educate consumers about the murderous drug trade and provide help for cocaine addicts in order to decrease the consumers’ demand for the drug. Trying to restrict supply is not an effective way to fight the war on drugs.
In many ways, drug trade is like any other business. And drug cartels and gangs have to recruit workers from somewhere. In countries such as the US, where the rule of law is relatively intact, the drug gangs face problems. They cannot post open job positions publicly and they have to completely trust the people working for them. But American drug gangs have found a way around these recruitment issues – prisons. Many prisoners are unlikely to face job offers after prison time, and joining a gang provides an alternative job opportunity. Kings College’s economist David Skarbek has found that gangs work as a form of protection for prisoners in American prisons with bad conditions and non-working institutions (and there are many of those in the US). One way to destroy the drug business is to decrease the recruitment base for drug gangs: decrease the prison populations. In the US, there are currently 1.6 million people in prison – a large recruitment base for drug gangs. By improving prison conditions authorities would also diminish the incentives for prisoners to join gangs.
And when no other strategy works (or preferably earlier) – legalize. By legalizing the drug trade, the illegal drug business would be drained of funds. This would not necessarily affect the demand for drugs, but it would make the business of drugs less lucrative. According to Tom Wainwright, the fact that a few US states have legalized marijuana has probably led to larger losses for global drug cartels than any supply-directed policy.
Three things could easily be done to tame the drug trade: target demand rather than supply, decrease prison populations in the US, and legalize when possible. Unfortunately, there are obstacles. There is a short-termism in the way in which governments work. They would rather execute large drug busts than spend time and resources on the kind of long-term solutions that would lead to smaller prison population. Providing job opportunities to former convicts seems politically impossible for American politicians, where being tough on crime is notoriously needed to get elected into any office. In fact, ending the war on drugs could be simple. But it is not possible unless there is a way to change the short-termism in which American politician acts. And for that, there is no blueprint.