The Drug Enforcement Administration is in an optimistic mood. A new DEA report insists that the antidrug campaigns Washington has undertaken with Colombia and Mexico in recent years have dramatically slowed the flow of cocaine into the United States. The DEA's principal piece of evidence is that average street prices for the drug have soared over the past twenty-one months from $96.61 per gram to $182.73, which suggests "that we are placing significant stress on the drug delivery system." There's just one problem with the DEA's proclamation of success. We've heard it all before. Many, many times before.
For example, in November 2005, the White House Office of National Drug Control Policy asserted that a 19 percent increase in cocaine prices since February indicated a growing retail shortage, thus validating Washington's multibillion dollar Plan Colombia, designed to stanch the torrent of drugs coming from the Andean region of South America. "These numbers confirm that the levels of interdiction, the levels of eradication, have reduced the availability of cocaine in the United States," White House drug czar John P. Walters boasted. "The policy is working."
And what was the sky-high street price of cocaine that justified such optimism? $170 per gram. Adjusted for inflation, that price was actually higher than the latest price spike to just under $183. Yet clearly that earlier alleged supply-side victory in the drug war was short lived. According to the DEA's own statistics in the December 2008 report, cocaine prices had declined to a mere $96 per gram by January 2007.
The reality is that street prices for illegal drugs act like the famous observation about prices in the stock market: they will vary. Over the past fifteen years, the retail price of cocaine has moved in a range between roughly $90 and $200 per gram. The latest spike is nothing abnormal, just as the plunge in prices from November 2005 to January 2007 was not unusual. Indeed, if one examines price trends over a longer period, any cause for optimism evaporates. During the early 1980s cocaine sometimes sold for more than $500 per gram. Obviously, that did not herald a lasting victory in the drug war.
Moreover, if the DEA had issued its 2008 report just three months earlier, there would have been even less evidence of supposed progress. For the previous five quarters, the street price had hovered around $120. The agency is simply grasping at straws to "prove" that the nearly four-decades-old effort to shut off the supply of illegal drugs is finally working.
Alas, facts are stubborn things. The DEA's notion that Washington's cooperation with Colombia has reduced the quantity of drugs coming out of South America is even disputed by another U.S. government agency. An October 2008 report to Congress by the Government Accountability Office found that coca cultivation and cocaine production in Colombia since the start of Plan Colombia in 2000 had actually increased.
Not only is the U.S. market for cocaine and other illicit drugs still healthy, the market elsewhere in the world is even more robust. The global drug trade is a vast, extremely lucrative enterprise, estimated at $320 billion a year. The United States is the largest single retail market, but the main areas of growth are in Central and Eastern Europe, the successor states of the former Soviet Union, and some portions of the Middle East and Latin America.
With such vast consumer demand, and with the black-market premium creating profit margins of 90 percent or more, there is little chance of shutting off the supply. The economic incentives to engage in drug trafficking are simply too powerful.
Government bureaucrats understandably go to great lengths to justify the mission of their agency. But the notion that the latest DEA report shows meaningful progress in the war against illegal drugs does not even pass the straight-face test. An effective strategy to deal with the drug issue cannot be based on wishful thinking and self-serving propaganda.