Sunday, May 11, 2008

Cocaine: Victory Against Inflation

In an era when commodity prices are skyrocketing it is reassuring to know that the price of one class of agricultural commodity is dropping - narcotics.

The San Diego State fraternity caught selling drugs last week was trading cocaine for only $28/gram. That is down from its $100/gram price in the 1980's. Cheese heroin is selling for only $2 a pop. The price drop in illegal drugs is a pure case of supply and demand. Actually only supply. The demand for drugs has never been higher but the suppliers have been more than able to keep up.

This decade has been boom years for drug traffickers. Transportation security is now focused entirely upon catching people bringing shoes and underwire bras onto airplanes. Durg smugglers are getting free passes. When was the last time the Transportation Security Administration (TSA) was involved in a drug bust? Trick question - the TSA is part of a drug smuggling network. No, they were not just a few rogue employees, the TSA has its own drug smuggling plane.

There is also Afghanistan, where the US military has been fighting for years to make the country safe for opium production. Included in that effort is the US blocking Afghans trying to move from opium into other crops.

This is all proof that a properly motivated political economy can easily control commodity inflation. The key is encouraging agricultural production while ensuring a smoothly efficient transportation system. It helps to have a President who believes in the products and will fight to keep prices low.

Other links: Bush sleeps on opium boom, Afghan drugs for guns, President Bush's drug use in the White House

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