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8. What is it about illegal drugs that makes their commodities so special that the producers fight violently against each other? Profit margin? Too bad economic theory has nothing to say about this issue.

Well, they are highly illegal so they are sold by organized crime syndicates. Plus the sellers do not get police protection. I would be pretty surprised if there was not violence.

Are they sold by criminal syndicates because the commodities are illegal or are the syndicates criminal because because the commodities are illegal?

At this point, it's a circle. But if you look at what happened in the USA at the beginning of prohibition, it becomes clear that existing gangs that had focused on protection/extortion rackets and the like started to specialize in alcohol-running since it was more profitable and they had the muscle.

There's a second circle, off the police protection. Lacking police protection, they are more obligated to defend themselves. But self-defense is costly--you might lose. Cultivating a violent image is also costly, but less so as it can be done in a more calculated and preemptive fashion, with the result that you have your honor and reputation. So illegal groups from street gangs to syndicates tend to be quicker to violence. In fact, cultures tend to be marginally quicker to violence in lower density areas (the "honor culture" of the south), where police protection is less efficient due to distance issues. It's still economic, just with the older "money": social capital.

Of course, there's yet another reason: what's being sold is a product whose demand is based on cultivating and maintaining addiction. You kind of have to shut down your empathy just to get involved in the first place.

An image is painted sometimes that the people are "bad" only because drugs are illegal.

This is of course, untrue. Legalizing drugs would still leave many of these people just as thoroughly a scumbag as they were when drugs were illegal. They were willingly preying on addiction and its consequent destruction of human life. It's just that, currently, their selfishness works to their profit. Remove the profit, and their selfishness will go elsewhere. For the lesser scumbags (who are perhaps only slightly more selfish than the rest of us), though, they might go back into legitimate work.

smiwil, I agree with your point that the scumbags would remain scumbags, but without such a profitable business they would lose a lot of power: the power of the organization they belong to, the ability to assemble an army, to bribe police & politicians, etc. Thus stripping them of their business model would make them less dangerous even if they remain scumbags.

1. Stiglitz is one of those guys you hate one moment and love the next.

I think Stiglitz is one of those guys that everybody always should love.
Most of my friends have very different ideological ideas than I have, but as long as they are frank about their views - and more importantly, candid about their rationale for those views - I don´t have any problem with it.

It's his side where he attacks the integrity of EVERYONE working at the World Bank and IMF that is so off-putting. Surely every economist working at the World Bank can't be as bad as he has made them out to be.

The issue took center stage when President Obama, during a visit to El Salvador on Tuesday and Wednesday, announced a plan to fight organized crime in the region by strengthening civilian institutions and providing training for local authorities, weapons and equipment.

Obama, Obama why have you forsaken me. War in Libya, war on drugs, still in Iraq and Afghanistan. Why vote!?

Legalize all drugs now.
Admit that we have won all that there is to win in Libya, Iraq and Afghanistan and bring all troops home now.
Not a snowballs chance.

dirk:
The fact that they are illegal.

5. I added that to my Amazon Wish List (which means I probably won't actually read it) and in the "Other Customers Also Bought..." listing was Albion's Seed. So an MR mention must do wonders for this type of book.

Dirk,

There's a lot of interest in organized crime among economists. Start with Thomas Schelling's papers "Economics and criminal enterprise" and "What is the business of organized crime."

From Schelling's “Economics and Criminal Enterprise”

“If one cultivates the market for dope, by hooking some customers, or cultivates a market for gambling in a territory where the demand is still latent, he cannot expect much of a return on his investment if opportunistic competitors will take advantage in cultivating consumer interest, a labor market, ancillary institutions, or relations with the police, can be undertaken only by a fairly large firm that has reason to expect that it can enjoy most of the market and get a satisfactory return on the investment. Finally there is the attraction of not only monopolizing a market but achieving a dominant position in the underworld itself, and participating in its governing.”

I read this as: the limiting nature of the black market itself, created by legal barriers to entry, encourages criminal firms to fight fiercely to obtain a monopoly position in a given territory without which returns on investment would be low. This would explain why rival drug gangs can't merely agree to disagree.

Yet the NYT article merely goes on and on about how Central America needs more American "assistance". IDIOTS!

I'm not sure if Dirk is being fascetious, but if not: there is a large literature, both theoretical and empirical, on violence and black markets; this is well-trod and reaononably well-understood ground. In short, violence arises in illicit markets because of the lack of a legal dispute resolution mechanism. For a recent theoretical contribution, see for example Caulkins et al 2006.

I was being facetious but I do appreciate the recommendations.

The fatalistic attitude in the economics blogosphere regarding drug war policy, particularly regarding Latin America, drives me nuts. Instead of "Another Victory for the War on Drugs?" or something like that, Tyler writes "Sell Costa Rica short."

The violence in Mexico and elsewhere over contraband commodities is a government made disaster. Bloggers don't comment on it much because they view changing the policy as politically infeasilbe. Yeah, no thanks to you, you fucks! If you wrote about it more maybe changing policy would become more politically feasible. Why isn't Yglesias attacking the administration more over this issue? Why aren't the liberals and libertarians being more loud mouthed about how U.S. policy is killing Mexicans in Mexico? Why are no petitions circulating among economists?

This is low hanging fruit we aren't even trying to pick.

Often one reads, if only US legalized drugs, it'd stop the violence. Well, realistically I don't see it happening in the US as yet.

Yet the brunt of the violence is borne by Mexico and the rest. I'm thinking, would it work if the Latin American countries unilaterally legalized these drugs? Would that have a desirable effect of shifting a lot of the violence at the doors of the US? The markets would remain illicit in the US but the producer countries themselves would now be able to offer a legal dispute resolution mechanism etc. The price jump would be a step change at the US border.

The price jump is already an order of magnitude at the US border. i found that Schelling piece mentioned above informative. I'd always assumed that rival drug gangs were violent because, since they were already on the wrong side of the law they might as well take criminality to the next level. But the idea that they won't be very profitable unless they maintain a near monopoly in a specific territory is a new way to think about the issue. It means violence is built into the system from the moment you make the product illegal. It is like having a 100 to 1 male/female sex ratio.

Carrots have more sugar than most vegetables, especially root vegetables, which is why there is such a thing as "carrot cake". Confections made with carrots need less sugar.

Shhh.. (don't tell Michelle Obama, she'll pressure schools into serving parsnips)

I make a ridiculous carrot cake, but it ain't the carrots making it sweet. They fit in a confection, they don't really make one alone. Not sure that's what you were saying, anyway, but whatever.

USDA data on a carrot:

http://www.nal.usda.gov/fnic/foodcomp/cgi-bin/list_nut_edit.pl

Not much sugar, overall.

And you've got nutrient effects, bulk fiber effects, and other stuff that contributes to satiety, counteracting the "good god eat more now!!" thing that sugars and starches do to our brains (gee, thanks, hunter gatherer history and short fruit seasons!). Minimal bulk, all-starch junk food (soda, too, even fruit juice) preys on this very sense. So the psychology aspects are way in carrots' favor.

I just think the darn things take too long to chew. I blend the suckers up with some other fruit.

Ah, Stiglitz:
"When I was in the lawyer- and politician-dominated White House environment, I often felt that I had arrived in another world," he recounted. "I had expected lower standards of evidence for assertions than would be expected in a professional article, but I had not expected that the evidence offered would be, in so many instances, so irrelevant, and that so many vacuous sentences, sentences whose meaning and import simply baffled me, would be uttered."

Re #8: Typical incompetent New York Times; sadly Tyler adds nothing of value to the issue. They go on and on about a major problem, and don't have the slightest clue what causes the problem. End drug prohibition and the problem of drug violence disappears precisely because it is prohibition that causes it.

7. Perfect example of why math people are my favorite people... (FYI the Canada/USA Mathcamp is an amazing program for any teenagers with a mathematical bent, and the origin of this particular trend.)

dirk, it is worth looking at what legal businesses have criminal involvement. Cash businesses like restaurants and laundromats are easy to extort money out of and easy to launder money into.

Typical disabled New York Times, sadly, nothing of value to the point Tyler says. They go on and on about a big problem, and not the slightest clue what is causing the problem.End drug prohibition and drug violence fix the problem disappears because it is prohibition that causes it.

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