The Market for Illegal Drugs and The War on Drugs Essay

The Market for Illegal Drugs and The War on Drugs Essay

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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 im...


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...sed above that, not only are the costs associated with the war on drugs leading us down the drain, but the war itself is highly inefficient at doing what it is designed to do. In 2011 the Global Commission on Drug Policy (GCDP) was formed to evaluate the progress of the global war on drugs. It was composed of 22 members that included numerous presidents and prime minister like that of Colombia, Mexico, Greece, Chile, and Switzerland among others. The group also included former Chairman of the Federal Reserve, Paul Volcker and former Secretary of State, George P. Shultz who was also the honorary chair. The commission issued an assessment in which it concluded “The global war on drugs has failed, with devastating consequences for individuals and societies around the world.” In its report, the GCDP “advocates decriminalizing drug use by those who do no harm to others.”

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