More on Drug War Economics

Over the years here, we’ve talked a lot about economics and the drug war, and how obvious it is that the drug war cheerleaders are clueless (sometimes intentionally) about the basics of economics.

NPR did a piece about Tom Wainwright, who followed the drug war for The Economist. ‘Narconomics’: How The Drug Cartels Operate Like Wal-Mart And McDonald’s

During the three years he spent in Mexico and Central and South America, Wainwright discovered that the cartels that control the region’s drug trade use business models that are surprisingly similar to those of big-box stores and franchises. For instance, they have exclusive relationships with their “suppliers” (the farmers who grow the coca plants) that allow the cartels to keep the price of cocaine stable even when crop production is disrupted.

“The theory is that the cartels in the area have what economists call a ‘monopsony,’ [which is] like a monopoly on buying in the area,” Wainwright says. “This rang a bell with me because it’s something that people very often say about Wal-Mart.”

Wainwright describes his new book, Narconomics, as a business manual for drug lords — and also a blueprint for how to defeat them. When it comes to battling the cartels, Wainwright says governments might do better to focus on controlled legalization rather than complete eradication of the product.

“The choice that I think we face isn’t really a choice between a world without drugs and a world with drugs,” he says. “I think the choice we face really is between a world where drugs are controlled by governments and prescribed by pharmacists and doctors, and a world where they’re dealt by the mafia, and given that choice, I think the former sounds more appealing.”

Nothing new to us, but good to be reminded of now and again.

Tom Wainwright has another article in the Wall Street Journal that came out a couple of days ago — How Economists Would Wage the War on Drugs — but it’s behind a paywall.

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