Is Your Econ Dept Celebrating ‘Narconomics’?

How to run a drug cartel.

April 6, 2016

Narconomics: How to Run a Drug Cartel by Tom Wainwright

Published in February of 2016.

This is not how a university Economics Departments work.  A terrific nonfiction book aimed at a general audience that builds on the principals of the discipline is published. (In this case, economics).  The economists in the department get very excited about the book.  They all buy copies and read the book.  They then sit around together and talk about the ideas in the book. Some of the economists choose to assign the book in their courses.  Maybe they invite the author of the book to come and speak on campus.  No, economists do not do these things.  At least the economists that I know.

In my magical university - think Hogwarts with less magic and more book reading - this is exactly what is going on in the Econ department. All the economists are celebrating Tom Wainwright’s Narconomics.

Wainwright, an editor at the Economist, thinks that the most effective way to understand the world of narcotics is to think of the drug business as a business. This means stepping back from analyzing drugs in terms of morals, and instead think about drugs in terms of markets.

In reading Narconomics I learned a great deal about cocaine, heroine, and marijuana.

I now understand how cocaine is produced (the journey starts with the coca leaf in the Andes), and how the product is produced, shipped, marketed, and sold.  I also now understand why efforts to eradicate the cocaine leaf have had almost no effect on cocaine use, as the retail cost of a kilo of cocaine is so high (about $100,000), that even doubling the cost of the ton of coca leaf that is required to make that kilo (from $400 to $800) adds almost nothing to the final price.

Through Narconomics, I learned why heroin is making a big comeback in the US - it has to do with it being cheaper than other prescription opioids oxycontin and oxycodone.

And I have a much better idea as to why the biggest fear of the Mexican drug cartels is that other states will follow the lead of Colorado, Alaska, Oregon, and Washington and make the recreational use of pot legal.  (The cartels cannot compete with either the quality or price of legally grown marijuana, even with high taxation and government imposed quality standards).

The War on Drugs has been going on since Nixon declared war in 1971.  Since then, the US has spent a trillion dollars to fight this war.  What we have to show for this fight is 2.3 million incarcerated Americans (500,000 for drug crimes).  All this spending and incarceration has not succeeded in lowering the use of illegal drugs, or even driving up drug costs.

Putting Narconomics on the Econ 101 syllabus will have the double benefit teaching core economics principles (supply, demand, scarcity - and even franchising), while also providing an opportunity to think about social policy.

My suspicion is that the professor that assigns Narconomics will not have a problem with the reading getting done.

Will reading Narconomics on campus encourage discussions about drug (and alcohol) use on campus?

What are you reading?



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