The World In Numbers July/August 2007

Snow Fall

Attacking cocaine at its source was meant to drive up prices, yet U.S. street dealers are selling it for less than ever.

If the four-year slog in Iraq seems endless, consider this: The “war on drugs,” begun by Richard Nixon, escalated under Ronald Reagan, and continued by every president since, is now in its 37th year. In this long struggle, the past few months have been especially fruitful. In March, the U.S. Coast Guard intercepted a freighter off Panama laden with 20 tons of cocaine, in the largest maritime bust ever. That was followed in April by Colombian authorities’ seizure of a 15-ton cache most likely awaiting shipment to Mexico.

Of course, the good news is soured by the fact that cocaine production remains robust enough to allow shipment in 20-ton batches. The Coast Guard would need to repeat its recent haul about every two weeks to intercept all the cocaine that Colombia sends north, and there’s no guarantee traffickers wouldn’t just ship more to make up for the losses, as they have always done.

The map to the right tracks cocaine shipments from Bolivia and Peru, and from Colombia, which is the source of about 90 percent of the cocaine sold by U.S. dealers. As each kilo island-hops across the Caribbean or travels north through Central America and over the U.S.- Mexican border, its value increases. The rising price reflects cumulatively higher risk to distributors—mostly of shootings or arrests at international borders. Clearly, policing has a big impact on cocaine prices: On the streets of Bogotá, a gramo of cocaine can be had for under $2. Recreational users in America, on the other hand, typically pay upward of $50 a gram.

Yet over time, cocaine prices per pure gram in the United States have steadily fallen, from $600 in the early 1980s to less than $200 by the mid-1990s. In 2000, under Plan Colombia, the U.S. took the fight directly to the coca fields, spending nearly as much each year on aerial coca eradication and fighting cocaine-dealing rebels in Colombia as Ireland spends on its entire military. Plan Colombia has cost $4.7 billion since its inception, but cocaine on U.S. streets has only gotten cheaper, while American demand has remained steady.

Why the price decline? More-efficient distribution networks may be part of the answer. Some smugglers now bring “factory-to-you” prices to New York by picking up their dope in Colombia and eliminating middlemen. At the same time, a surge in trade between the U.S. and Mexico has made smuggling safer and cheaper by providing endless nooks and crannies among the billions of dollars’ worth of legitimate goods flowing over the border each year.

Inside the United States, retailers have reduced prices by cutting the take of street-corner vendors, some of whom now make less than the minimum wage. Ironically, aggressive imprisonment of drug offenders may contribute to this phenomenon: When convicts rotate out of prison, stigmatized by felony convictions and possessing no licit skills, they are sometimes willing to sell dope for less than they were earning before they went in. Sellers up and down the food chain also appear willing to work for less because the risks involved in selling cocaine have declined: Violence has trailed off since the 1980s crack boom ended, and since 2001, federal drug prosecutions have fallen 25 percent, as agents have been reassigned to chase terrorists.

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