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Room at the top

July 18th, 2006

One of the beliefs that is (or at least used to be) influential in discussions about the War on Drugs is that, if only the Mr Big(s) at the top of the distribution chain could be caught, the problem of illegal drugs could be controlled. The Melbourne gangland wars provide an ideal test of this idea. The leading gangsters did a better job eliminating each other than any police force has ever managed and most of the survivors are in jail or on the run. So, at least for a while, drug crime ought to be under control if Mr Bigs count for anything.

According to this story in The Age, the opposite is true. The void created by the war is rapidly being filled. Takeaway quote

Police say the profits from drug trafficking mean little-known criminals can became major influences in months.

In most cases, gangsters like those involved in the gangland wars don’t facilitate the illegal drug trade, they tax it.

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  1. July 18th, 2006 at 16:56 | #1

    The ‘Mr Bigs’ are not drivers of the drug trade merely products of it. Its simple supply and demand.

    But a lot of big drug distributors are quite young. Not just street dealers either but mid level or above. 18 year olds with multiple cars and houses full of stolen goods. Theres always more of them coming through to replace whomever has been shot/arrested/straightened up.

    The recklessness and vanity of youth means theres unlikely to be a shortage of candidates wanting to build themselves a ‘rep’. These kids rarely have a long criminal record and as such are not closely observed by police.

    BTW: the link to the Age story doesn’t seem to work.

  2. Terje (say TAY-A)
    July 18th, 2006 at 17:30 | #2

    The drugs problem is on the surface at least very easy to understand.

    1. Drugs make you feel great.
    2. Some people feel like crap.
    3. Drugs offer a ready solution to the problem of feeling like crap.

    Anybody who thinks that drugs don’t make you feel good has obviously not tried them.

    If less people felt like crap in the first place we would be part way toward solving the drug problem.

  3. July 18th, 2006 at 20:05 | #3

    Terje,
    The other way to solve the illegal drug problem would be to decriminalise. Prohibition does not work. Treat it as a public health issue and only deal with those who cannot deal with the illegal drugs. Once people see illegal drugs for what they truly are the exciting image will dissipate.

  4. Uncle Milton
    July 18th, 2006 at 20:21 | #4

    I don’t understand the original premise. Why should the elimination of the Mr Bigs mean the end of the illrgal drugs market. It is like saying that if all the bank CEOs died tomorrow, there would be no more banking.

  5. Seeker
    July 18th, 2006 at 20:24 | #5

    Assuming we actually do have a ‘drug problem’, and I am very skeptical that we do. It seems more like just another beat-up to give the illusion of tough moral action, and conveniently distract us from far more important issues.

    I am not saying that there are no serious problems with heavy (legal or illegal) drug use, particularly medical problems, just that they are blown way out of proportion to the actual cost/benefit of drug use. And there are some benefits, otherwise people would not take them.

    Whatever ‘drug problem’ we may have is as nothing compared to the cost of trying to even limit let alone eliminate it. Or to the real socio-economic cost of legally available alcohol.

    The war on drugs has been and will remain a expensive failure and disaster. Any involvement authorities have with personal drug use should be limited to health and safety issues, and protection of children, not moralistic judgements about the principle of victimless adult drug use in private.

    As to the Mr Bigs issue, it depends a lot on what (illegal) drug you are talking about. Cannabis production is increasingly far more decentralised than for opioid, amphetamine or cocaine based production. The reason is that it is technically much easier and legally much safer to produce (personal consumption amounts of) cannabis than it is for the other drugs. Industrial scale commercially produced cannabis is also easier to sell retail as it is a far more popular drug than all the other illegal drugs combined.

    The demand for (currently) illegal recreational drugs is high and show no sign of diminishing overall. And while they remain illegal the profits will be massive.

    So the reality is that every time a Mr Big in the drug world is taken out another one will quickly emerge to take his place, and often violently.

    Did we learn nothing from the Prohibition era?

  6. melanie
    July 18th, 2006 at 20:24 | #6

    Or, if you think of the drug retailers as part of a global commodity chain (such as that, for example, that stretches from Asian garment workers up to the western retailers of Nike or Gap, via several intermediary layers) you could think of profits as taxes or taxes as profits???

  7. July 18th, 2006 at 21:15 | #7

    Isn’t this exactly what happened, historically, after some of the more famous gang wars? For instance, in the Chicago mobs of the 1920′s and 1930′s, when the North Side Gang and South Side Gang fought each other, ending in the “St. Valentine’s Day Massacre”, the South Side Gang gradually withered away.

    However, the illegal activity didn’t end; a new bunch of mobsters ended up running things instead of the old lot.

    In any case, the characterization of mobsters as a unified criminal organization, and thus easily disruptable by taking down the leaders, is rubbish. I thought this was well known; maybe the cops really do need to read this book. Individual entrepreneurship makes up a large part of organized crime, by all reports.

  8. July 18th, 2006 at 21:44 | #8

    I think no-one these days believes that eliminating the Mr Bigs will stop the drug trade. The drug importation industry has a variety of viable oreganisational forms. One thing that has happened is that the interdiction of large imports of heroin has led to a preference for home-produced meth-amphetamine. These can be produced in competitive market structures where the unit of production is the kitchen.

    Drug distribution networks are very narrow. At the street level in Chicago the typical vendor services about 6 clients.

  9. jquiggin
    July 19th, 2006 at 06:51 | #9

    I agree that the Mr Big idea never made sense, and that it’s rarely heard in an explicit form nowadays, but it certainly used to be prominent, and it’s still implicit in a lot of discussion of Prohibition policy. Most obviously, US policy still makes a big thing about drug “kingpins” – although as Harry points out, this category applies to people at quite a low level in the distribution chain, maybe controlling the turf for a few blocks of a big city.

  10. Majorajam
    July 19th, 2006 at 08:15 | #10

    Interesting subject. Having done a bit of thinking about drugs in school, and not all of it recreational, I’ve always seen the problem as one of demand, so the story doesn’t surprise me. There are cases where policies that affect supply are the disproportionately factor in drug consumption such as for narcotics derived from easily controllable substances- e.g. methamphetamines, the critical ingredient of which is manufactured in something like five global pharma plants- and you might say that cheap supply helped get one-third of China addicted to opium in the 19th century. But for the most part, demand is the determinant of consumption, which itself is determined predominantly by the extent of the culture of consumption and its interaction with and erosion of social controls.

    One comment I recall reading about the repeal of Prohibition made the point that repeal neither eliminated the problems which Prohibition gave rise to, i.e. influential and widely diffused organized crime, nor the problems which Prohibition had sought to relieve, i.e. alcoholism and concomitant social fallout. It was the most well written expression of futility about government’s quixotic crusades against drugs and relatedly, the most intelligent thing I’ve ever seen written on the subject.

  11. smiths
    July 19th, 2006 at 13:42 | #11

    the mr bigs that the media trys to identify are mr. mediums,

    from Craig Murray, 2002-2004 British Ambassador, Uzbekistan

    “The Taliban virtually stopped the production of heroin in that country, and it has now come back. Now, about 40% of what was produced was smuggled into Uzbekistan under the control of General Dostum and Islam Karimov. And we turned a blind eye because both are or were US clients.
    SNIP
    But I made one tactical mistake. I imagined that it was low-level MI6 and CIA operatives collaborating with Uzbek officials and channelling this dreck out as information. I thought that if I sent back this information to London, the Home Secretary would read about it and it would stop. In retrospect, that was incredibly naïve of me, because in the end I got stopped.”

    drugs fund black ops for intelligence services, they flow along the same pipelines as guns and women

    and yeah, yeah, its another conspiracy theory, easy label, write it off

  12. Terje (say TAY-A)
    July 19th, 2006 at 14:48 | #12

    Andrew,

    I am not a fan of prohibition. I understand the arguments in favour of prohibition and I don’t dismiss them out of hand but I am not a fan.

    Regards,
    Terje.

  13. peter robertson
    July 19th, 2006 at 17:24 | #13

    Well check out the Greens Drug policy recently announce by Colleen Hartland and Richard DiNatale – they are th eonly political party who recognise the health issues involve din the drug trade. Our DLP Premier in disguise Bracks just bangs on about more police and stiffer penalaties – he really is your A grade typical populist. Even his health Ministe Pike, who represents an inner city seat rife with drug issues totally ignores needle exchage policies and heroin shooting room trials. She is a coward of th ehighest order and will hopefully get the boot come November.

  14. Terje (say TAY-A)
    July 19th, 2006 at 17:40 | #14

    From what I have seen the greens are pretty much into freedom when it comes to drugs. Unless of course nicotine is your drug of choice.

  15. Bill O’Slatter
    July 20th, 2006 at 10:47 | #15

    You need to get your standard public health problem examination kit out. The elimination of drug king pins and changes in drug useage is not an experiment. It is not an isolated system and meausres of inputs and outputs from the system are ill defined. The mortality from amphetamines is low and changes in crime rate due to it are hard to measure. Fluctuations in the price of the drug are not public knowledge. I don’t think that it is quite correct to picture these gangsters as solely taxers they also provide entrepreneurial activity : liaise with police, develop new labs , test for quality ( somewhat haphazardly)
    THe economic analysis of the drug trade is useful in providing insight into it, as per Steven Levitt’s “An Economic Analysis of a Drug-Selling Gang’s Finances.” Quarterly Journal of Economics, 2000, 115(3), pp. 755-89. (with Venkatesh, Sudhir A.). The production and distribution of different drugs will involve different dynamics. It maybe that the change in distribution from heroin to amphetamines was the primary cause of these gang wars and has been pointed out these deaths were a form of company takeover.
    Harm minimisation must be the order of the day. ( and this is implicit Commonwealth government policy)The distinction between legal and illegal drugs is fairly arbitrary with the proviso that the state can’t be held responsible the long term public health effects of illegal drugs.

  16. Mike Pepperday
    July 20th, 2006 at 13:56 | #16

    “I don’t think that it is quite correct to picture these gangsters as solely taxers they also provide entrepreneurial activity”
    Yes of course, but the point is the activity still goes on without the Mr Bigs. Actually it is a pretty good example of Mancur Olson’s “stationary bandit� theory of government. See: http://en.wikipedia.org/wiki/Mancur_Olson

  17. DCatwork
    July 20th, 2006 at 14:07 | #17

    How about an economics approach to “illegal” drugs?

    Given price is the key driver in markets, dropping the drug price below the point where the lack of profits does not compensate for the risks involved for the entrepreneurs, err, criminals would decriminalise the market.

    Setting the mechanism for the price drop aside for a moment, an obvious riposte is that as price drops demand will run away.

    We have such a mechanism to manage both price and runaway demand in the Pharmaceutical Benefits Scheme! OK its imperfect, but it seems to work, by and large, at the street, err, retail level.

    Where the imperfection is is the benefits are shared not only by PBS users but also the Mr. Bigs, mostly the international pharmaceutical companies. This is not wholly bad, as in return for subsidised oligoplolistic postions, they supply pure and effective drugs (well, mostly).

    So lets subsidise the domestic market to decriminalise the trade, issue drugs by prescription, and send the producers offshore to where they are someone else’s problem.

    There must be a merchant banker out there who can turn this scenario into a tax effective win-win PPP scheme….

  18. joe2
    July 21st, 2006 at 14:02 | #18

    Indeed, DCatwork. Presumably this merchant banker would have sold all interests in jail contracts that would no longer be of much value. Unless new crimes could be created to fill prisons.

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