About the author: Jhone Carrinho is Local Coordinator of Students For Liberty Brasil, a researcher in the social sciences area, with research experience, focused in the sub-area of political impacts on the social body. Find him in [email protected] or linkedin.com/in/jhonecarrinho

If you consider 9/11 as the ground zero of “War on Terror” declared by President George W. Bush, it means that we are nineteen years old in an anti-terrorism war. It may seem like a long time, however, there is another war that lasted even longer, decades longer, the war on drugs. This in turn, like the war on terrorism, costs millions of dollars and thousands of lives.

Already seen as a harmless leaf, used by indigenous peoples in South America, the modern history of cocaine involves Freud, Pablo Escobar, Hedonism in Ballads, Hedonism in Wall Street, Crack, El Chapo and more hedonism in Wall Street. Cocaine has been a target of public security for years, yet it remains one of the most lucrative markets of the 21st century. What makes the cocaine industry indestructible?

To start this debate I would like to present a basic account, which presents the average costs and profits of a cocaine dealer [1]:

COST (USD) $900/oz
RESALE (USD)  $1800 – $2700/oz
PROFIT (USD) $900 – $1800/oz

In a business that works with a pyramid hierarchy, where the drug dealer who sells on the street is one of the lowest positions in a large and structured industry, the sale of drugs is one of the ways they find to support their families. Selling packages of 20g is enough for traffickers to be able to put food at home, without risking long penalties, for example, in the United States anyone found with more than 1 kg of Cocaine can face up to 25 years [2].

When you take cocaine, your brain is tricked into thinking that something incredibly satisfying has happened. The body releases an intense amount of energy, increases the heart rate, increases the body temperature, dilates the pupils. At the top of the effect, there is a great feeling of joy that together with the high levels of dopamine, make that feeling addictive. However, tolerance builds up relatively quickly [3] and this puts the user at risk for an increasing amount of the drug.

Global cocaine production was at an all-time high in 2017 [4], reaching 1,976 tons, which means an increase of 25% over the previous year and 50% in a decade, points out the UN World Report on Drugs [5]. This production fuels the consumption of 18.1 million users worldwide [6]. The number of new users in the United States [7] has practically doubled since 2013 and normally, an increase in demand would mean an increase in price, but that has not happened with cocaine.

The cocaine market is different from the others, not competing for the price, but for the confidence that they will be able to serve the market. Consumers choose their reseller, valuing someone who can safely give them their products and who will not increase the price too much. The price of each gram of cocaine has been around USD $100 for more than 25 years [8].

An analogy would be the video game industry, where game prices remain constant at around USD $60 per game over a long period of time. It is certainly not because the technology has not evolved, but because the fixed price generates a very effective coordination mechanism because the consumer knows how much they must pay for the next game and reserve that money. Any successful industry requires stable supply and demand, and with an abundance of unoccupied land and an ideal climate for growing coca, Colombia ended up becoming the largest producer of cocaine in the world.

This has been the case since the 1980s when the American DEA and local governments closed the cocaine trade in Bolivia and Peru. However, in Colombia, the business prospered under the legendary management of the Pablo Escobar cartel, who, at the height of his business, earned about USD $420 million a week [9], largely because his operation was fully vertically integrated [10]

Faber-Castell is a great example of the success of vertical industrial integration. As a pencil seller, they own their florets in various parts of the world, so that they can manage their wood supply more reliably than buying on the open market. It also gives them their own grinding options, designers themselves. It was exactly the same as Pablo Escobar did. He absorbed profits from all stages of the productive value chain and ended up taking over producers, coca growers, laboratories, processors, transportation, and sales. Pay-in makes sense when looking at profit, however, this is an illegal market and the risk assumed is extremely high.

As the only producer of cocaine in all industrial stages, Pablo ended up becoming a giant target for the DEA and the Colombian government. When the Medellín cartel collapsed, the vertically integrated model fell with it and this was a cataclysm that completely decentralized and restructured the Colombian drug trade into a Hydra phenomenon. By cutting a supplier, several smaller suppliers emerged and the business became more complex in terms of tracking people linked to each step in the process.

In Buenaventura, where the largest Colombian seaport is, there is a large network of child labor for trafficking, with salaries of up to one hundred thousand pesos (about USD $30) [11], which in the local currency is a lot of money. The promise of such values compared to not having running water at home is extremely tempting for young people. It is estimated that only in Colombia: one-third of the population is unemployed, 45% have no drinking water, and 80% live below the poverty line [12]. When observing these data points and comparing them with the salary paid for the trafficking, it becomes clear it is one of the most viable options for a citizen desperate for his survival.

If we consider this new geopolitics of drugs no longer “top-down” (market, States, institutions), but “bottom-up” (living conditions of the populations, social organization of working-class neighborhoods, movement of migrants), the moral disengagement [13] (a term used by Albert Bandura to explain how people break free from their moral standards to inflict harmful actions on others, without feeling guilty for their non-moral conduct. Subject inserted between the explanations of the regulation of human behavior, being described as part of the explanation of the self-regulation of moral behavior) is an important fact. 

With this, we understand the absence of legal work, the extension of the informal sector that more or less compensates for it, massive unemployment, abandonment, and professional demotion of younger and abstinence behavior. The natural changes in the capitalist economic and financial system (the adjustments that the economy itself makes to remain stable, called by Adam Smith “The invisible hand of the market”), aggravated by state interference in the economy plunged millions, not just rural migrants poor, but also of traditional urban migrants, in misery due to the violence of “adjustment”… The result is a massification of the informal sector and a growing involvement in illicit urban markets.

In the central or peripheral neighborhoods of the working class, small drug trafficking is part of a survival economy, or even the “last resort”, in a logic of compensation. The inaction of public authorities, the stigmatization of the different categories of the population living in these urban areas (in particular migrants or descendants of the second or third generation of immigration), the multiple obstacles they face in accessing resources, reinforce this process of social disengagement.

It is estimated that the United States alone spent more than $3.3 billion dollars in the war on drugs in the year instead. [14]. A Brazilian study estimates that in 2017 alone, one of Brazil’s 27 states, spent about $1 million dollars on the drug war [15]. Between 1994 and 2015 Colombia has already spent around half a billion dollars (the equivalent of 13% of GDP in the same period) [16].

These data are just a few of the many that can prove the failure of the war on drugs. We stopped investing in the well-being of the people and invested (and a lot) in a war whose victory we have not won until today. It is intriguing to say that a government stands still when it sees the population below the poverty line and without access to drinking water, but spends in an inefficient war, with which all the money spent could solve the problem of its population. 

To these countries, we have the example of Portugal, which made a difference with the change in sensitivity towards addicts: they were no longer treated as criminals, received care programs, substituted heroin for methadone, and were included in the health system to treat their illnesses. With that, the results didn’t take long to arrive. Although the global consumption of drugs has not decreased, that of heroin and cocaine, two of the most problematic, went from affecting 1% of the Portuguese population to 0.3%; and the prison population for drug-related reasons dropped from 75% to 45%, according to data from the Piaget Agency for Development (Apdes) [17].

In closing, I would like to bring a phrase that is present in the film V for Vendetta and that illustrates very well the situation currently experienced: “Their bombs don’t kill our hunger, but they feed our disgrace”.

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[1] Wainwright, Tom. Narconomics: How to Run a Drug Cartel. 1st ed. PublicAffairs, 2016: 288p. 

[2] Randy Collins Law Office: Jail Time for Cocaine. <https://drugcrime-law.com/cocaine/time-jail/>

[3] Hoffman BB, Lefkowitz RJ. Catecholamines and sympathomimetic drugs. In: Gilman AG, Rall TW, Nies AS, Taylor P, eds. Goodman and Gilman’s the pharmacological basis of therapeutics. 8th ed. New York: Pergamon Press, 1990: 187-220.

[4] White House: New Annual Data Released by White House Drug Policy Office Shows Record High Cocaine Cultivation and Production in Colombia. <https://www.whitehouse.gov/briefings-statements/new-annual-data-released-white-house-drug-policy-office-shows-record-high-cocaine-cultivation-production-colombia/>

[5] World Drug Report 2019

[6] Foundation for a Drug-Free World: International Statistic of Cocaine. <https://www.drugfreeworld.org/drugfacts/cocaine/international-statistics.html>

[7] NIDA. 2020, June 11. What is the scope of cocaine use in the United States? . Retrieved from <https://www.drugabuse.gov/publications/research-reports/cocaine/what-scope-cocaine-use-in-united-states> on 2020, July 27

[8] The Telegraph: Class A drug use among young people highest in a decade as price of cocaine falls.<https://www.telegraph.co.uk/news/2018/07/26/class-drug-use-among-young-people-highest-decade-price-cocaine/>

[9] Britannica: Pablo Escobar – 8 Interesting Facts About the King of Cocaine. <https://www.britannica.com/list/7-amazing-historical-sites-in-africa>

[10] Insight CrIme Org: 20 Years After Pablo – The Evolution of Colombia’s Drug Trade. <https://www.insightcrime.org/news/analysis/20-years-after-pablo-the-evolution-of-colombias-drug-trade/>

[11] 2017 Annual Drug Report – Government of Colombia

[12] Cláudia Juárez, Buenaventura: Una Crisis Humanitaria Sin Respuesta, march/2016. <https://silo.tips/download/buenaventura-una-crisis-humanitaria-sin-respuesta>.

[13] Bandura, Albert (1999-08-01). “Moral Disengagement in the Perpetration of Inhumanities”. Personality and Social Psychology Review. 3 (3): 193–209. CiteSeerX 10.1.1.596.5502. doi:10.1207/s15327957pspr0303_3. ISSN 1088-8683. PMID 15661671.

[14] Prison Policy Initiative: Mass Incarceration. <https://www.prisonpolicy.org/reports/pie2015.html>

[15] Gazeta do Povo: Prisões sem fim e alto custo. <https://www.gazetadopovo.com.br/parana/peso-guerra-as-drogas-cofres-publicos/>

[16] El Espectador: Las deudas de Colombia en la guerra contra las drogas. <https://www.elespectador.com/noticias/judicial/las-deudas-de-colombia-en-la-guerra-contra-las-drogas/>

[17] APDES. General considerations on the PNRCAD and Recommendations in the field of Drugs in Portugal. September/2013. Available at: <http://hdl.handle.net/10400.26/4754>.