Thursday, October 25, 2007

DEA Failed, But Weak $ Raises Price of Cocaine?

REUTERS (May 8, 2007) -- Billions of dollars in aid to Colombia have failed to drive up the price of cocaine on American streets, according to the head of the top U.S. anti-narcotics agency.

Officials in Washington have said crop spraying and military pressure on drug-smuggling guerrillas and paramilitaries would make cocaine more expensive in the United States following a U.S.-backed offensive launched in 2000.

But the Drug Enforcement Administration's chief said that a higher price -- a key indicator of success in the war on drugs -- had failed to sustain itself for long.

According to this report by the Drug Enforcement Administration (DEA), wholesale cocaine prices increased 11% in the U.S. between January and June 2007 from from $20.85 to $23.04 per gram, and retail prices increased 15% from $145.42 to $166.90 per gram of pure cocaine during the same period.

The DEA concludes "Cocaine availability in the United States has fallen significantly, as indicated by an increase in the price per pure gram since December 2006."

Before the DEA takes too much credit for "winning the War on Drugs," and making cocaine less available, it might also consider that the significant decline in the value of the dollar vs. the Colobmian peso might be playing a role in rising dollar prices for cocaine. For example, the graph above indicates that the dollar fell by 27% from the fall of 2006 to the summer of 2007, and by 13% during the first half of 2007, the exact period that the DEA reported a 11-15% decrease in the dollar price of cocaine in the U.S.

Apparently the weak dollar might have done more to raise cocaine prices than the billions of dollars spent by the DEA.

And for an analysis of why rising cocaine prices might actually make the drug problem worse (increased violence, users switching from powder to crack cocaine, or from cocaine to cheaper meth, increased drug trafficking because of higher prices, etc.), not better,
read this.


At 10/25/2007 11:26 PM, Anonymous Anonymous said...

I heard an economist propose that monogamous people should have more one night stands, that way the transmission of disease would "diluted" more and one night stands would be safer. I was wondering rather than do stings to prosecute, why not put lots of undercover officers out there selling fake drugs at every level without the costly follow-up. That way the supply would be "diluted" and dealers/users might have to be more careful.

At 11/30/2007 11:04 PM, Anonymous Anonymous said...

What a ridiculous notion.

At 1/24/2008 3:22 PM, Blogger Raj Mehta said...

Very interesting. If the DEA was a company and their product was illegal drug scarcity and high cost, they would be bankrupt.

Follow this; the DEA budget has gone up dramatically since Nixon in the 1970's. Not only have drugs become more available, they are cheaper than ever if you factor in the cost of inflation.

The best part, is the more they fail, the more money they receive.

There is no accountability.

Nor does this follow any known business model.

Why does the DEA make no effort to change the way they operate?

Because the way the operate keeps getting them more money.


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