The Market For Illegal Drugs And The War On Drugs

1212 words - 5 pages

In 2009, former Secretary of State Hillary Clinton, while on a state visit to Mexico said something no other political figure had been courageous enough to admit at that point – that the war on drug is a failure. In her own words, she said: “Clearly, what we have been doing has not worked… our insatiable demand for illegal drugs fuels the drug trade and our inability to prevent weapons from being illegally smuggled across the border to arm these [Cartels] criminals causes the deaths of police officers, soldiers and civilians.” Taking a closer look at the economic forces that have been driving the supply end of this business as well as evaluating the economic costs of the war will give us a better understanding of the reasoning behind her statement.
First lets put into perspective the characteristics that define the market for illegal drugs. We begin by distinguishing the steep inelasticity that delineates the demand curve. Inelasticity is a feature of those goods whose demand decreases by a smaller percentage than the percentage by which price is increased. Cigarettes, for example, are inelastic because if a tax were imposed on all tobacco goods, demand would hardly be affected, as addicted smokers would not have alternatives to satisfy their needs at the same price as before (Pettinger, 2013). Another characteristic of this market is that of the lucrative incentives that make the risks associated with producing, smuggling, and dealing drugs, worthwhile. According to former DEA agent Robert Strutman, the average nark-supplier can afford to loose up to 90% of its profits and remain profitable (Stutman, 2000). On top of this, production of most of the drugs that are sold on the U.S. is considered to be a tremendous cash crop for impoverished communities and efforts to eradicate these crops face incredible popular resistance. The lucrative nature of this market leads us to our third characteristic, which is that there is an almost infinite source of people willing to take the risk of entering this illegal workforce. Figures vary as we move along the production chain, but the fact remains that for most people living below the poverty line, the opportunity of earning as much as $4,000 a month from selling weed can prove to be the only way to provide for ones family. For this reason cartels are not concerned for their “employees” being arrested since they can expect for there to be enough labor demand from people willing to take the risk for a share of the profits. These three characteristics put together create the ideal environment under which cartels are able to run their business and not be afraid for the governments policies against drugs.
Now that we have seen how the market for illegal drugs works, lets take a look at the costs associated with the war on drug. According to the Office of National Drug Control Policy “Supply reduction is an essential component of a well-balanced strategic approach to drug control. Demand reduction cannot be...

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