The Limits of Drug Control
U.S. policy aims to increase the price and restrict the availability of illegal drugs. It hasn't worked. Here's why.

By Peter Reuter

U.S. drug policy has been frozen in place since crack hit American cities in the mid-1980s. Those policies are punitive (in both rhetoric and reality), divisive (certainly by race, probably by age and perhaps by class), intrusive (in small ways for many and in large ways for some) and expensive ($30 billion to $35 billion annually). Yet the nation has a drug problem more severe than that of any other rich Western society, whether measured in terms of the extent of drug use, dependence on expensive drugs, drug-related AIDS cases or the level of violence associated with these drugs. Other Western nations troubled by drugs, such as Australia or Italy, have a per-capita heroin problem about the same size as in the United States and a cocaine or methamphetamine problem that is vastly smaller than ours.

U.S. policies are heavily supply-side oriented -- that is, they aim primarily to increase the price and restrict the availability of illegal drugs. Though drugs are indeed extraordinarily expensive and somewhat difficult to get, these control efforts seem powerless to make cocaine or heroin more expensive or less accessible.
International drug control gets a lot of media coverage but not much financial support. Overseas efforts never have attracted more than five percent of the federal drug budget. Congress is ever eager to support programs in other countries, but there simply are few opportunities to intervene effectively overseas, let alone accomplish much there by way of reduction in U.S. drug use.

Scaling the Problem

In some ways the American drug problem is narrow and static. No more than about two million Americans have substantial problems with cocaine or heroin -- less than one-fifth the number for alcohol. They are heavily concentrated in urban minority communities. Methamphetamine abuse remains a much smaller problem, while marijuana dependence, a real phenomenon affecting many more people, has much less consequence for those who experience it.

The recent epidemics of cocaine and heroin addiction have apparently run their course. There have been few new heroin addicts since the early 1970s, or cocaine addicts since the mid-1980s. The addict population is getting older and sicker, though still criminally very active; the average age of heroin addicts is now probably about 45. With early deaths and increasing incarceration, the number of active cocaine and heroin addicts is very slowly declining. Marijuana use has risen among adolescents; whether that presages a new cocaine, amphetamine or heroin epidemic remains to be seen.

The most striking characteristics of the United States response to illicit drugs in the last decade have been its scale and its punitive nature. The federal government spends about $18 billion annually on drug control, which is carried out in almost all cabinet departments, from the Department of Education to the Department of Defense. State and local governments spend at least as much, though it is far more difficult to obtain good estimates of these expenditures. Thus, government drug control programs cost roughly $35 billion a year during the late 1990s, a massive increase from the $10 billion annual level in the mid-1980s.

Source-Country Control

Most of the illegal drugs consumed in the United States are produced abroad, which explains the emphasis on programs aimed at reducing production or export from the source countries. Thus, international programs attract a great deal of political attention. Polls consistently show that more than half of the American population believes this is the most promising way of controlling drugs.

The sources of supply to the United States have never been very diverse: Bolivia, Peru and Colombia for cocaine and Afghanistan, Burma and Mexico for heroin in the early 1990s. Since 1995 the sources have become very few indeed; almost all narcotics come from Colombia and Mexico. Colombia now dominates production, refining and export of cocaine, with Bolivia and Peru of secondary importance in the growing sector. Colombia has also supplanted Southeast Asia in the U.S. heroin market; Mexico and Colombia now account for about two thirds of U.S. heroin imports. Mexico is the principal source of imported marijuana and methamphetamine, though a substantial share of both these drugs is produced domestically.

Three types of programs have been tried to reduce source-country production: eradication, alternative development and in-country enforcement. Eradication, usually involving aerial spraying, aims either to literally limit the quantity of the drug available in the United States or to raise the costs of those drugs or otherwise discourage farmers from producing them. Alternative development is the "soft" version of this; it encourages farmers growing coca or poppies to switch to legitimate crops by increasing earnings from these other products -- for example, by introducing new and more productive strains of traditional crops, better transportation to get the crops to market or more effective marketing schemes. Finally, the United States pushes other countries to pursue traffickers and refiners more vigorously.

None of these programs receive much money. In Fiscal Year 2001, even including the much trumpeted Plan Colombia, expenditures overseas totaled only $610 million out of a total federal drug control budget of $19 billion. The vast majority of that money went to the Andean region, since Mexico has so far, as a matter of national sovereignty, been unwilling to allow the operation of U.S. programs on its territory. Though Asia is the dominant producer of heroin, there are no meaningful opportunities to intervene in the major producing nations. Even before Sept. 11, the United States had hostile relations with Afghanistan's government, and it still has no ambassador in Burma (Myanmar).
Few countries are willing to allow aerial eradication, which may cause environmental damage; it is also politically unattractive, since the immediate targets, peasant farmers, are among the poorest citizens, even when growing coca or poppies. Colombia and Mexico, neither a traditional producer of drugs, have been the countries most willing to allow spraying.

Eradication advocates can claim only one instance in which this approach was able to substantially reduce the flow of drugs to the United States for a few years: the spraying of Mexican opium fields in the mid-1970s. An industry that had operated fairly openly in five northern states, with large, unprotected fields, took approximately five years to adapt to spraying. Production became much more widely dispersed and fields moved to smaller, more hidden locations. But by the early 1980s, Mexico was again supplying as much heroin as before the spraying.

Alternative development presents a very different challenge to source-country governments. In contrast to spraying, it is politically attractive, since it tries to help the marginalized farmers who grow opium poppies and coca. However, it requires that the farmers believe the government will maintain its commitment over a long period; otherwise they will not be willing to incur the costs of shifting crops. In situations of political instability there will understandably be skepticism about the ability of the government to assure a market for, say, pineapples from the Chapare, which require a good transportation infrastructure.

Though there are a few instances of well-executed local crop-substitution programs, it does not appear that they have reduced drug production in any region of the world; instead, production has simply shifted areas within the region. For example, the government of Thailand provided the hill people in the north with new crops and marketing schemes, part of the rapid growth of the Thai economy in the 1970s and 1980s. Thailand, once an important component of the Golden Triangle, no longer produces a significant quantity of opium. However, neighboring Burma (Myanmar), where there has been no economic boom, has taken up the slack, and supplies Thailand's substantial heroin addict population.

The United States has also invested in building institutional capacity to deal with the drug trade. Each year the State Department's International Narcotics Control Strategy Report argues that the central problem of drug control in other countries is lack of political will and integrity. Training investigators, strengthening the judiciary and improving extradition procedures are the very core of efforts to deal with this issue. Unfortunately, in both Colombia and Mexico the corruption problems have been seemingly endless, imbedded in a larger system of weak integrity controls. In Colombia the army has taken on a major role in drug control, particularly with respect to coca-growing; allegations of involvement in mass killings of peasants suspected of supporting left-wing guerrillas are well substantiated and have been a major source of controversy about U.S. funding.

Since 1986, the president has been required to certify that each country identified as a producer and/or transshipment nation has cooperated fully with the United States in trying to reduce production and trafficking. If a nation is not certified, the United States will withhold certain aid and trade preferences, as well as vote against loans from international banks, such as the Asian Development Bank.

Whatever the rationale of the certification process, it has been tarnished in practice by its obvious divorce from drug control. Certain pariah nations (e.g., Nigeria until 1999 and Syria) are routinely decertified, while the largest single source for the United States market, Mexico, with a long history of corruption in its drug control efforts, has never been denied certification. The political costs of decertifying Mexico, given the close and complex relations between Mexico and the United States, are unacceptably high. The one strategic use of decertification was in 1995 and 1996, when the Clinton Administration decertified the Samper government in Colombia amid allegations that drug traffickers had financed the presidential campaign. This turned out to have little effect on collaboration between agencies in the two countries; it simply meant that the president's office in Colombia became isolated from the rest of the government. As of 2001, with a growing acceptance that the problem is less other nations' production than U.S. demand, there is growing support for repealing the certification law.

Prospects of Success

Can these programs make a difference to America's drug problems? Answering that question requires an understanding of the nature of the market for expensive drugs. Start with eradication, which has always had a peculiar appeal to a culture that looks to Tom Clancy for solutions to problems. But source-country programs for cocaine are doomed from the start, because the price of coca leaf is a negligible fraction of the retail price of cocaine in the United States.

It costs approximately $300 to purchase the coca leaf needed to produce a kilogram (2.2 pounds) of cocaine, which retails for about $150,000 in the United States when sold in one-gram lots (of two-thirds purity) for $100. The modest share of costs associated with cocaine production is easily explained. Production involves cheap land and labor in poor countries; it requires no specialized inputs. Even Bolivia, the smallest of the three producer countries, is over 500,000 square miles -- much of it difficult to monitor.

In addition, cocaine refiners pay what is necessary to purchase the leaf to meet cocaine demand. Assume that eradication efforts lead to a doubling of the price of coca leaf, so that it now costs $600 for the leaf that goes into a kilogram of cocaine. The change in retail price, assuming the cost is passed along, will be negligible. Indeed, leaf prices have varied enormously over the last decade, while the retail price of cocaine has steadily fallen in the same period. If retail prices do not rise, then total consumption in the United States will not decline as a consequence of eradication. In this scenario, there will be no reduction in total production -- just more land torn up in more places to plant an environmentally damaging crop.

The argument for alternative development is just as flawed. It assumes that the price of leaf will not increase enough to tempt the peasants back to coca-growing. But refiners have every incentive to offer a high enough price to get back the land and labor needed to meet the needs of the cocaine market in the developed world because the price of leaf is so small compared to the street price of Bolivian marching powder. Peasants will be better off than before the alternative development, but only because they will make more money growing coca.

In the face of this depressing economic logic, the supporters of the recent Colombia initiative point to the apparent success of the combination of eradication and alternative development in Bolivia and Peru, where land under coca cultivation fell from 150,000 acres in 1992 to 60,000 acres in 1999. Certainly U.S. support of aggressive efforts to reduce the flow of raw material from Peru to Colombia has helped make Peru a less attractive source for Colombian refiners and traffickers. But two other changes, which fans of eradication and alternative development efforts don't talk about, are probably as important in explaining the decline.

First, there has been a huge internal migration within Colombia, with perhaps as many as 800,000 people moving away from areas where paramilitary forces have committed massacres to more remote areas, where farmers have few commercial alternatives to growing coca. Second, the breakup of the Cali cartel may have favored the rise of traffickers with less international reach -- traffickers more oriented toward buying their leaf or coca paste from Colombian sources. Consequently, compared with 10 years ago, Colombia is a more attractive source of leaf, and thus, production has shifted there.
This reflects the cocaine production industry's regional, rather than national, base. The location of production can change for many reasons, including interdiction, but there is no evidence that any intervention has lowered total regional production. The package of interventions being implemented in Colombia has little chance of making an observable difference to the flow of drugs to the United States.

Interdiction

Protecting U.S. borders from unwanted imports seems a fundamental government role. Failure to do so has many consequences; a surprising number of Americans believe indeed that the federal government must be complicit in the drug trade because otherwise such vast quantities of drugs would not be able to enter the country.

The vast quantities, though generating tens of billions of dollars in sales ($40 billion for cocaine; $12 billion for heroin), are in fact tiny quantities. Estimated imports are about 15 tons for heroin and 400 tons for cocaine. Given the volume of traffic and commerce across U.S. borders, specifically those from Mexico and the Caribbean, it is not hard to hide a few hundred tons. Indeed, one can marvel rather at the fact that interdiction seizes such a large share of cocaine, perhaps 35 to 40 percent over the whole production and import system. Heroin seizures are closer to the 10 percent that orthodoxy has enshrined as the share always seized by enforcement agencies; the drug generally enters in small packages, which reduces the potential for seizure. One particularly troubling mode of smuggling is "body packing"; the smuggler swallows a number of packages of the drug wrapped in condoms or similar material. Enough body packers have had problems with packages bursting that there is even a small medical literature on the phenomenon; unsurprisingly, an early contribution to that literature came from an emergency room near the Los Angeles airport.

The interdiction program is an unending series of adaptations by smugglers and agencies. There are large-scale shifts in routes, modes of transportation and techniques for hiding. In the early 1980s, most cocaine came in through Florida; an early Reagan interdiction effort, run by Vice President George Bush, pushed traffickers farther out in the Caribbean and into Mexico.
In the 1980s, a large share of cocaine was brought in by private planes, typically carrying 250 to 500 kilograms on each trip. By the early 1990s, smugglers had shifted to placing their loads in legitimate commerce, such as in a cargo ship with frozen fruit pulp or in furniture. Technological innovations are announced from time to time, such as machines that can scan a container from the outside and detect cocaine through its pattern of heat reflection. None seem to have much impact; import price has not risen and there seems no diminution in the total quantity entering the country.

The economic logic underlying the limited effects of interdiction is the same as for source-country programs. Cocaine travels in large bundles in international shipping; seizures suggest that shipments of 250 to 500 kilograms (enough to supply 500,000 retail sales) are quite common. Though large sums may be paid to pilots for flying small planes carrying cocaine or to Honduran army colonels for ignoring their landing, these costs still represent a relatively small percentage of the market value of the drugs. A pilot who demands $500,000 for flying a plane with 250 kilograms of cocaine is generating costs of only $2,000 per kilogram -- less than two percent of the retail price. Even if the plane has to be abandoned after one flight, it adds only another $2,000 to the kilogram price.
For shipments by container cargo ship, seizure constitutes little more than a random tax collection. The replacement cost of the seized drugs is substantially less than the landed price, so high seizure rates have a modest effect even on wholesale prices. Interdiction in fact seizes a quite high share -- perhaps one-third of the cocaine that is destined for the United States. Nonetheless, this still leaves plenty of product to support the large U.S. cocaine market at prices that are modest by historical standards.

The Limits of the Demand Side

Fairness requires an equally objective review of demand-side programs: drug prevention and treatment. Everyone likes the idea of preventing kids from starting drug use or at least not going beyond experimentation. It appeals to the American preference for fundamental solutions rather than Band-Aids, and it is hard to think of negative side effects. Unfortunately, there is no reason to believe that we know how to immunize kids against drug abuse. A few experimental programs show promising results. But it is unclear how they will perform when scaled up and put in the hands of schools, already under pressure to spend more of their limited class time on basic academic subjects.

Moreover, the political marketplace for choosing anti-drug programs is wretchedly inefficient. DARE (the Drug Abuse Resistance Effort), perhaps the only program that has been subject to frequent evaluations -- all of which have been negative except those paid for by the DARE organization itself -- was the most popular choice of school districts throughout the nation until early 2001, when the program admitted that its curriculum was fundamentally flawed and went back to the drawing board. Mass media campaigns are notoriously difficult to evaluate. There is an absence of credible evidence of effectiveness on the high-profile media campaign funded by the federal government in the last few years.

The case for treatment is much stronger. Methadone unquestionably helps a substantial fraction of heroin addicts cut down on their use of expensive illegal drugs; this has a direct effect on crime rates, reducing them by three quarters or more while the addicts are in treatment. Other mainstream treatments seem to make a difference, too. The ratios of benefits to costs, even when discounted to allow for the biases of the evaluators, are reasonably high, almost certainly higher than those from source-country control of investigating and prosecuting high level dealers.

But it's tough to get most addicts to enter treatment in the first place. Building stronger drug treatment programs that are not so marginalized by the health care system would no doubt help. It would be optimistic, though, to suggest that treatment could reduce America's drug problems by, say, as much as one-third in the next five years.
Prices have fallen and the drugs remain available to many teenagers. So why has there not been a new epidemic of cocaine or heroin use? The most likely answer is the intellectually boring one: fashion. Cocaine, once seen as exciting and not very harmful, is now viewed as dangerous; there are certainly enough miserable-looking cocaine addicts on the streets of bad neighborhoods to make the case for the drug's perils to any moderately rational youth. Heroin can now be snorted rather than injected, overcoming the AIDS-fear barrier. But even in the era of heroin-chic fashion models, the drug retains a sense of menace for most. It would take a real shift in attitudes to start any major new upturn in these drugs.

Yet illicit drugs are a permanent part of the American scene. So is legalization an appropriate policy option? Over the past decade, I have been assessing the likely consequences of legalizing cocaine, heroin and marijuana, drawing on the experiences of other countries, the U.S. historical experience with legal cocaine and heroin around 1900, and the record of regulation of other vices such as gambling and cigarettes. My conclusion is not so much that legalization of drugs is a bad idea but that it is impossible to tell if it is a good one. We must think less of eliminating the drug problem than of finding ways to manage it better. International programs don't offer much toward this end.

Peter Reuter is a professor of public policy and of criminology at the University of Maryland. He came to the university in 1993 from the Rand Corporation, where he founded and directed its interdisciplinary Drug Policy Research Center. His most recent book, Drug War Heresies: Learning from Other Vices, Times and Places (co-authored with Robert MacCoun), was published in August 2001 by Cambridge University Press.