The War on Drugs

The war on drugs is the purest lunacy. I have known this for quite a long time. There is no justification for it that is not produced by its execution. In the most rigorous economic sense, the war on drugs is a massive squandering of funds. Prohibiting drug traffic and then placing barriers for imports creates two issues. Firstly, drugs become more expensive to import. The government sees this as a disadvantage, but in fact this is a boon to those selling the drugs. Let’s say that a kilo of cocaine costs $1,000 to produce and ship to the U.S. without federal interference. Laws get passed, and now the operation requires detailed smuggling. Countermeasures must be taken against the government; smuggling craft, secret meetings, messages, and eventually a covert transaction. This requires far more shipping infrastructure than normal, increasing the cost of small shipments disproportionately to large shipments. Maybe ship 100 times as much at 200 times the cost, or $200,000 for 100 kilos, or $2,000 a kilo, but far more is entering the country. Secondly, both the government and the rival drug traffickers introduce a prohibitive amount of risk which hikes up the price without a direct manufacturing cost increase. Call it $20,000 a kilo to slake the greed of the importers, because, after all, “we’re risking our lives out here, man!” SNIIIFFFF!! The result is a cocaine shipment that is much larger in scale to maintain efficiency, which requires gun-toting, hardline dealers prepared to kill to make the transfer because of the prohibitive risk of capture. And, worse yet, none of these costs are inflicted on the dealers. All additional cost and risk are passed on to the buyer. Still worse, the extreme price of cocaine by this point means that its profit margin can be further inflated without significant loss of business, so all these measures only make it even more profitable to sell cocaine. Factor in all that, and you get something in the neighborhood of $40,000 to $50,000. It is important to note, however, that the hard price of that kilo was only $2,000 in this simple little calculation, and the rest is a “soft price” that is derived entirely from the illegal nature of the trade producing a huge price hike from all vendors by universal delusion. If they couldn’t charge at least that much, they wouldn’t be in the business- too risky.

Alright, some of the drug traffickers get caught, some get through. Cocaine is going to get into the country, no matter what the government does, because an effort to make it more difficult will simply raise the price. They’re already doing their damnedest and although I don’t know the street value of cocaine (Miami Vice tells me it’s maybe $35,000 a kilo plus ten years’ inflation) I can authoritatively say that it costs many times more for the American buyer than the importer needed to spend to get it there. Continuing on, what effects does this conflict produce in American society? Well here’s a nice little list if you can’t work them all out on your own. In short, in order to keep the drug trade “undesirable” for the majority of people, they have to lock up those they can catch. And since there are comparatively few importers compared to end users, this means they end up filling up the jails with people innocently snuffing up in their own homes. True, it’s illegal, and they are the reason why the drug trade exists, but they are not the reason why it is so profitable. In fact, they would much, much prefer that the drugs were limited by competition down to their hard price instead of being swelled to insane costs by prohibition. Next, consider the conundrum of marketing. If competition will reduce the price to a borderline existence by rapid sequential upstaging, how can you convince anyone to purchase your product? Advertising of course. However, where illicit mystique plays to the strengths of the drug industry, open advertising hits it right where it hurts. The reason why they are illegal is because, overall, they are really bad for you, right? So how are they going to be able to convince people in an open market to use their product? “Use cocaine- it feels great! Side effects may include brain death and heart failure.” Sorry, not going to work!

Basically, the whole issue is ridiculous. Anyone with a brain can see that by prohibiting drug trade, the law plays right into the drug lords’ hands. If you want a more exhaustive and thorough treatment of the war on drugs, I recommend Freedomain Radio‘s treatment (Vol. 1, show #26, 27).

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