Tuesday, December 29, 2009

The drug war two-step

San Diego Union-Tribune commentary "The drug war two-step" (December 27th, 2009) fails to mention a curiosity in the "War on Drugs" that helps to make interdiction efforts a self-defeating campaign. The article suggests that the elimination of one drug dealer may reduce violence in Mexico but increase the amount of drugs shipped into the United States. Corrections sees a definite possibility for the opposite to occur. Corrections suggests that the elimination of drug dealers could cause more drug-dealer-on-state violence, smaller quantities of drugs shipped, higher drug prices, and higher industry profits.

The question is will “El Barbas’ ”death have any lasting impact on reducing cartel-related violence and reducing the flow of drugs into the United States. On the first point, there may be some hope, but not for the right reasons. Here’s the rub: drug traffickers are peace-lovers at heart, because peace means no competition for customers and profits. With Beltr├ín Leyva out of the way, “El Chapo” Guzman can expand his business and keep moving up the list of Forbes magazine’s wealthiest people. Meanwhile, the U.S. drug consumers who are padding his bank accounts can rest assured, there will be plenty more drugs available in the days to come.

When something is demanded inelastically, it means that a one percent increase in price will be met with a less-than-one percent decrease in demand. Addictive, illicit drugs are often examples of goods with inelastic demand. While a monopolist will never supply a good on the inelastic portion of the demand curve, competition will. It is not unlikely that the illicit drug industry is pricing drugs on the inelastic portion of the demand curve.

Therefore, if authorities artificially shift the quantity supplied leftward, it may increase illicit drug industry profits. This is depicted graphically below (click to enlarge).




It is in this manner that drug interdiction efforts may actually benefit the drug industry. It is important to note that under this scenario, fewer drugs will be consumed in the period of interdiction, even though the industry is better off. We could imagine that increased drug-industry profits might actually increase its capacity for violence against the government, concluding the reasons for the above predictions.

Corrections notes as a piquant possibility that one method of reducing the quantity of drugs sold in the United States might be to help form a cartel or monopoly supplier. As outlined above, a monopoly supplier will artificially restrict supply, gaining higher profits. It could be that the formation of a monopoly will cause a smaller quantity of drugs into the market, as depicted below (click to enlarge).

3 comments:

  1. One need not travel to China to find indigenous cultures lacking human rights. America leads the world in percentile behind bars, thanks to ongoing persecution of hippies, radicals, and non-whites under prosecution of the war on drugs. If we’re all about spreading liberty abroad, then why mix the message at home? Peace on the home front would enhance global credibility.

    The drug czar’s Rx for prison fodder costs dearly, as lives are flushed down expensive tubes. My shaman’s second opinion is that psychoactive plants are God’s gift. Behold, it’s all good. When Eve ate the apple, she knew a good apple, and an evil prohibition. Canadian Marc Emery is being extradited to prison for selling seeds that American farmers use to reduce U. S. demand for Mexican pot.

    The CSA (Controlled Substances Act of 1970) reincarnates Al Capone, endangers homeland security, and throws good money after bad. Administration fiscal policy burns tax dollars to root out the number-one cash crop in the land, instead of taxing sales. Society rejected the plague of prohibition, but it mutated. Apparently, SWAT teams don’t need no stinking amendment.

    Nixon passed the CSA on the false assurance that the Schafer Commission would later justify criminalizing his enemies. No amendments can assure due process under an anti-science law without due process itself. Psychology hailed the breakthrough potential of LSD, until the CSA shut down research, and pronounced that marijuana has no medical use, period. Drug juries exclude bleeding hearts.

    The RFRA (Religious Freedom Restoration Act of 1993) allows Native American Church members to eat peyote, which functions like LSD. Americans shouldn’t need a specific church membership or an act of Congress to obtain their birthright freedom of religion. God’s children’s free exercise of religious liberty may include entheogen sacraments to mediate communion with their maker.

    Freedom of speech presupposes freedom of thought. The Constitution doesn’t enumerate any governmental power to embargo diverse states of mind. How and when did government usurp this power to coerce conformity? The Mayflower sailed to escape coerced conformity. Legislators who would limit cognitive liberty lack jurisdiction.

    Common-law allows that adults are the legal owners of their own bodies. The Founding Fathers undersigned that the right to the pursuit of happiness is inalienable. Socrates said to know your self. Mortal lawmakers should not presume to thwart the intelligent design that molecular keys unlock spiritual doors. Persons who appreciate their own free choice of path in life should tolerate seekers’ self-exploration.

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  2. Thank you for your comment. Corrections eschews normative (moral) economics and embraces positive (factual) economics.

    Your thesis appears to be that the government should not be involved in making drugs illegal. Point by point, your argument appears to be:

    1) You do not see the incarceration of large numbers of a population as copacetic with an ideal of liberty.

    2) Incarcerating individuals for drug offenses is wasteful, both of taxpayer money and of forgone opportunities.

    3) The original law was based not in utility concerns.

    4) The existence of religious exceptions to prohibition are morally anathema.

    5) A necessary input to the production of Freedom of Speech is an absence of restrictions to inputs on Freedom of Thought (viz., psychotomimetic drugs).

    6) Individuals should have the Freedom to Choose.

    Corrections admits that our understanding of your syntax was limited, and welcomes elucidatory addenda.

    It isn't clear that the first point is correct. Corrections sees the capacity for differential rates of crime without a difference in liberty. One is not proof of the other (it may be suggestive).

    Your second point appears to beg an empirical question. It appears to corrections, in the absence of supporting evidence, Corrections conjectures that your point is valid for the marginal individual incarcerated for illicit drugs, but not the average individual.

    We cannot speak to the third or fourth point.

    Your conjecture on the fifth point is an interesting one. To Corrections, it hinges on the existence of input substitutes. If there are substitutes to the prohibited input, then the shadow price of prohibition will be small.

    Corrections agrees that individuals have knowledge the government does not have, that government incentives are often not properly aligned, and that a Freedom to Choose is a Pareto improving option.

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  3. Dear CPO. Belated thanks for your comments on Dec. 30, which I only now noticed. I apologize for the undue delay. I will now attempt a response to the points you pick, and pick some of my own too in the process. I give you

    credit for willingness to engage, as my pet peeve is that my opponents' tactics historically are to ignore and obfuscate. Best regards, and thanks for reading. Bill

    >1) You do not see the incarceration of large numbers of a population as copacetic with an ideal of liberty.
    Clarification: I see the unjust incarceration of large numbers of peaceful citizens who never harmed anyone in their life as anathema to liberty.

    >2) Incarcerating individuals for drug offenses is wasteful, both of taxpayer money and of forgone opportunities.
    Yes.

    >3) The original law was based not in utility concerns.
    Yes.

    >4) The existence of religious exceptions to prohibition are morally anathema.
    I don't understand your sentence. Please revise with subject and verb-form agreement if singular or plural.
    Elaboration: The very name of the RFRA reveals the barefaced truth that the real purpose of the CSA is pointedly to deprive citizens of their birthright freedom of religion. The sixties were a time of spiritual awakening, which

    the CSA was designed to squelch, and to prevent from ever reviving.

    >5) A necessary input to the production of Freedom of Speech is an absence of restrictions to inputs on Freedom of Thought (viz., psychotomimetic drugs).
    Elaboration: There is no substitute way to get stoned or to trip (have sacred visions). Meditation and runner's-high types of experience are fine, but they are not the same as the result of intaking molecules that fit corporal

    receptors. The whole concept of substitute experiences being equivalent is an oxymoron.

    >6) Individuals should have the Freedom to Choose.
    Not that they should have it. They do have it. Freedom comes from God. The point is that Government should respect the human rights of the citizens.

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