Thursday, 13 December 2012

The War on Drugs is Unwinnable

Cocaine grows wild in South America, and has been cultivated for the stimulating properties of its (highly nutritious, by leaf standards) leaves for centuries.

A comparison of coca with other major food sources has shown that it is an excellent source of vitamins B1, B2, C and E, and in particular of mineral elements such as calcium, potassium and phosphorus.
It's also excellent for warding off altitude sickness, and so coca cultivation is allowed in Bolivia, where Yields of 1.3-5 tonnes of Sun-dried leaves per hectare are common and prices on the illicit market (Peru, 2003) are around $2.50 per kg.

So, coca can be bought for a few dollars a bushel, and one kilo of sun-dried leaf yields between 2.5g and 4.5g of pure cocaine hydrochloride. The costs of the sodium carbonate (or cement powder) sulphuric acid, petrol and caustic soda used in the production process are negligible amounting to a few dollars. It is unlikely to be $200 to buy and process 50kg of leaves, if you're doing it in bulk.

50kg of coca leaf will yield 125g of pure cocaine hydrochloride. On the street in Europe, where street purity would be around 10-30% (assuming 25% to keep the maths simple) and the drug retails for £40-50 (assume $72) a gram, your 50kg of leaf and chemicals bought for $200 generating $36,000 (£22,500) of retail sales. The input costs are negligible, and the difference is profit shared entirely by an illegal supply-chain. Narco-lords, mules, warehousers and distributors and street dealers. The majority of the risk is run by the street dealers, mules (or more accurately, those who direct and orgainse them) and narco-lords so this is where I expect the majority of profits to flow.

With such an economic pull, is it any wonder people do things like this?
Spanish authorities have arrested a Panamanian woman who arrived at Barcelona airport with 1.38kg of cocaine concealed in her breast implants.  
That's 1,380g of cocaine worth (on the calculations above) nearly $100,000. Even if the mule captures just 20% of this, and this is probably an underestimate: getting the drug from Bolivia to a European city is the difficult bit; it is simply impossible to prevent a resource from rolling down so steep an economic slope.

The only sane response: just legalise it, and take that mark-up as better wages for Andean farmers and generate a lot of tax. More money for Government coffers, while generating many fewer bodies as it would be companies competing over taxable profits, not criminal gangs fighting for untaxed ones. Finally Governments such as the US would not need to spend the $7bn on fighting the drug war. To put this in perspective, the US spends just the gross profits from 2,800 hectares of Coca, or about 10% of the Bolivian crop alone.

We cannot stop the flow of cocaine from South America any more than Canute could order the tide to retreat. The laws of economics are stronger than the UN Convention on the illegal trade in narcotic drugs and psychotropic substances, 1988.



4 comments:

The Filthy Engineer said...

I was on anti dugs patrol in the carribean a few years back when we borded a vessel and seized 32 Tonnes bound for Europe.

Our US boarding party intimated that was just the tip of the Iceberg.

Anonymous said...

Dear Jackart

"Finally Governments such as the US would not need to spend the $7bn on fighting the drug war.

Perhaps the US government wants to spend $7bn of taxpayers' money fighting an unwinnable 'war'.

If it stopped doing so it would have to find another unwinnable 'war' with which to occupy itself and waste $7bn. There would be an awful lot of unhappy DEA operatives, unless they could transfer to the new department of unwinnable war: the TSA perhaps?

DP

Jackart said...

DP, that is of course the regulatory capture.

Not just DEA, there's a whole supranational bureaucracy concerned with drugs who'd be out of a job were it legalised, as would the people whose job it is to farm addicts. These are also the people whom legislatures turn to as the "experts".

No-one's asking the happy stoners, party people, ravers and so on who outnumber the problem users by orders of magnitude.

Jackart said...

Most independent studies recommend something along the lines of decriminalisation and medicalisation. Full legalisation is too controversial to be even considered.

Even they're ignored.

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