by David R. Henderson
It’s really too bad that the coffee cartels are causing mayhem in Mexico and even on the streets of American cities. Those bloodthirsty profiteers in the illegal market for coffee who are killing their competitors must be stopped. What? You haven’t heard about the coffee cartels? Actually, neither have I. Why do you think that is, whereas there is a violent war between sellers of illegal drugs. Is it that coffee isn’t addictive? For many people, it is. So what is the difference?
The key difference is that coffee isn’t illegal (yet), whereas marijuana, cocaine, and heroin are. And what’s happening in the illegal drug markets is happening not because the goods exchanged are drugs, but because they’re illegal.
Because drugs are illegal and the penalties for being in the "industry" are very high, the illegal-drug industry attracts criminals. In the wars between rival drug "firms," competition is often cutthroat – literally – and many innocent people are killed. If drugs were legal, competition would be just as it is on legal goods – based on price, quality, and convenience. When Prohibition ended in 1933, organized crime left the liquor industry – and so did violence.
Notice that I use the term "firm," not "cartel," to refer to organizations that produce drugs. The reason is that they are not cartels. A cartel is an organization of firms that colludes to keep prices high and output low. It is unlikely that the drug firms are cartels. The very fact that they are engaged in violent conflict means that they are unlikely to have a collusive agreement. Calling them cartels reflects the same kind of sloppy thinking that favors the drug war.
Whenever you hear politicians like Hillary Clinton express their concern about the violence, keep in mind that the government created this crime problem. Those expressions of concern you see from politicians are, in many cases, crocodile tears. Mrs. Clinton doesn’t feel the pain; she, and the many politicians who have supported the drug war for most of the 20th century and all of the 21st so far, have caused and are causing the pain.
The drug war has caused many ironies. Take the high price. It’s due to the fact that the drugs are illegal and, therefore, suppliers, to be willing to supply, charge a risk premium. In an unpublished article I wrote a few years ago, "The U.S. Drug War on Latin America," I compared two exports from Colombia, both of which are drugs or contain drugs, and both of which begin with the letter "c." I refer to cocaine and coffee. I estimated that if the same markups applied to cocaine as to coffee, which would occur with cocaine legalization, then cocaine’s price in the United States would fall by about 97 percent. No one would need to steal to support a cocaine habit. That would not mean, of course, that no one would steal to support a habit. People steal to get the wherewithal to buy even items that are cheap and legal. But virtually no one would need to steal to afford cocaine.
Consider the legitimate concern many people have that drug users would die from overdoses or from foreign substances used to "cut" the drugs. Even this problem is due to the fact that drugs are illegal. Because the drugs are illegal, no one in the business can use advertising to establish a reputation and brand name. You can’t have a brand name for, say, cocaine, that is at all comparable to the brand name for Coca-Cola. Therefore, there is much less incentive to provide a known-quality product.
It may be a hard pill to swallow, so to speak, but it is true, nevertheless, that the vast majority of harm attributed to drugs is, in fact, due to the drug war. End the drug war, and it’s true that some people will consume things that others don’t want them to; but it’s also true that the amount of violence in that market would decline to the amount seen in the legal alcohol market. That is, there would be almost no violence. Keep that in mind when you see politicians advocating stemming the violence by escalating violence against sellers of illegal drugs.
