Today, I watched a new documentary on Netflix, called Operation Odessa. It is a really fascinating movie that details how a few guys attempted to broker a deal with a Colombian cocaine cartel for a Russian submarine. They intended to use it to move enormous shipments of cocaine to (and money from) the USA. Tony Yester, Juan Almeida, and a Russian immigrant who goes by the name of Tarzan set up a deal with the Russian military to accomplish this feat for the sum of $35 million. Some guys in the Russian military even offered to sell them a nuclear weapon, to which they adamantly declined. Ultimately, this got the attention of law enforcement in the US, who ended up thwarting the deal. Tony Yester was never brought to justice, and has been on the run since 1990. He lives somewhere in Africa to this day.
Regardless of how the cards fell with these people, the fact remains that there still are those willing to pay exorbitant sums to mitigate the risk of distributing drugs. Drug dealing is so profitable that the purveyors of said drugs can afford to broker deals with the Russian military to purchase military submarines.
This got me thinking about the function of risk premium as a crutch to prop up black markets. If we approach the concept from simple economics, black markets are going to happen. It is supply and demand, whether you are dealing with capitalism, socialism, fascism, or anything in between. If you prohibit a product that is high in demand, the price of that product is going to be inflated by the risk of supplying it. Look at alcohol 100 years ago, or any illegal narcotic today. This set the stage for creating drug barons, such as Pablo Escobar, Griselda Blanco, the Ochoas, the Cali Cartel, El Chapo, and the like to become drug smuggling billionaires. There will always be somebody willing to take the risk to make the premium, and there are always people willing to pay the price for the product. Stop one kingpin (or queenpin), and more will pop up. Plenty of people deify these drug barons (and baronesses), hoping to become the next monarch of the mountain. Many of these people would rather live a fast, hard life, knowing full well that they are risking imprisonment or death. This atmosphere is like a magnet for psychopathic people, willing to commit murder in the name of the almighty dollar. To stretch their profits, they are willing to cut the product with similar looking substances and dilute the potency.
For the better part of a century, the USA has approached this problem from the perspective of criminality, declaring war on drugs. Taking the moral high ground has created the need for agencies like the DEA, and vast narcotics task forces at the local level. Unfortunately, this also has shaped our society's view on drug users and addicts as being a part of that same problem--that of criminality. The sad truth, however, is that the addicts are dealing with a medical problem--a disease.
This drug war has been a costly one, in terms of lives and money. Law enforcement agents have been killed, as well as dealers and users. Prisons are experiencing such a glut that they are releasing inmates early, just to make room for more inmates. The majority of people in these prisons are users and dealers of illegal drugs. The moral high ground is a slippery, costly slope to climb, fraught with deadly pitfalls. Law enforcement at every level is losing a very costly war by going after the dealers. With our tax dollars. This is not how to win this war.
So what is the best way to approach this from the perspective of squashing the black market? How do we torpedo that artificially inflated submarine?
The solution, in my opinion, is as simple as it is elegant. You frame the problem from a different perspective, and take over the market at the same time. When you are dealing with a market defined by addiction, a small percentage of the clientele finances the majority of the market. Look at alcohol and gambling. That is how addiction works. There are far more recreational users than addicts, but the addicts spend far more money than the recreational ones. So, to gain market dominance, all you have to do is give addicts a better, cheaper alternative. They are paying enormous risk premiums to get their drugs, and creating these drug barons. They would love to find the purest examples of their drugs, and pay less money to do so. The healthcare system could rob these drug barons blind in one fell swoop by treating the addicts. All without firing a single bullet, and for a fraction of the tax dollars that finance these agencies' drug enforcement. So what happens when you knock out most of the market by creating an infrastructure covered by health insurance to treat the addicts?
The drug dealers go broke, because their cash flow is destroyed. The incentive to become a drug dealer disappears along with the lifestyle that an artificially inflated market provided. Drug addiction is finally seen as a medical problem, and would-be dealers have lives devoid of emulating Tony Montana in Scarface. The law enforcement agencies are forced to downsize. The private prison industry goes bankrupt.
The vast majority of people who enforce the law are high integrity, honest individuals. The world needs more of these people, and their skills and talents are wasted babysitting sick people. They can (and will) find better jobs where these admirable characteristics help them shine. The justice system can finally focus on crimes that have actual victims. Tax dollars can be re-purposed to serve the public, instead of financing a war that cannot be won. Infrastructure can be upgraded, such as roads and public transit. A tiny fraction of those freed-up tax dollars can finance addiction treatment programs, because it would only cost a tiny fraction of those tax dollars to do so.
The USA can take a page from Portugal and Switzerland's book, and regulate the drugs that come into the country by providing the best products in a clinical setting, way cheaper than unscrupulous dealers fueled by greed. The end goal is helping these addicts get away from their chemical crutches. That way, they can develop their own skills and talents. If their addiction needs to be maintained (rather than eliminated), that can be done by clinicians (who want them to be healthy), instead of drug dealers (who only want their money). Addicts have a much higher chance of being functional when they are in the hands of people whose entire goal is a positive healthcare outcome.
Bottom line, if you want to find out the root cause of the problems in this country--follow the money. Drug dealers and law enforcement want to maintain the prohibition of drugs. They want to keep things the way they are for one simple reason: job security. When people on both sides of the war want to maintain it, it is time to take a gander at why. I, for one, do not value anybody's job over anybody's life. People can find new jobs, but the the people who have lost their lives fighting the War on Drugs cannot get them back. We need to sink this submarine--and the sooner, the better.