Why the War on Drugs has failed.

politics and economics

“Economics is really politics in disguise.” Unfortunately, this notion is minimally understood, in politics it is common for politicians, buearcrats or civil servants to overemphasie theatrics and forget about the economic lens. A lens that is often ignored as a potent weapon to solve many of society's greatest problems and in this case: the war on drugs.

The war on drugs, for instance, reflects this underlying ignorance towards the notion that economics and politics are interchangeable. Since Nixon waged the “war on drugs”, the American government has been fighting an uphill battle. Despite spending US$30.6 billion fighting this war, the number of people who use cannabis and cocaine has increased by 50% and narcotics have grown into a US$300 billion global industry.

Even in hindsight, it appears fairly obvious that battling the forces of supply and demand in unregulated American markets with firepower was not at all an effective strategy for the past four decades. However, governments have not yet grasped this line of logic, fighting back with a show of brute force that critics have pointed to as mere spectacle to gain public trust.

Economically speaking, the war on drugs is fought on two fronts, demand and supply. When governments such as the U.S. and Mexico emphasise on the distribution of illegal narcotics, such prevention measures serve only to further fuel the war on drugs, as it continually leads to corruption, fraud, death and violence whilst countries ironically contribute to their own losses in the so-called war on drugs.

From an economic standpoint, fighting the war on drugs by targeting supply with consideration of the logistics of drug smuggling tells us that every win from officials is an even bigger win for drug lords. Since drug demand is not price-sensitive, each “victory” in the war on drugs boosts drug traffickers' profits, making any supply reductions all the more difficult. This also allows drug suppliers to use their increased profits to strike back even harder.

The prohibition of drugs only makes drugs more effective as suppliers render products as small and light as possible to reduce the possibility of detection. They compensate for this adjustment by increasing the drug’s potency; additionally, the fixed costs of evading law enforcement is the same, regardless of potency, and drug prohibition minimises the price difference between more and less potent products. As a result, since the relative price gap between drugs of varying potency is smaller, prohibition allows consumers to seek out more potent drugs.

The increased potency of drugs triggered by government crackdown actually encourages tribal or animalistic behaviour, as stifling the supplies of the cartels cultivates a cycle in which consumers are hooked by the increasing potency, thus creating further inelastic demand (i.e. demand that is not swayed or affected a lot by price, meaning that if price skyrockets, demand may stay relatively stable) that then leads people to resort to stealing in order to support their habits.

As economist David R. Henderson calculated, if the same mark-ups were applied to cocaine as they were to coffee, the price of cocaine in the United States would drop by 97 percent. Few users would need to turn to violence to support their habit if cocaine and other drugs lost the price premium imposed by the drug war. Without the war on drugs, society would be relieved of crime rates and stress on law enforcement would decline.

As prohibition was repealed, regular business resumed and crime subsided alongside the legalisation of alcohol. According to economist Jeffery Miron, because of prohibition, the murder rate is 25-75 percent higher. In other words, the violence associated with drugs, whether perpetrated by users to sustain their addiction or by gangs selling the drugs, is largely a result of prohibition itself, a major finding against the idea of fighting the war on drugs through counteracting its supply.

The failure to tackle the long-lasting war on drugs highlights a seismic problem in government, especially in their ability to understand fundamental economics and accept the worrying statistics. As they continue to inadvertently feed money and supplies to drug cartels, they only succeed in promoting decreasing health and increasing violence in a desperate attempt to gain public confidence. Where the real solution could be uncovered much more efficiently by means of legalisation and consulting demand, because economics is truly and very simply “politics in disguise”.