I was having a bit of trouble with the section of Super Duper Socialism relating to the drug trade. Since "street" drugs have not seen any price pressure from the massive prohibition efforts, at least none that I could find, I decided to call some veteran entertainers and find out their thoughts. Ed and Bob were quite helpful and brought up the now lucrative pharmaceutical black market.
So, why are these "factory drugs" so expensive now? My first observation goes to an artificial scarcity as an intended result of regulation. Does anybody doubt that these products would no longer command a premium from buyers if they were over-the-counter purchases?
We have seen a reverse effect in formerly over-the-counter medications, like the Pseudoephedrine (Sudafed®, and other products) restrictions used to "combat" methamphetamine production. It is likely those restrictions result in higher prices for legal users, like me, since a pharmacist must be involved in the sale, rather than just the cashier. Also, the government added a a database or two, administered by the bureaucracy and paid for by you and me. So, before the product is out of the store, one is paying a government-inflated price for the product.
Bob Thomas, Professional Actor and WNOX entertainer
What increases the "street" price of prescription, or pseudo-prescription drugs like Pseudoephedrine, is the added layer of sales involved. If I were so inclined to purchase Pseudoephedrine and resell it, I would probably not sell it to the lowest bidder. I could, of course, or I could even give it away for whatever charitable reason I could muster. That is no guarantee that the next person who possesses that Pseudoephedrine will not seek a profit and find a buyer willing to pay a premium.
To get to the heart of why this works at all, one must wade into the mire of human behavior. In the case of street drugs vs. pharmaceuticals, we have two separate law enforcement systems and two separate distribution systems. Okay, there are some exceptions, like pharmaceutical cocaine, but we are talking the generalities here.
In the case of street drugs, we have an array of prohibition laws with billions of dollars in enforcement behind them with no measurable positive result. As previously posted, the price of heroin is lower than a pack of cigarettes, yet we do not have a massive "addict problem" with heroin. What we do have is thousands of people in jail over heroin, with no increase in price and no known increase in usage.
In the case of Oxycontin® and other drugs, we have controlled production and distribution, with very little direct law enforcement involvement. I say not direct, since everybody involved in the production and distribution of those drugs has been deputized in one manner or another, including the drug store customer.
The deputies include: the businesses (factories) making the drugs, the people transporting the drugs, the people stocking the drugs in warehouses, as well as the people handling and dispensing the drugs at your local Apothecary establishment. In the USA, all of these businesses must be licensed. Indeed the individuals selling the drugs to prescription holders must be licensed too. They face great risk, great penalties, for failing to follow the control guidelines set by the government.
Even the consumer is restricted by heavy penalties if he does not use his drugs (property) as intended. For example, if I had a prescription for Oxycontin® and did not use all of it, am I free to sell the unused portion? No, I cannot even return it to the chemist for a partial refund either, at least I am unaware of any who would engage in that folly. If I keep my unused Oxycontin® and a family member is prescribed the exact amount that I have remaining, am I "allowed" to give or sell it to them? No, that would be committing a host of felonies that I would rather avoid, from dispensing without a license to who knows what else.
However, the thing that "prevents" me from committing dastardly deeds like giving away my property to someone who needs it more is not my sense of conscience, it is the government threat to my liberty, even though the likelihood is undeniably low. For an example of conscience, I would not give or sell one of my guns to someone I even slightly suspect would not own them in a responsible manner.
Other people do not follow my attitude about risks to liberty, as is their right as people, so we have a situation where as soon as certain people obtain pharmaceuticals they are looking to resell them. The array of "protective" measures, from the doctor protecting her license whilst writing the script, to the pharmacist protecting his whilst filling the order, creates an expensive production and distribution chain while, at the same time, creates an artificial scarcity resulting in a price jump between the chemist's window and the parking lot of the store.
What to make of this? For one thing, if the government wants to impose a prohibition a great deal of effort, to the point of deputizing all of the actors involved, is required to have any price inflation effect on the product.
Does this mass deputization prevent anybody from obtaining contraband if they want it? It still does not appear to be the case. Yes, the price is higher for those who wish to intoxicate themselves with these particular chemicals, but they are hardly scarce enough to say that anybody is prevented from obtaining them.
It also appears that the regular patient who is prescribed pain killers, or what-have you, is not the major source of re-resale pills. The re-resellers themselves go to great lengths to forge prescriptions, or even establish licensed businesses, nicknamed pill mills (link is to a Florida, USA definition), to engage in these profitable crimes. Indeed, some "illegal" sellers have every credential required for legally dispensing controlled substances. Indeed, this is nothing new. Rep. Charles Rangel (D-NY) in 1989, led a raid on pharmacies in the Harlem borough of New York city. Well, it was more like a caravan of news cameras feeding the Representative's need for publicity, but raids on pharmacies it was just the same.
Is collusion a factor? Of course it is. Profession after profession has joined with government for licensing with the intent of limiting the number of people who practice that profession. Doctors and pharmacists are no different and this is a Nationalized Socialism of sorts.
So, what we have here is more government of good intentions that produces none of the good intended results that they promise.
The book Easy Riders Raging Bulls, the author quotes Dennis Hopper thus:
The cocaine problem in the United States is really because of me. There was no cocaine before Easy Rider on the street. After Easy Rider it was everywhere.
Sadly, I cannot find the television interview where he combines that statement with what he said on Inside The Actor's Studio (skip to 27:14):
In the interview I was thinking about, Hopper said that the original idea Peter Fonda had for Easy Rider involved a marijuana sale. Hopper thought the pot too bulky for a couple of guys on motorcycles. He thought of and rejected heroin, because he did not want to promote that drug. So he went with cocaine because it was expensive in small quantities.
The Dennis Hopper interview was the first thing I thought of when I read this passage in Dr. Walter E. Williams' essay Drugs, Economics, and Liberty.
Which is easier to conceal and transport—a million dollars’ worth of marijuana or a million dollars’ worth of cocaine? Obviously, it’s cocaine because there is far less bulk per dollar of value. Thus one effect of prohibition is the tendency toward increased sales and use of more-concentrated forms of drugs that can include products such as crack cocaine, ice, and meth.
Well, in the case of illicit drugs, the more things change, the more things change. Particularly the price. In 1969, when Easy Rider was released, cocaine was apparently a very pricey powder which did become more popular from that point forward. In the early 1980s, the typical price I heard from people I knew who knew about this stuff (usually bragging to others about how financially flush they were) spoke of "$1,200 coke", which I am pretty sure they must have been talking grams. If it were ounces, that comes out to only $42.33/gram and does not sound like a sum to brag about.
Michael Corbin reported in his story Cocaine Economics in July, 2012 this price regression:
I recently asked a group of ex-offenders who had served time for drug possession or drug distribution about historical trends in the price of cocaine in Baltimore. Those who had sold drugs in the early 1990s agreed that, depending on purity, you could get (or have to pay) as much as $300-$500 for a gram of cocaine.
When I talked to and observed some street level dealers for an Urbanite story last year, it was not uncommon to hear of a gram being sold for $75-$100. There was no way to know about levels of adulteration of the product, which is common, but the price trend was clear nonetheless.
If there is one number that embodies the seemingly intractable challenge imposed by the illegal drug trade on the relationship between the United States and Mexico, it is $177.26. That is the retail price, according to Drug Enforcement Administration data, of one gram of pure cocaine from your typical local pusher. That is 74 percent cheaper than it was 30 years ago.
As I have written about in the previoustwo posts, the prices of marijuana, and heroin, especially heroin, have been dropping like a car from Marina Towers into the Chicago River since the 1970s. Now I discover, the same thing has been going on with cocaine.
If government prohibition enforcement efforts are doing anything at all to the price of these prohibited products, I would like to see where that affect shows up.
If the common sense, perfectly logical, theory that prohibition enforcement elevates prices, then without it heroin would be free, or cheaper. Perhaps given away with every gram of cocaine and both would be thrown in with every pound of high-grade marijuana.
William F. Buckley, Jr. was right about this in one way: The only measurable result of the drug war, as of this writing, is a big bill and thousands of very special people in jail. The price has been too great. I disagree with him about the freedom aspect (he did not believe that people were free to put whatever they like into their bodies), but any way, his, mine, or a combination, this drug war has proven to be a fool's errand.
In the previous post I failed to convert 1971 US dollars to 2012 US dollars, so here are the numbers using the US government BLS inflation calculator. If anybody notices math errors, please point them out.
Heroin price per 0.10 gram
1971 $30 = $170.53 in 2012 dollars
2012 $4 = $0.70 in 1971 dollars
So, after all this law enforcement "helping" keep heroin out of the country, we discover that one bag of heroin has dropped in price from $30 to $0.70 in 1971 dollars.
But that is not the whole story. As per the previous post, in 1971 a 0.10 gram bag of heroin was only 5% purity. So for $30 one was purchasing 0.005 grams of heroin. That $30 purchases $170.53 in other stuff today.
A 1/10 gram bag of heroin is 90% - 95% heroin these days, so the purchaser is buying at least 0.09 grams of heroin for $4.00. Furthermore, if that 0.09 grams were further "cut" to 5% strength, like the 1971 product, it would produce 18 bags of product. The 2012 heroin user is getting an absolute bargain from his suppliers.
If one were going to replicate the heroin experience of 1971, he could do it for $0.22(plus some cutting agent)/per dose.
Update: Here is the math from a different approach. If one wanted 0.09 of a gram of heroin (C21H23NO5) in 1971, he had to purchase 18 1/10 g. bags @$30/bag, $530. Today he need only purchase one bag @$4 to get that quantity of heroin. Now, $4 in 2012 buys about what $0.70 bought in 1971, unless you are talking heroin, marijuana, or cocaine. In 1971, $0.70 bought almost two gallons of gasoline. Today (23 Dec 2012), $4.00 buys about 1 1/3 gallons of gas where I live. Also, $530 dollars from 1971 buy $3069.54 worth of other stuff today, or 767.385 1/10 g. bags of 90% pure heroin.
Now, what of the folks who used to say that the "high price" was keeping many people out of the market, thus "saving" lives? This stuff is cheaper now than most other street drugs. Now, what of the stories we would see in fiction of overdoses from "extremely" pure heroin killing people? I focus on fiction there because I do not recall actual news stories of actual rashes of overdoses due to more pure heroin. It was frequently used in TV and movie plots.
Well, today this stuff is so cheap that it could be treated as free, yet we do not have legions of addicts roaming the streets. One is more likely to be accosted for a price-inflated-due-to-taxes cigarette than a mugger trying to feed his much less expensive heroin habit.
Is prohibition increasing drug prices, or is the government just ripping everybody off? The lobster pot theory on marijuana price. (major edit on 16 December 2012)
Just a minor theory that I have not done any serious research on, yet.
I hear that lobster traps are
incredibly ineffective. Yes, lobster fishers catch plenty, but when the
traps are watched it seems that many lobsters crawl all over them, even
enter and take the bait without being caught, and the lobsters that
show up on our plates are the exceedingly stupid lobsters. When the lobster industry catches a large number of lobsters, it really does not affect the lobster population in any meaningful way. A bit of
information I recall from a TV show about lobster fishing, but I could not find the video online. What I did find is this, a study like the one the fisherman was describing:
Based on our observations of approximately 24 videos obtained during the summers of 1998-2000, we have drawn a number of conclusions, a few of which are listed below. For more details about these studies see our first manuscript on the subject (Jury and Watson, 2001) in the Publication section of this website.
1. A large number of lobsters approach and enter traps, yet typically we only catch 1-3 per trap haul because the vast majority escape. We estimate that 10% of the lobsters that approach a trap enter, and of the ones that enter, only 6% are caught. Over 75% of the lobsters that escape the trap do so through the entrance. Video 1, on the right, shows a lobster escaping through the entrance to the kitchen.
2. Lobsters are very active around traps during the day, as well as the night. This confirms other field observations indicating that lobsters in their natural habitat are not as strickly nocturnal as previously thought.
3. Agonistic encounters around traps appear to limit entry and stimulate exits. Video 2 shows a large lobster chasing away smaller lobsters and then entering the trap. Small lobsters are very hesitant to enter, while larger lobsters tend to move right in like the one shown in this video.
4. Once in the trap, lobsters tend to "defend" the resource. Video 3 demonstrates this behavior. This also limits entry and it is probably one of the main behaviors that lead to trap "saturation".
My suspicion is that the drug war is much like lobster fishing and our public servants are only catching the
exceedingly stupid segment of the drug trade. The evidence for my theory? Law enforcement uses increasingly larger amounts of manpower, technology, and money, yet the price of the contraband they are chasing continues to drop. We are not examining a cause/effect relationship with lobster fishermen and street chemists, no not at all. It is just an interesting parallel to what is going on with the drug fishermen, aka, law enforcement.
For years I have heard people I respect greatly talk about certain aspects of drug prohibition, like Dr. Milton Friedman:
And Penn Jillette & Teller:
(that is not Penn in the frame)
From the Penn & Teller video I am reminded of an
interesting statistic - heroin prices have been dropping over the
decades since the 1971 beginnings of the so-called "Drug War." Watch
the video and look for the doughnut demonstration.
According to Penn & Teller, the price of "a bag" of heroin had dropped from $30 to $4 while the purity has risen dramatically. From 5% heroin for the 1970s $30 bag, to 95% for the $4 bag. This matched the hearsay information I'd heard in a late 1980s trip back to college. The younger students were talking about heroin being used again and they seemed unaware that it was ever considered expensive.
I had to do a little hunting around to discover how much product is in a "bag" and it appears to be 100mg (0.10 grams). After revealing this information about the price drop/purity increase, all of the "experts" that P&T cite say throughout the video that drug prohibition and enforcement increase the consumer price of whatever is being prohibited. As good, sound common sense as this makes, it does not appear to be correct. It is so good and sound that Penn and Teller refuted it before a single interviewee asserted that drugs are "more expensive" and those assertions made it right past the editors. Dr. Friedman said the same thing, over and over again, while he was alive, that drug prohibition efforts created an artificially inflated price for those products.
In the case of heroin, there was once a cartel that kept the price high. I believe The French Connection was based on that cartel. It was not law enforcement keeping the price high as much as it was a tight knit community of heroin producers and traffickers.
One of my Economics professors (in the 1990s) compared the heroin market with the marijuana market of the 1970s. Heroin had protected geographic territories, protected by "gangsters," and the consumers could not easily switch suppliers. Indeed, the suppliers were in collusion and kept the price high. The raw material came from poppies that could not be cultivated just anywhere and there was some other processing involved.
I am not sure what happened to the heroin cartel. Like most cartels, it seems to have fallen apart.
Marijuana, on the other hand, is both industrial and a cottage industry. It is a plant that is easy to grow almost anywhere, and with sex and violence* could be cultivated into a quality product. People setup large indoor growing operations, and some try outdoor growing, while others grow small amounts in their basements, spare bedrooms, closets, garages, sheds, and just about anyplace else you can think of.
Marijuana, generally illegal in US States, and federally illegal throughout the country, seems to run about $300/oz. for "high grade" in most of the USA, according to http://www.priceofweed.com/, which seems to be a "grade" that was unavailable in the 1970s and superior to anything sold then. The PBS Frontline series investigated in 2011 and reported a production price of $1,606/Lb., or $100.375/oz., making it quite profitable at a 300% markup. They also reported that the 2011 end-user price is not much different from the price today. Also, from a cursory look at their reporting, the street price has more to do with the average income where it is being sold than anything else. But what of the historic price?
This short internet article gives some clues:
The Price of Marijuana October 5, 2009
. . . Due to the increasing supply of this drug and the proximity of the border to Mexico, marijuana’s value has taken a full swing throughout the 90’s. Today, Marijuana can be purchased in Mexico for $100 to $200 per kilogram. Along the southwest border, Mexican marijuana goes for $400 to $1000 per pound and can also be bought for wholesale for $150 – $300 a pound. In the northwest and Midwest sections of the US, the average price of marijuana runs from $700 to $2000 per pound. California sells it at a high for about $2000 to $6000 per pound. . . .
WOKI-FM, a Knoxville, TN USA radio station, recently took an on-air survey during The Phil Show and if I recall correctly, $100/oz. was easy to find in the area, but that is considered "low grade." Fancy-pants weed was reported at $350/oz. if I recall correctly.
So, what we are seeing is the opposite of what one would expect, the opposite of what Friedman predicted, and the opposite of what Penn and Teller's guests stated without challenge. The federal government certainly is not spending any less money on prohibition. Also, the information cited above came before Colorado and other States made marijuana relatively or completely legal at State level. So what is the deal?
First, as Dr. Milton Friedman cited in (I believe) an appearance on Donahue in 1980, if the general citizenry is not in agreement on a particular law or category of law, then the law is not going to stop them from continuing to behave contrary to that law. Friedman cited alcohol prohibition. In addition, I will cite the 55 MPH national speed limit (passed by Congress and signed by Pres. Nixon in 1974), that was largely ignored. Also, I will raise "hand roll" cigarette tobacco vs. "pipe cut" tobacco, where folks like me use the much cheaper pipe variety to avoid the excessive tax ($24/lb) on the cigarette variety, a tax that is supposed to discourage me from smoking cigarettes.
Since there appears to be little or no public resistance to illicit drug use, plenty of willing customers, and the sellers are not getting a monopolistic price, not even an unconscionable price, not even a high price, for their product. What it appears is that the consumer is getting a quite reasonable price for non-pharmaceutical drugs.
Federal, State and local governments all go "begging" to the taxpayer for more "enforcement" money, yet they do not seem to be able to impact the price, at all. They have no trouble filling jails with the folks who just "jump into the boat" so-to-speak, yet they do not put a dent in the alleged problem that they keep saying they need more money to fight. The prohibition has shaped up to be nothing more than a bureaucrat full employment scheme.
On this point I am in complete agreement with Dr. Friedman, and not enough people point this out. Most of people advocating and enforcing the prohibition in no way advocate jailing millions of people for possessing a little pot. The people who came up with this had no intention of creating the actual results that we see today. No, the vast majority of these people are well intentioned folk who think they are saving many more people from horrible mistakes.
These are the good intentioned people who pave the road to Hell. Quite a few of them sincerely believe that you or I will run out and try heroin if it becomes legal. They also sincerely believe that their efforts are preventing us from purchasing heroin right now. I will fully admit, I have no idea where to get heroin at this moment, and it might take me all of a weekend to figure it out. Availability is not what prevents me from trying it, or marijuana, at all. I simply have no desire to try it.
Additionally, all reports estimate the size of just the marijuana market at $50 Billion +/- $40 Billion, which shoots another hole into the "money buys everything" theory. The collection of customers and sellers in that market do not seem to have been able to buy any political cover at all with all that money. The efforts in legalization have come from libertarian moral quarters, in opposition to those opposed on moral grounds. In the case of Colorado 2012, the citizens passed legalization by referendum, over the objection of their elected officials.
Could it be that some of that money was used by the illegal producers to keep it illegal and create an artificially high price due to a hostile/risky environment? Possibly, but unlikely. At least there does not seem to be any evidence pointing to a drug lobby fueled by pot growers. The "keep it illegal" crowd appears to be driven by well meaning people who are sincerely against individual choice.
For the record: No, I do not favor any prohibitions, I do favor strict enforcement of damages against anybody who damages property or injures people, sober or not. Also, it should be the property owner's call if he wishes to allow intoxicant users (or anybody else) to be on his property, including businesses.
*"Sex and violence" in the sense that the female plants must not be exposed to pollen from the male plants, so the male plants are killed. If there are no male plants around, a female plant may switch sexes and pollinate other plants, so plants must be watched somewhat carefully and any switchers must be cut out.
A number of knife-wielding attacks on children in various schools across China have occurred in recent years, underlining the shortcomings of the nation's mental health care system.
State-run news agency Xinhua has reported that Min Yingjun, 36, was arrested after he went on a stabbing rampage that left children and an elderly woman injured as they were walking to school on Friday morning. A post on Weibo, China's top microblogging site that's similar to Twitter, described the "vicious incident" that unfolded.
"One mental patient charged into a group of students on their way to school, hacked and injured one resident and 22 students," the post read.
The man who initially stabbed the elderly resident before attacking the children was eventually stopped by school guards.
No fatalities resulting the incident have been confirmed, an outcome that cannot be said for previous incidents that occurred in 2010 and 2011.
Last August, a daycare facility employee in Shanghai went on a similar rampage, injuring eight children with a box-cutter. The victims were between the ages of 3 and 4 years old, and they sustained injuries mostly to their necks and heads. Most were immediately rushed to the nearby Fudan University hospital for treatment. The woman accused of the attack was 30 years old and suspected of suffering from mental illness.
In March 2010, a stabbing spree in Fujian province made international headlines after a man brandishing a 10-inch knife attacked students at the entrance of their school, killing eight and critically injuring five.
If you were looking for this - Connecticut School Shooting Suspect Named Adam Lanza - and were under the impression that banning guns would stop attacks on school children, you deserve a refund from whomever taught you that only guns are used in school attacks.
The story above shows what you get from government healthcare and gun bans don't help.
What is Left and what is Right?For that matter, where do the various
political movements from the past 150 years fit in the Left/Right
construct?If you thought that contemporary
writers continue in the tradition of the French to define Left and Right, then
as the very Liberal John Tagliaferro says, “You deserve a refund!” from the
government education industry.
Super Duper Socialism begins with what the political
Left and Right really are, shows where the most familiar political groups fit,
and may shock you where they do not.This is not a simple rehash of already argued positions.
Was FDR a Fascist?Of
course not, National Socialists hated Communists in the same manner that
Democrats hate Republicans.Was Teddy
Roosevelt a Socialist of different label?Anybody who would deny that is as blind to the concept as the New
York Times was until 1913.
As you see, this is a slightly more complicated issue than
it appears on the surface, a surface muddied by government education and
mainstream media since the early decades of the 20th century.Super Duper Socialism takes the reader
on a fully documented historical journey through the American political scene,
and its surprising ties to other collectivist movements.
If you do not know the answers to these questions, or even
if you think you do, then you really need to read this book:
Why are Nazis and Fascist called “Right Wing” today?
Who was the last USA President to raise taxes?
Is slavery socialistic?
How far did Mussolini and Hitler take laissez-faire economic policy?
Who was the first world leader to achieve a Silent Spring?
What end of the political spectrum uses famine as a weapon?
This is pretty close to finished. Basic elements are where they will be when finished. Won't know the spine thickness until I get done writing and the editor gets done editing. Not sure what the back cover description will be yet.
