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Are Higher Cocaine Prices a Good Thing?

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Here we go again. President Bush's Drug Czar is claiming success in the war on drugs because cocaine prices are rising. Except two recent government reports say cocaine is still widely available; and higher cocaine prices means greater profits for organized crime and greater violence in our communities. So what is the Bush Administration smoking?

Let's assume that a recent report by the Drug Enforcement Administration (DEA) is accurate, and the average price per pure gram of cocaine increased 47% in the U.S. since last October. That hardly means we're winning the war on drugs. Cocaine prices are still lower than they were 30 years ago, and rising cocaine prices will lead to greater trafficking, not less.

As the price of cocaine increases, it becomes more profitable to manufacture and sell cocaine, which means more people will get into the market and more cocaine will be made and sold. DEA Administrator Karen Tandy was just in Europe in May warning that higher cocaine prices there are causing Latin American drug traffickers to ship more and more drugs there. Higher U.S. prices will lead traffickers to ship more drugs here too.

As the Associated Press notes:

Even while acknowledging previously announced shortages during the first half of the year, [a] report prepared by the Justice Department's drug intelligence center found "cocaine availability may already be returning to previous levels in some areas."

[...]

The Justice Department report echoes the findings of another study presented to Congress on Oct. 25 by the Government Accountability Office.

Then there is the impact of higher drug prices on our communities. The minority of cocaine users who commit crimes to support their habit will commit even more crimes to pay for higher prices. And the increased profits that come from higher drug prices will spark turf wars between violent drug gangs. In their best-selling book Freakonomics, economist Steven Levitt and journalist Stephen Dubner review the scientific literature and conclude that falling cocaine prices resulted in a 15 percent decline in violent crime in the 1990s. Sustained increases in cocaine prices could drive crime rates back up.

The Bush administration is citing rising cocaine prices as a reason to give Mexico $1.4 billion for supply reduction efforts there. But even if successful, decreasing the supply would just make cocaine more valuable, boosting the profits of major drug cartels and increasing prohibition-related violence on both sides of the border. A more sensible approach would be to spend that $1.4 billion on drug treatment here at home. An estimated 20 percent of cocaine users account for 80 percent of the quantity consumed. Providing treatment to those who need it most could significantly reduce demand and make drug selling less profitable.