5 Reasons the War on Drugs Is a Costly Economic Disaster


The global war on drugs is the cause of some of the biggest public health and social justice disasters of our time, from violent, billion-dollar cartels to mass incarceration targeting communities of color and locking people up for profit. On top of everything, the drug war is shockingly expensive according to a groundbreaking report released May 7 by the London School of Economics.

The report exposes the injustices of the drug war by examining its true costs. Five Nobel Prize economists, as well as national leaders and professors, weighed in, reaching the overall conclusion that policies need to move away from heavy law enforcement to public health and humanitarian-based efforts. 

The foreword of the report states, “It is time to end the ‘war on drugs’ and massively redirect resources towards effective evidence-based policies underpinned by rigorous economic analysis.”

It also notes, “Continuing to spend vast resources on punitive enforcement-led policies, generally at the expense of proven public health policies, can no longer be justified."

The report calls for a shift in global drug enforcement strategy. It suggests that new drug policies should be based on  harm reduction. It also calls for "expanded access to essential medicines," and "an unwavering commitment to principles of human rights.”

Below are five of the most important findings from the report.

1. Law Enforcement Paradox: Crackdowns Bolster Violent Dealers

Drug prices on the blackmarket are decreasing while drug doses are becoming more and more potent. This is happening “despite drastic increases in global enforcement spending,” according to the LSE report. This trend alone is evidence enough to argue that the current system of drug enforcement isn’t working.

This is because there is a paradox happening in which enforcing drug laws actually increases the profitability of illegal drugs, according to the LSE report. Since countries can’t realistically expect to eradicate any drug completely, the best they can hope for is to make it hard to sell illegal drugs so the prices increase, and that drug eventually becomes unaffordable to users and unprofitable to dealers.

The problem governments have run into is one of diminishing returns. After a certain level of drug enforcement spending, additional spending does little to mitigate the illegal market. If anything, all it does is create “interventions which are unpredictable and potentially violence-inducing,” or increased costs to society “in the form of incarceration and negative public health outcomes.”

The report explains that a “drastic overemphasis on policies aimed at suppressing the supply of illicit substances” has a short -term impact on the supply of a particular drug, but an adverse effect in the long run because there are so many different, shifting suppliers in the illegal market.

Cracking down on specific substances drives the price of those substances up as they become harder to find. This increases incentive for a new rise in supply. Over time, this trend feeds into lower prices, so crackdowns are a temporary solution at best.

The report notes that this effect is even stronger when it comes to addictive substances. Someone addicted to heroin, for example, is more likely to skip spending on other living expenses in order to cover new heroin expenses (to all the economists out there, yes, this is basic price elasticity).

2. Costs of Global Counternarcotics Efforts Far Outweigh Benefits

The US has led counternarcotics efforts—activities aimed at dismantling the narcotic drug trade—abroad for three decades based on incorrect assumptions, states the report. They assume that drug suppression policies reduce drug consumption by reducing the number of drugs that make it into the states. They also assume their efforts foster the US goals of taking down terrorists and militant groups involved in the drug trade. But these assumptions have been wrong as each effort on the part of US counternarcotics has had serious side effects.

According to the report, the unintended consequences of these efforts have been “extensive human rights violations; further political, economic and social marginalization of illicit crop farmers; destabilization of local governments; alienation of local populations; strengthening of bonds between militant groups and local populations; and increases in violence perpetrated by [drug trafficking organizations] and other criminal groups.”

3. Displaced Populations in Colombia and Mexico

As drug-related violence has increased in Mexico and Columbia as a result of the war on drugs, thousands of families have been forced to leave home and flee the violence.

This displacement is an expensive humanitarian crisis.

“In Colombia, [displaced populations] have arrived in the big cities and have become homeless, begging for money at traffic intersections. In Mexico, they generally do not receive humanitarian assistance from the government, and when they do, it is under deplorable conditions.

“According to testimonies of displaced families from Ciudad Juárez,  they were placed in warehouses (often without air conditioning) by the city government in Mexico City, where they had to stay 24 hours per day for several months while fighting for every inch of space.”

In addition to the humanitarian costs are the costs of returning people to their homes after they have been displaced, the report notes. Even if legislation were to guarantee a safe return home, it’s easier said than done.

“The creation of new rebel groups, the perpetuation of violence and the absence of state  presence are just a few of the many obstacles to ensuring security for the returning [displaced peoples]."

The report notes that the problem has been, at least, recognized in Colombia and the government has enacted legislation to provide humanitarian assistance to displaced people. However, in Mexico there are no such policies and the government has yet to recognize its responsibility for the problem.

“Currently, the discussions about the failure of the ‘war on drugs’ are taking place at various national and international levels,” the report states. “Experts have argued that new drug policies should be focused more on addiction treatments, consumption prevention and health programs. However, some important questions should be kept in mind while discussing these new policies. What would happen to peasants in Colombia who abandoned their land and to civilians in Mexico who moved to safer places because their lives were threatened?”

4. Mass Incarceration

There are over 9 million people in prison worldwide (25 percent of them are in the US). The report explains how “large scale systems of punishment,” or mass incarceration, are a public health disaster.

Worldwide, individuals are punished for drug use via “hard labour, severe mental and physical conditions, long periods of punitive isolation, bodily mutilation and execution. These all have profound effects on the trajectory of individual drug use, the social construction of addiction and the human rights of drug users.”

The report notes that as penal systems expand, families and communities of those incarcerated experience collateral damage.

The report concludes that the “expansive reach of ‘mass incarceration’ and its collateral effects” is often paired with increased contact between citizens and law enforcement. This increases time and money spent on people awaiting trial and crowded prisons and jails lead to “a decline in the quality of correctional health care and a reduction in available services for formerly incarcerated individuals.”

5. Constitutional Costs

On top of increased violence, human rights violations and direct economic costs, the report adds another cost: the cost to the constitutional commitments of countries.

“Constitutional texts, interpretations and practices have been transformed in order to, in theory, better tackle drugs. Many of these changes undermine long-standing commitments to specific constitutional principles, values and rights,” it states.

“These are not problems of unconstitutional behaviour on the part of authorities, but rather an alteration in what is deemed constitutional so as to accommodate the policies and practices deployed by authorities in order to better enforce prohibition. This contribution will make this phenomenon visible and offer an initial analytical framework through which to explore it. It offers three preliminary case studies drawn from the three key countries engaged in the war on drugs in the Americas: Mexico, Colombia and the US.”

The report pulls examples from the governments of Mexico, Columbia and the United States to illustrate significant constitutional costs. In Mexico, costs include “the curtailment of fundamental rights by either the restriction of fundamental rights across the board, or the carving out of a regime of reduced rights for certain people; the restructuring of forms of government; and the undermining of legal security.

In Columbia, the report explains, that governments have established exceptional criminal process regimes in order to support the war on drugs for several decades. These have resulted in curtailment of fundamental rights of drug offenders.

In the US, constitutional costs are described as “the affectation of constitutional commitments manifests itself most importantly in judicial opinions.” The report cites Michelle Alexander’s arguments that the US war on drugs is deeply discriminatory.

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