Freakonomics and how to end drug trafficking

Freakonomics, a.k.a the book about how you are wrong about incentives, provides a great deal of insight into solving a lot of important issues in society. One of the examples I like the most is the one about crime in New York. From around the 70s till the 90s, New York was a crime ridden city. It had actually built a fame for being insecure and dangerous. Majors had tried everything including increasing police paychecks and increasing police numbers. However nothing seemed to help bring down crime in New York. But then something happened, in 1994 the crime started slowing down. All crime numbers started to turn negative. The murder rate was down, the pickpocket crimes were down and the most astonishing thing is that nobody knew exactly why.

Back then Giuliani was just elected major of NY. One of the things he did is to increase misdemeanor enforcement. However, contrary to what people thought back then, one of the biggest reasons why crime fell back then was, *drum roll*, legalizing abortion in the 1970s. Apparently most of the crime is done by kids from orphanages or kids whose parents didn’t really want to have them. Contrary to what most people would think, abortion is great for reducing crime rates (you should buy the book if you want to know more!).

Drug Cartels

So how does this relate to drug cartels? Well I want to make the case that logical linear thinking has not worked at all in fighting drug trafficking in Mexico. During 2006, Felipe Calderón was elected president in Mexico. Shortly thereafter he decided to wage a nationwide war on drug cartels. He basically threw a big part of Mexico’s army at the cartels to try to stop them. However as we all know that failed miserably. Murder rates went through the roof, which was expected since that’s what a war is about, however the problem is that the murder rates did not go down after a few years. In fact the murder rate has stayed at the same level since then.

The solution

So it seems just fighting fire with fire is not the solution here. However what would be the freakonomics way of dealing with the problem? Well one solution could stem from supply and demand. Let’s imagine a situation, say that Mexico has 5 main drug cartels which manage almost all trafficking. What would happen if the army shutdowns one of them? Well the others would not only have more clients, but due to the scarcity the price would go up and so they would be richer. It’s basic demand and supply. If you cut supply then the price just goes up. If this is true then the army will never win since if you crush one player, the other one grow automatically.

Now let’s think of a possible solution. What if instead we increase supply? One way to increase supply would be to have the government had an undercover agency which actually trafficked drugs and sold them at an artificially low price. Drug cartels would be forced to lower their prices, which in turn would give them less money which in turn would diminish their power. Of course this is not a very ethical solution, and would probably be a diplomatic disaster with the USA. Another such way of increasing supply is to legalize drugs and so add more players. More players means that the cake would be divided in more pieces and so would decrease the power of any single one.


However it maybe even easier to increasing supply, why not just cut the demand? There have been at least two known cases of countries with drug addict population which have solved it without any violence. Portugal and Switzerland already had this problem, and found a way to successfully lower the addiction rate. If only the US government officials would pull their head from their ass, they could save millions of people’s lives on both sides of the border.