Result of War on Drugs: Everyday Low Drug Prices

In the July/August issue of The Atlantic (subscription required), there is another excellent article "Snow Fall: Attacking cocaine at its source was meant to drive up prices, yet U.S. street dealers are selling it for less than ever." It opens like this:

"If the four-year slog in Iraq seems endless, consider this: The “War on Drugs,” begun by Richard Nixon, escalated under Ronald Reagan, and continued by every president since , is now in its 37th year." Here are some facts about the War on Drugs:

Number of U.S. presidents presiding over the War on Drugs: 7 (Nixon, Ford, Carter, Reagan, Bush, Clinton, Bush)

Largest Recent Drug Busts: 20 tons of cocaine in March near Panama, followed shortly by a 15 ton seizure in April in Colombia. That's 70,000 pounds of pure cocaine, or 32 million grams, just about enough for 1 gram of pure cocaine for every resident of California, or the country of Canada. When cut to typical street level quality, it might end up eventually as 100 million grams, enough for one gram for every resident of CA, TX, NY, and FL.

Amount spent on the War on Drugs since 1981: $600-800 billion, about the same amount spent on the Vietnam War, another failed effort.

Number 2 destination for cocaine: Brazil (U.S. is #1)

Price of a gram of pure cocaine in Bogota: $2

Cost of "Plan Colombia" since 2000 for aerial coca eradication in an area of Colombia equal to Delaware and Rhode Island: Almost $5 billion, about the same as Ireland has spent on its entire military budget during that period

Lowest price of a gram of cocaine in various U.S. cities in 2005 (see graph above, click to enlarge): $20 in NY and Miami, $30 in L.A. and Seattle, $50 in Detroit and Dallas, $75 in Chicago, $80 in Atlanta.

Average price of a gram of cocaine in the U.S. (nine cities in graph) in 1999: $70

Average price of a gram of cocaine in U.S. in 2005: $50

Reasons for the significant decline in the price of cocaine (30%) between 1999 and 2005: 1) more efficient distribution networks and supply chain management, just like Wal-Mart, to achieve "everyday low cocaine prices," 2) increased trade between U.S. and Mexico that allows more cocaine to penetrate a porous border, 3) a recent reduction in drug enforcement and arrests as resources have been shifted to fighting terrorism, and 4) when drug offenders get out of prison, stigmatized by felony convictions and possessing no licit skills, they are sometimes willing to sell dope for less than they were earning before they went in.