The Office of National Drug Control Policy (alias ONDCP, alias the Drug Czar’s office) has once again
In the National Drug Control Strategy released last month, ONDCP claims that domestic U.S. retail cocaine prices have been rising recently. There are several problems with that claim: (1) it probably isn’t true; at least, the DEA, which maintains the STRIDE database on which it is based, won’t stand behind it; (2) local officials around the country aren’t reporting any tightening of the cocaine market; (3) falling numbers of users as reflected in the Household Survey don’t tell us anything about heavy users, which is where all the action is ; (4) at best, the numbers show a bounce-back to 2002 levels, which doesn’t do much to reverse a quarter-century decline that has brought cocaine prices down by about 80%.
At some point, policymakers are going to figure out something that’s been obvious to analysts for more than a decade: While prohibition reduces drug abuse (otherwise why are there several times as many abusers of alcohol alone as of all the illicit drugs combined?), and some level of enforcement is necessary to make prohibition a reality, increasing enforcement efforts against mass-market drugs can’t raise the prices of those drugs, or at least not much.
In the long run, drug enforcement may, in fact, tend to decrease prices by creating a class of retail drug dealers with felony records who therefore can’t find lawful employment. That group then bids down dealing wages. (Crack dealers, who were making $30/hr. in Washington D.C. in the late 1980s, were making less than the minimum wage in Chicago in the late 1990s.) Since retail dealers’ wages are an important element of the cost structure of the illicit drug industry, falling retail wages translate into falling retail prices.
That analysis has two policy implications: (1) drug law enforcement should aim primarily to reduce the violence and disorder associated with illicit-market drug dealing; (2) we could reduce the number of drug dealers in prison substantially without taking any corresponding hit in the form of increased addiction.
Footnote Tomorrow morning around 7:15 I’ll be on KNX, AM 1070 in Los Angeles, discussing this for about five minutes with James Tuck. If you happen to listen in and I happen to say anything interesting, please let me know. At that hour of the day, my lips may be moving but I’ll be sound asleep.