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Friday, May 16, 2014

Drugs & Money

I was looking for a dollar figure for the amount of illegal drugs consumed in the USA. Seems like everyone has an estimate, but none of the estimates agree. They all seem to be in the hundreds of billions of dollars annually, from a low of 100 to a high of 500. That's as much as we spend on oil or food. Pretty stinking amazing. But the part that really got me, the part that should have been obvious, but which I hadn't given much thought to, was how much of that money stays in the USA. There is all this talk about how the drug cartels in Mexico and South America are making tons of money. The thing is they aren't. The wholesale price of drugs coming over the border is about 10% of the retail value, the money going to the producers in South America is maybe 10% of that. So if the US recreational drug user is spending $500 billion a year getting wasted, then the Mexican smugglers are getting $50 billion and the South American producers are getting $5 billion. Five billion dollars is still a stink load of money, so someone in South America is benefiting.
     But $400 billion is staying right here in the USA and going into the pockets of our retail drug suppliers. No wonder there are flippin' turf wars. You can make as much money standing on a street corner handing out packets of toot as a guy who has sunk a million dollars into a retail business.
     This also explains why drugs are illegal. There are a whole lot of people who are making a whole lot of money out of the drug business, and most of them are not flashy gang bangers wearing gold chains and driving pimped out Escalades. They wear nice conservative clothes, keep a low profile, probably have some kind of legitimate business that they use as a front. "Consulting" would be good. As long as drugs are illegal profits will remain high and life will be good. The much vaunted war on drugs only busts those who are foolish, have flaked out, or have pissed off upper management.
    We talk about how drugs should be legalized, how if they were legalized they could be taxed, and we could use those taxes to pay down the national debt or reduce income tax. Problem is that wouldn't happen. Give the government another source of tax revenue and they will just add it to their current taxes. They won't pay down the debt and they won't reduce any existing taxes. And all those people who were making boat loads of money off of illegal drugs will be looking for new ways to make money, and I doubt they will have many qualms about what kind of work they turn their talents to.
    We talk about all the non-violent people being arrested for dealing, but what I think you've got here are the young and foolish, people who don't realize the kind of stakes they are playing for. The world is a brutal, vicious place. The sooner you find out who your real friends are the better.
    Drug dealers are often portrayed as vicious because they are playing by realpolitik rules, not our nice let's all get along, play by the rule-of-law rules.

Is $500 billion a year for illegal drugs even in the realm of possibility? Say 1% of the population spends $100 a week. $100 a week times 52 weeks in a year is $5000. $5000 times 3 million people is $15 billion dollars. If 10% of the population was spending $100 that would be $150 billion a year. To get to $500 billion a year that 10% would need to be spending $300 a week. I suppose that's possible, but I think it's a stretch. I kind of think total illegal drugs sales in the USA is probably closer to $100 billion a year than 500.

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