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The Economist - 2 settembre 1989
Drugs: it doesn't have to be like this
The Economist of September 2nd 1989

ABSTRACT: Colombia is fighting a war against drugs. America is losing one. The rest of the world will lose too, if its weapon is prohibition. There are better ways.

Towards the end of 1988 a kilogramme of cocaine fetched about $ 12,000 in New York. A hard bargainer could get it for $ 8,000. Stockists were unloading and the price was falling fast. The import, sale and possession of cocaine are illegal in the United States, yet there was a glut of the stuff.

Back in 1980, one-kilogramme lots of cocaine hydrochloryde cost about $ 60,000. In those days it was a foolish fashion for bankers and bond-salesmen, who sniffed it through rolled $ 100 bills after dinnner while boasting of their good connections. Now it is sold adulterated at $ 10 or less for a cheap ten-minute thrill amid murder and mayhem in America's slums. Even that price still brings huge profits: a gramme makes four doses, so the kilogramme bought for $ 12,000 can fetch $ 40,000 on the street.

The drugs trade is a fine specimen of unrestricted competition, which efficiently brings down prices and pushes up consumption. Governments refuse to limit the trade by regulation, taxation and discouragement. Instead, by national laws and international conventions, they try to prohibit it. In 1980 the federal government of the United States spent just under $ 1 billion trying to keep heroin, cocaine and marijuana out of its domestic market. By 1988 it was spending almost $ 4 billion. Yet the retail price of drugs dropped even faster than the cost of policing rose. As prohibition failed, the volume of imports soared.

Funny figures

No one knows the arithmetic of the drugs trade. Retail prices can be fairly easily established by asking around in any American city. Since drugs traders do not declare their dealings to the customs or the tax-men, other figures on the trade are bogus. The American figures are especially odd, since 11 federal agencies (police, customs,coast-guard, Drug Enforcement Agency and so on), plus uncounted state bodies of one sort and another, competitively claim that the drugs problem is very serious, so give them more money and they can solve it. The first statement is true, the second false: either way the "statistics" get swollen.

For example, a subcommittee of the United States Senate recently reckoned the global trade in banned drugs at $ 500 billion a year - an estimate credited to another estimate , in Fortune magazine. Of that, said the subcommittee, about $ 300 billion was earned in the United States, and about one-third of American drugs sales are of cocaine. So, hey presto, the American cocaine market is worth $ 100 billion a year, which, at $ 40,000 a kilo retail, implies imports of 2,500 tonnes of cocaine.

At a fair guess, it costs about $ 200 to produce one kilogarmme. Transport from Colombia to North America costs about the same. Add a crude $ 1,000 for distribution expenses, including bribes and enforcement. Compare these costs even with the low 1988 street price, and it appears that along the distribution chain total American cocaine sales bring dealers tax-free profits of more than $ 95 billion.

Of such heroic arithmetic are scare stories made. Yet - however uncertain the figures - cocaine is indeed clearly the most profitable article of trade in the world. In response to profitable American sales in the late 1970s, third-world producers planted extra acres, fitted out new laboratories and recruited better-armed sales forces. By the late 1980s deliveries had soared. To unload them, the middlemen had to cut their prices. They went down-market, hiring gangs to compete for distribution monopolies in poor areas.

By early 1989 the slums of the District of Columbia, seat of the most powerful government in the world, saw - or rather, took care not to see - about ten murders a week. Half were associated with cocaine trafficking. Politicians and journalists could hear the shooting. It hugely reinforced the anti-drug propaganda that was already fashionable with everybody from First Ladies to the musicians selling rap and reggae and salsa tapes to the ghettoes. The war on drugs flooded the media. The drugs continued flooding the slums of Washington.

Now for Europe

American demand is probably falling (though not the murder rate: the fight for the remaining trade could well become still more vicious). So forward-looking drugs merchants are investing their profits in new markets. Japan's is potentially huge, and developing fast. The richest is Western Europe, even ahead of 1992. In drugs as in other leisure products, Europe's diverse countries have different tastes and offer different market opportunities. Spain's links of trade and culture with producing countries in Latin America make it a natural market for the Colombian cocaine industry. Italy is the native land of the mafia, which is losing its old grip on the North American drugs trade; heroin, the mafia speciality, is already rife in Italy, where it killed more than 800 people in 1988, half as many as in the United States.

In northern Europe, Chinese, Pakistani and West Indian gangs (not to mention the natives) have long competed for control of illicit markets. Imports are rising, prices dropping. European governments these days are spending much more on anti-drugs law enforcement than they used to do. far higher is the pice paid by the customers who die of overdoses or poisonous adulterants, by policemen, by orduinary citizens whose lives are intermittently put t risk and whose civil liberties sometimes curtailed in the losing battle to prohibit drugs.

Legal and illegal

Almost everybody takes some kind of stimulating drug. In 1988 the average Briton aged over 18 spent $ 50 on tea and coffee, $ 325 on tobacco and $ 750 on alcoholic drinks. These legitimate products please, or invigiorate, or calm, or console; they change the taker's state of mind. So do various stimulants and tranquillisers that may (depending on local law) be available only on prescription. All are addictive, in varying degrees.

The demand for mind-changing drugs is irresistible, although their effects are mysterious. Alcohol, for instance, is classed as a depressant, but makes most drinkers happier. Alcohol abuse has been recorded ever since Noah, safe after his Flood, "drank of the wine, and was drunken", with awful consequences for race relations.

Cigarette kill smokers by the million. Alcohol wrecks people's lives and livers, ruins families, helps cause most road accidents and most violent crimes in most western countries. Powerful advertising promotes its consumption, mild government campaigns (backed by discriminatory taxes) seek to diminish it. But outside the Muslem countries that forbid alcohol on religious grounds, nobody seriously suggests prohibition. That was tried in America between 1920 and 1933, and it failed.

Illegl drugs do much the same things as legal ones but more so; the difference that matters is legislative, not pharmacological. The law copes clumsily with "designer" drugs, invented by chemists and cheaply made in home laboratories. But the main traded products are easier targets, the traditional drugs derived from tropical plants:

* Marijuana (ganja, bhang, dope) is made from the leaves and seeds of Indian hemp; its concentrated (and so much more easily smuggled) form is hashish. It may be smoked, drunk as an infusion or baked in cakes. It produces euphoria, disorientation, a heightened sense of rhythm and music and a lack of motivation and aggression. It has no important medical use, and people do not feel ill when they stop using it. Many American students find arijuana milder, easier to conceal and harder to detect than beer, which is equally illegal for most people of college age there. Marijuana consumption is widely toleratedd even where its sale and supply are banned.

* Cocaine is the active ingredient of the coca plant, habitually used by Andean Indians against cold, hunger and fatigue. Medically, no good substitute has yet been found for coca derivates in the relief of pain. Illegally, cocaine crystals are mixed with a neutral (sometiomes harmful) powder and sniffed, smoked or sometimes dangerously injected. One eigth of a gramme in the bloodstream can intoxicate an inexperienced user into hyperactive euphoria. Regular users want more and more to get the same effect. Stopping its use may leave a craving as acute as that which some people feel after they stop smoking cigarettes. Regular use rots the nose and damages the muscles of the heart.

Cheap cocaine may contain traces of the damaging solvents used in extracting it from the original leaves. Tiny volumes of it, mixed with baking soda to make "crack", may be heated to give off hot and harmful intoxicating smoke. Crack is no more or less addictive than cocaine in other forms; but $ 10-worth of it can give impoverished youths ten minutes of reckless excitement, during which they do crazy things. They could get the same effect much more cheaply with synthetic amphetamines.

* Heroin is a loluble powder derived from poppies; opium is dried poppy sap, morphine an intermediate derivative, codeine is in every household. The opiates are medically irreplaceable painkillers, which work so powerfully on the central that stopping their use can cause physical distress as bad as flu.

Prudenty used, heroin need do no great physical harm: when doctors in Britain were free to prescribe it, some of them became addicts and still worked well at their jobs for decades. That was stopped because a few addicted doctors thought heroin so wonderful that they prescribed large quantities of it for others, profitably spreading their own addiction.

Most healthy people dislike heroin, but it can enslave the unhappy or the psychologically disturbed. As many as one in four of those who regularly use it, and will lie, cheat, and steal for their supply; these are addicts. Their craving may be chemically assuaged by synthetic methadone. Many doctors and prison officials think heroin addiction mainly a symptom of psychological disturbance, and try to treat irt much as they treat alcoholism, gambling and other compulsions. But doctors are reluctant to treat addicts who, by admitting their addiction, are also confessing to a crime.

Addicted societies

Drug abuse may accompany social as well as personal disorder. Respectable citizens were scared by alcohol in England in the 1740s (and in Russia always), by opium in nineteenth-century China, by hashish in Egypt in the 1920s. North Europeans tend to drink rarely but in heavy binges, so Nordic countries tax strong drink hard. Southerners drink as much but more slowly, so Italians do not seem drunk and have weak anti-alcohol laws, but still damage their livers.

American politicians became convinced during the fisrt world war that drink was wrecking the nation. In 1919 they amended the federal constitution to prohibit all dealings in alcohol, except for medical purposes. Drukenness dropped, but a lot of people insisted on their beer or whisky. Some brewed the stuff at home, and brewed hangovers with it. Others bought certified liquor from Scotland via Canada, or from France via Cuba. The shippers, labelled as criminals, behaved as such. They "protected" truck-drivers and bar-owners, shot rivals, paid off local politicians and policemen.

The federal authorities caught the richest bootleggers mainly by tricks such as excessive income-tax assessments. As soon as they trapped one, another sprang up to satisfy the profitable demand. By 1933 the federal government gave up and legalised drinking again. The bootleggers, losing their tax-free profits, diversified into other illegal services such as gambling and abortion. As these too began to be made legal, so less profitable, the gangs went back to smuggling, and began with marijuana.

The Caribbean entrepots began to relive the bootlegging days that Hemingway recorded. Then in the 1960's the region acquired more small, poor, bribable governments. The marijuana transport and retail networks too made progress, brutally, by buy-outs, into cocaine, which meant higher profits from smaller volumes easier to conceal and transport.

Britain's experience has been longer. In the eighteenth century cheap gin ravaged its crowded, already industrialising cities. Moralists were appalled at the degradation depicted by Hogarth, capitalists found that drink made their workers unproductive. So Parliament began to control the trade. Retail sales were limited to outlets supervised by local magistrates. The quality of spirits was stiffly controlled, to cut out poisonous adulterants. Taxes made strong drink much costlier than relatively harmless beer.

The system remains in place, modified (albeit too slowly) to match the changing times. Now Britain certifies Scotch whisky that is smuggled to the prohibition countries of the Gulf, as though Colombia certified cocaine for export to New York. At home, alcohol's ravages increase when, as now, the government fails to keep taxes on drink ahead of inflation. Drinking remains a problem for private health and public safety. But the drinks trade is crime-free.

Crime-creating prohibition

Prohibition creates crime, and so gives rise to fiercer dangers than the medical and social ones it is intended to avert. True, the prospect of time in jail must prevent prudent people from even trying drugs at all. But it is not the prudent who need protection.

The young and the foolish are exposed to special risks when several different drugs are classed together as illegal. The state says that marijuana is much worse than alcohol, and must therefore be banned, with stiff penalties. Young people see their friends smoke it, and try it without much harm. They may therefore believe the whole law is an ass and imagine that heroin, subject to similar bans, is similarly harmless, which it is not.

Governments compel producers to indicate the alcohol content - and, for wine at least, the quality - of their drinks. Banned drugs are simply banned; their quality and purity depend on no more than the seller's good faith, which may not be great. Cheap crack, or the even cheaper cocaine sold as basuco, is often poisonously tainted by ethylene or even petrol used as a solvent in its making. That can kill. In southern Italy the mafia sells heroin at 10% concentration, in the north at 50%. Southern addicts visit the north and kill themselves with one injection, like a beer-drinker who might unknowingly gulp a pint of whisky.

Governments that ban drugs cannot also tax them; they thus abandon the most effective means of controlling their abuse. Britain's differing tax-rates divert demand from hard spirits to less harmful beer, but not from heroin to marijuana (nor from marijuana to beer, if you think that desirable, which many wouldn't: a joint costs less in London than a pint). Drugs impose public costs - for policing the trade, for treating its victims (such as the heroin users who get AIDS from shared needles), for warning the public against abuse. Governments decline the revenue that taxes could produce.

Drug-takers steal to pay for their illegal habit. Drug retailers fight it out for control of the streets. Drug wholesalers form protection squads, bribe policemen, tempte politicians. Drug shippers and exporters buy aircraft, arsenals and whole governments. America's covert agents, in South-East Asia and in Central America, have too often exchanged favours with them. The drug business is the basis of much of the world's petty crime, and of some of the world's largest criminal conspiracies.

Vast untaxed profits amass in the conspirators' hands and trail off into peaceable tax havens. The latest intergovernmental fashion, enshrined in a new United Nations convention, is therefore to beat the conspirators by taking away their profits. That sounds good. But the world is awash with crypto-dollars, avoiding tax or evading exchange-controls; it is impossible to sort the drugs money out from the rest without attacking the banks that big countries protect. So far, the main target of America's prosecuting zeal is a bank owned by Saudis, inspired by Lebanese, managed by Pakistanis and blaming any regrettable misunderstandings on its outpost in Panama.

American politicians are frightened of drugs wars on their streets, and so they should be: they have the most heavily armed urban population in the world. Drugs wars in poorer, less resilient countries terrify their politicians with even bettter reason. Lebanon is awash with weapons, many of them paid for by the poppy crop whose precious sap keeps the Afghans fighting too. In Colombia judges and newspapers editors have faced a choice: collaborate and get $ 100,000, resist and get a bullet in your son's head. Now it is the authority of the state itself that is at risk.

The ooze of corruption from the illegal trade threatens bigger nations such as Pakistan and Brazil. Hard-working Jamaicans can make money flying fresh flowers to the United States; but smugglers slip ganja into the flower-pots, so the American customs search the flowers for so long that they die.

Legalise and control

Drugs are dangerous. So is the illegality that surrounds them. In legitimate commerce, their sale controlled, taxed and supervised, their dangers proclaimed on every packet, drugs would poison fewer customers, kill fewer dealers, bribe fewer policemen, raise more public revenue.

For drugs as for alcohol, different societies need different remedies. The present international ban compels all to adopt the same blanket policy: to pretend that they can stop the trade, so forcing it into the evil ways that it now follows. Only the Dutch have had the courage to break away, treating different drugs differently and selectively applying social and medical remedies rather than criminal. Holland is permissive; yet few of its youngsters die of drug abuse (and hardly any get AIDS from infected needles). Drug-related crime is under control.

Legalising the drugs trade would be risky. Prohibition is worse than risky. It is a proven failure, a danger in its own right. The Economist advocates its replacement with more effective restrictions on the spread of drugs. In summary, we want to legalise, control and strongly discourage the use of them all. Give it 20 years, while today's drug squads turn their energies to things that actually do some good like helping little old ladies cross the road.

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