The Drug Czar's High Math

How phony statistics about cocaine prices hide the truth about the war on drugs

Ryan Grim from the August/September 2009 issue

John Walters had some data he wanted to make public, but he also had a credibility problem. Just two years earlier, in 2005, Walters, the country’s drug czar, had cited a hike in the price of cocaine as a battlefield victory in the war on drugs—only to see the price fall just as he was touting the increase. He was ridiculed in some quarters of the press; others decided to stop listening to him.

This time around, in the summer of 2007, Walters went looking for the most receptive audience he could find. So he zipped down New York Avenue to the headquarters of The Washington Times, the conservative daily based in the outskirts of Washington, D.C. Walters, according to a staffer present at the briefing, came with a small staff and a stack of glossy pages making the case that the United States had turned a corner in the war on drugs. Prices for cocaine, he said, were rising fast. And that, he explained, can only mean a decline in supply.

The Times wouldn’t bite. The data were suspiciously thin. Walters’ numbers showing the increased price of cocaine began in 2007. The best comparison data, which he didn’t have with him but could be found online, dated back to the first half of 2003, when the RAND Corporation gathered information for a comprehensive report. The drug czar had sat on the RAND report for a full year after it was completed in 2004 because it showed prices trending downward. The RAND study was also transparent about its methodology, whereas the new numbers Walters was touting, covering the period afterward, came with no explanation of how they were concocted.

Walters finally found a platform one month later in USA Today. Soon the story The Washington Times wouldn’t touch was all over the news. Thanks to the drug czar’s cherry-picked statistics, newspapers were crowing that America was winning the war on cocaine, particularly the effort to suppress production in Latin America.

While Walters was shopping his numbers around, I was in the middle of researching my book on the history of drug trends, This Is Your Country on Drugs: The Secret History of Getting High in America. So I filed a Freedom of Information Act request to get whatever data Walters had left out of his presentation. I also asked for information on the methodology and analysis. My request was rejected, even though some of what I was asking for had already been given to Sen. Charles Grassley (R-Iowa), who had repeatedly asked for the data. The Department of Justice, where the Drug Enforcement Administration (DEA) is located, explained in denying my request that there was no “public benefit” to disclosing what I had asked for. 

Fortunately, the Obama administration disagreed. When Edward Jurith became acting director of the Office of National Drug Control Policy (ONDCP) in January, he quietly released the report that Walters had been keeping to himself, posting it on the ONDCP’s website. John Walsh of the left-leaning Washington Office on Latin America first wrote about the new numbers in April, nearly a year after the report was finished. It turns out there was indeed no “benefit” to releasing the information—for Walters, that is.

Rather than an “unprecedented” spike in cocaine prices, the underlying data that Walters had derived his claims from showed that 2007 featured the lowest cocaine prices on record, down 6.6 percent from 2006. Yes, the price bumped up in the middle of the year, but in his victory lap across the media the drug czar neglected to mention that the bump followed a quarter in which cocaine had reached its lowest price level since the government began keeping track in 1981. The “spike” still left cocaine costing $136.93 a gram in September 2007, 13 percent cheaper in constant dollars than the average price for 1999. This was hardly the resounding victory Walters had declared.

The numbers in Walters’ Washington Times handouts were just that: numbers. No explanation, no methodology, no context. In fact, the underlying data came from the System To Retrieve Information from Drug Evidence (STRIDE), derived from undercover buys, wiretaps, and other law enforcement sources of information about the drug trade. The Institute for Defense Analyses, a nonprofit research firm that contracts with the U.S. government, analyzed the data using the same methodology as the RAND researchers and produced the report that the Obama administration released. The STRIDE evidence showed a 26 percent spike in cocaine prices in the middle of 2007. Walters, who never disclosed his own methodology, had claimed the spike was 44 percent.

The newly released numbers and Walters’ data overlapped for 10 quarters. For three of the quarters, the new analysis showed the price of cocaine going in the direction opposite from what Walters’ numbers claimed. It’s one thing to quarrel over the size of a spike. It’s quite another to be wrong on the direction of a trend.

The Dollar Effect

It’s far from clear what caused the brief price hike in 2007. Walters unsurprisingly credited enforcement and interdiction efforts. But it’s unlikely the ONDCP and DEA really had the cocaine cartels in retreat. The more plausible explanation is that cocaine producers were targeting more lucrative markets. The rise of the euro and the concomitant decline of the dollar have made it less profitable to sell cocaine to Americans.

“The euro has replaced the dollar in the Western Hemisphere as the currency of choice among these traffickers, which is an extraordinary shift,” Karen Tandy, head of the DEA, told an antinarcotics conference in Spain in April 2007. “As cocaine use has declined in the U.S. dramatically, in the European market it has risen.”

Officials at the Spain conference said a kilogram of coke that would fetch $30,000 in the United States was worth $50,000 in Europe—and the dollar has fallen further against the euro since then. On April 1, 2007, a dollar was worth about 0.74 euro; a year later, it was worth only 0.63 euro; it’s now at about 0.7. Because of this price differential, it is theoretically profitable to smuggle cocaine out of the United States. Buried in its 2009 National Drug Threat Assessment, the Department of Justice cited the currency exchange rate as one possible explanation for decreased imports. The “declining value of the U.S. dollar provides a financial incentive for drug traffickers to sell cocaine in foreign markets where the wholesale price of cocaine is already much higher than in the United States,” the report said.

Size matters too. The euro is denominated in notes of 200 and 500, making transportation of large sums of money much easier, given that the biggest American note is worth only about 70 euros. When you’re moving hundreds of millions of dollars, that represents a real convenience. Donald Semesky, the DEA’s chief of financial operations, has noted that 90 percent of the €1.7 billion that was registered as having entered the United States in 2005 came through Latin America, “where drug cartels launder their European proceeds.” As the cocaine market has shifted, use along its new
trade routes has grown. A 2008 United Nations report notes increases in use not only in South and Central America but also in Africa, where seizures jumped tenfold from 2003 to 2006 and then doubled again between 2006 and 2007.

West African nations, which make Colombia and Mexico look like models of transparent governance, have become important stopping-off points for coke traffickers on the way to Europe. Out-of-work African youth make cheap foot soldiers, and drug runners with expensive equipment and weaponry have little to fear from airports that are barely electrified and cop cars with empty gas tanks. “Africa is under attack,” warned Antonio Maria Costa, executive director of the U.N. Office on Drugs and Crime, in a 2008 Washington Post op-ed piece. “States that we seldom hear about, such as Guinea-Bissau and neighboring Guinea, are at risk of being captured by drug cartels in collusion with corrupt forces in government and the military.” From West Africa, the cocaine heads to Spain and Portugal. In 2006, according to the U.N., Spain’s level of coke use was equivalent to America’s for the first time ever.

Comments

Annoon-I-MOOSE|7.22.09 @ 12:13PM|#

Hey guys, the giant racist we told to fuck off is complaining about it.

No mercy should be shown to racists. They need to stamped out. They have no right to spread their hared. Let us make it be known that this kind of stuff isn't accepted here.

Cabeza de Vaca|7.22.09 @ 12:15PM|#

That movie is great. A poor naive girl unwittly gets hooked after a she tells a smooth talking drug dealer she has a headache. He offers her some "headache powder", which she takes. Under the influence he then convinces her to run away to the big city with him. Once trapped in the evil big city he turns her into a prostitute.

Bigg Blakk Dikk |7.22.09 @ 12:40PM|#

"Hey guys, the giant racist we told to fuck off is complaining about it."

Wow! I can't wait to tell Richard Hoste's mother that I made it into a racist's blog:

From Bigg Blakk Dikk

Hey Richard!

I'm fucking your mother.

She says hello.

Bigg Blakk Dikk |7.22.09 @ 12:41PM|#

"That movie is great. A poor naive girl unwittly gets hooked after a she tells a smooth talking drug dealer she has a headache. He offers her some "headache powder", which she takes. Under the influence he then convinces her to run away to the big city with him. Once trapped in the evil big city he turns her into a prostitute."

So it has a happy ending then.

|7.22.09 @ 12:42PM|#

Moose,

Those comments are comedy gold. Let me sum up from those without a strong stomach: Libertarians on the Hit & Run board don't agree with me about putting black people in concentration camps. They are statists.

Xeones and Marshall Gill both get name-checked.

|7.22.09 @ 12:46PM|#

Remember, these aren't communists or new leftists, but libertarians. What kind of deranged human beings respond to people they disagree with like this? Us "racists" are supposed to be so morally inferior to everybody, yet you won't find such simple-minded name calling at Sailer or even Stormfront.

Hoo boy, he has thinner skin than Michael Richards when being heckled. Awesome.

Yahoo Answerer|7.22.09 @ 12:46PM|#

Is that poster a cocain advertisement?

Bigg Blakk Dikk |7.22.09 @ 12:50PM|#

BTW I'm still fucking his mother.

Cabeza de Vaca|7.22.09 @ 12:51PM|#

Yahoo,

It's the movie I was describing above.

Yahoo Answerer|7.22.09 @ 12:56PM|#

Cabeza de Vaca,

So it is an advertisement for a cocain advertisement?

Warty|7.22.09 @ 1:02PM|#

Xeones and Marshall Gill both get name-checked.

Fuckin' A, I missed out on a golden opportunity then. I think the only time I've ever been complained about in a blog before was for making a stupid blowjob joke about Kerry Howley and Megan McArdle.

|7.22.09 @ 1:10PM|#

Warty,

You have been immortalized on a blog, after a fashion.

Warty|7.22.09 @ 1:15PM|#

Could you please develop it into a feature film, SugarFree? I'll chip in an eight-ball.

|7.22.09 @ 1:17PM|#

I've got a lot of irons in the fire right now, but I promise I'll try to try.

Strugglin Brother|7.22.09 @ 1:18PM|#

As a young black man, I want to say that I hate these racists from the bottom of my heart.

Look at this article here.

Look at the black African skull. It appears to have less brain capacity. I've been wrecked with doubts ever since reading Steve Sailer and those like Hoste. IQ tests, brain mesaurements, standardized test scores all point in the same direction. And they even have pictures of the skulls! Is this the reason I've been doing so poorly on standardized tests? Is this why I had to drop out of college? Is this why my race struggles?

If we put Saddam Hussein on trial for crimes against humanity, what should be done with these people that destroy the hopes of millions?

Thank you all for shouting these racists down. This information CAN NOT BE KNOWN. I'll do anything to stop my children from being exposed to this. These white values like freedom and openness can not be coutned on to produce equality and get rid of hate.

Bigg Blakk Dikk |7.22.09 @ 1:19PM|#

"Kerry Howley"

I'd do her. And she'd like it.

Warty|7.22.09 @ 1:21PM|#

It's OK, Richard. Those urges you get when you see those sweaty young black men playing basketball are completely natural. You don't need to feel ashamed any more.

|7.22.09 @ 1:21PM|#

Hey guys, the giant racist we told to fuck off is complaining about it.

Thanks. I left a comment. How long till it's deleted?

Bigg Blakk Dikk |7.22.09 @ 1:26PM|#

"Thanks. I left a comment. How long till it's deleted?"

Racist cunt won't even post mine. So if yours is there, it has the racist stamp of approval.

|7.22.09 @ 1:27PM|#

Oh, why can none of use see through "Strugglin Brother"'s ham-fisted satire?

phalkor|7.22.09 @ 1:35PM|#

oh he was a real racist? I was too tweaked to notice.

Strugglin Brother|7.22.09 @ 1:38PM|#

No satire here, brother. Scientists SHOULDN'T BE ALLOWED TO STUDY THIS.

I was in an African-American Studies department at a major university when The Bell Curve came out. Do you have any idea what that book and the discussion of its ideas did to young African-Americans? A girl, whose mom had died of AIDS the year before and was the first one in her family to go to college, broke down crying over a POSITIVE REVIEW given in The New York Times. I found a young brother in a room alone. I asked him what was wrong. He told me that it was all lies, that he was an affirmative action student and that whites knew it. Haven't young blacks suffered enough? Doesn't their story need to be told?

Being told that you're stupid hurts worse than anything else. Thanks to these racists us blacks always have that voice in the back of our head.
ALL PEOPLE need to be more considerate.

|7.22.09 @ 1:43PM|#

So you don't have to dirty your portion of the tubes by visiting, here's I left at racistdouchebag.com

Awww,

You got treated poorly at a libertarian website by people who found your views offensive. You didn't get banned, you got a display of outrage from those who prefer to judge people as individuals and find your opinions odious.

Boo fuckig hoo.

phalkor|7.22.09 @ 1:49PM|#

I don't get it Jsub. You have pretty good command of the english language then you misspell fucking? Fucking? Can't winnem all I suppose.

Warty|7.22.09 @ 1:51PM|#

At the risk of sounding like an Internet Tough Guy, I would really enjoy pounding this shitstain into the pavement.

|7.22.09 @ 1:53PM|#

Awww, those fucktards are likely too stupid to notice the typo.

|7.22.09 @ 1:58PM|#

Oh, why can none of use see through "Strugglin Brother"'s ham-fisted satire?

Ham-fisted? I'm afraid that's not racist enough, NutraSweet.

|7.22.09 @ 1:59PM|#

But "watermelon-fisted" sounds like those videos you always try to get me to watch...

|7.22.09 @ 2:03PM|#

Chimp-fisted? joe, can we get a ruling on these?

Warty|7.22.09 @ 2:06PM|#

Chicken-fisted.

Spartacus|7.22.09 @ 2:07PM|#

Being told that you're stupid hurts worse than anything else.

I'm sure you know all about that.

qwerty|7.22.09 @ 2:31PM|#

Now I know you're lying, Strugglin Brother. There's no way that the New York Times gave The Bell Curve a positive review.

mr simple|7.22.09 @ 2:48PM|#

If I read
"It's especially ironic that those responses were posted on a site calling itself "Reason"."
on another site, do I still have to drink?

I also was surprised to learn that we libertarians support, among other things, racial quotas and statist programs. Who knew?

Civil Discourse|7.22.09 @ 3:10PM|#

"Being told that you're stupid hurts worse than anything else."

Really? I would have thought that getting shot in the belly by some 16-year-old, gangbanging, pants-sagging, Hoover worshipping, piece of shit firing randomly into a crowd to prove his manhood would hurt even more.

But mine struggle differs from yours.

|7.22.09 @ 3:13PM|#

"Ham-fisted? I'm afraid that's not racist enough, NutraSweet."

I say we chase him around a tree until he turns into cocoa butter.

Marian Kechlibar|7.22.09 @ 3:28PM|#

WTF?

Is everyone high, or what? Never seen a thread so separated from the article on Reason yet.

Well, I can at least be assured that getting the whole thread high would not cost more than 100 dollars of 1982 value.

|7.22.09 @ 3:46PM|#

If I read
"It's especially ironic that those responses were posted on a site calling itself "Reason"."
on another site, do I still have to drink?

Case by case basis. Here it seems clear that in context, you have to take a drink.

|7.22.09 @ 4:43PM|#

Who pays $130 a gram? I never paid more than $50-60, and a couple of times down to $40. Some people are getting ripped off.

If I could get a list of them I would be happy to fix that ,lol

hANOVER fIST|7.22.09 @ 5:40PM|#

In support of Struggling Brother:

From Wikipedia: Initially, The Bell Curve received a great deal of positive publicity, including cover stories in Newsweek ("the science behind [it] is overwhelmingly mainstream"), early publication (under protest by other writers and editors) in The New Republic by its editor-in-chief at the time Andrew Sullivan, and The New York Times Book Review (which suggested critics disliked its "appeal to sweet reason" and are "inclined to hang the defendants without a trial"). Early articles and editorials appeared in Time, The New York Times ("makes a strong case"), The New York Times Magazine, Forbes, the Wall Street Journal, and National Review. It received a respectful airing on such shows as Nightline, the MacNeil/Lehrer NewsHour, the McLaughlin Group, Think Tank, PrimeTime Live, and All Things Considered.[3] The book sold over 500,000 copies in hardcover.

While the book's popularity was mostly propelled by its controversial claims regarding race and intelligence, both the accuracy of those claims and the qualifications of the authors soon came under attack in the media. Herrnstein died before the book was released, leaving its public defense to co-author Charles Murray. Although Herrnstein was a psychologist, Murray is a conservative think tank analyst with a Ph.D. in political science and no credentials in psychometrics.

Some scholars have condemned the book. University of Oklahoma Professor of Anthropology Michael Nunley wrote:

I believe this book is a fraud, that its authors must have known it was a fraud when they were writing it, and that Charles Murray must still know it's a fraud as he goes around defending it. [...] After careful reading, I cannot believe its authors were not acutely aware of [...] how they were distorting the material they did include.

Professor Leon Kamin, a longtime critic of cognitive ability tests, said the book was "a disservice to and abuse of science." Psychologist Howard Gardner, who teaches in the Harvard Graduate School of Education, called the book's style of thought "scholarly brinkmanship":

The authors seem to show the evidence and leave the implications for the reader to figure out; discussing scientific work on intelligence, they never quite say that intelligence is all important and tied to one's genes, yet they signal that this is their belief and that readers ought to embrace the same conclusions.

Columnist Bob Herbert, writing for The New York Times, described the book as "a scabrous piece of racial pornography masquerading as serious scholarship." "Mr. Murray can protest all he wants," wrote Herbert; "his book is just a genteel way of calling somebody a nigger."[4]

Economist and conservative writer Thomas Sowell criticized the book's conclusions about race and the malleability of IQ, writing:[5]

When European immigrant groups in the United States scored below the national average on mental tests, they scored lowest on the abstract parts of those tests. So did white mountaineer children in the United States tested back in the early 1930s... Strangely, Herrnstein and Murray refer to "folklore" that "Jews and other immigrant groups were thought to be below average in intelligence." It was neither folklore nor anything as subjective as thoughts. It was based on hard data, as hard as any data in The Bell Curve. These groups repeatedly tested below average on the mental tests of the World War I era, both in the army and in civilian life. For Jews, it is clear that later tests showed radically different results - during an era when there was very little intermarriage to change the genetic makeup of American Jews.

In its defense, fifty-two professors, most of them psychologists including researchers in the study of intelligence and related fields, signed an opinion statement titled "Mainstream Science on Intelligence"[2] endorsing the views presented in The Bell Curve. The statement was written by psychologist Linda Gottfredson and published in The Wall Street Journal in 1994 and reprinted in the Intelligence[3]. Only seven of the 100 invitees contacted said the statement did not represent the mainstream view of intelligence. Some of the signers had been cited as sources for Murray and Herrnstein's book.

So that said...yes...the Times did positively review this piece of tripe.

At any rate...read my postings on the subject - cocaine is less dangerous than aspirin.

MonkeeHeadinSouth|7.22.09 @ 6:17PM|#

"cocaine is less dangerous than aspirin."

I know if I spent all last week on asperin

I wouldn't feel half as fucked up as I do now

what a week

:)

|7.22.09 @ 7:09PM|#

Those prices are absurd and totally unrealistic. Are these prices for 100 percent pure product? I've never seen them that high, even in the "low" years, that high on the street (or behind suburban doors). Never more than $50 a gram. It's not worth more than that. I'd be better off raiding my sister's bottle of Adderall.

|7.22.09 @ 8:00PM|#

@astonished

Where do you buy coke? Standard is about $60 a gram, at least $90 for good stuff. I'm talking 2009 prices in suburban Ohio.

@Annoon-I-MOOSE

Thanks for posting about that fucktard. How'd you find that site? Did you read those comments? What a bunch of shitheads.

Oneof the day people|7.22.09 @ 8:10PM|#

"Thanks for posting about that fucktard. How'd you find that site? Did you read those comments? What a bunch of shitheads."

He came here.

tankrunner1123|7.22.09 @ 10:04PM|#

I think the funniest part about that blog is how they are calling us borderline liberals/communists because we find racism disgusting. This clown sounds like Buchanan with an intellect.

|7.22.09 @ 10:23PM|#

About mid way through the article, the author begins his explanation of the negative correlation between cocaine and pot. I would be interested to see an article on what he thinks might happen if we made marijuana cheap and easily affordable (ie legal)?

Would this have the effect of driving down the usage of other, harder drugs? Would their use remain constant, with a spike in prices, a drop in prices? What does he think might happen to alcohol and cigarette sales if we legalized marijuana?

B|7.23.09 @ 3:47AM|#

Is this the same Ryan Grim douchebag who reports for the Huffington Post?

|7.23.09 @ 10:41AM|#

Please you're being just as bad as the people you're attacking.

Marajuana and Cocaine are inversely correlated? What evidence do you have for that? Correlation is not causation. Just because during a few decades the prices moved in opposite directions means nothing. It could be that MJ was easier for the government to stop, so it did. Cocaine is harder for the government to stop. There is no evidence that people "switched" their drug of choice.

"The war on drugs, hard, soft, or otherwise, helped persuade pot smokers to put down the bong and pick up the crack pipe, the mirror, or the needle."

puh-leeze. I have some friends that smoke MJ, NONE of them would dare touch amphetamines or opiates, those drugs are far too dangerous, plus they work differently.

You are actually arguing the same argument the anti-drug people use: that MJ is a "gateway" drug, that anyone who uses it will gravitate towards harder drugs, because after all all drugs are the same and they are "drug users"

If you are going to argue against bad use of statistics you should probably not do the same thing yourself.

|7.27.09 @ 4:42PM|#

The drug czar and the DEA are charged in removing and controlling drugs,and are mandated by congress to lie or do whatever is required to refute or cast doubts on any studies or data that validates any medical uses for drugs or supports legalization of any Schedule I drugs.
Title VII Office of National Drug Control Policy Reauthorization Act of 1998: H11225:

Responsibilities. --The Director-- [...]

(12) shall ensure that no Federal funds appropriated to the Office of National Drug Control Policy shall be expended for any study or contract relating to the legalization (for a medical use or any other use) of a substance listed in schedule I of section 202 of the Controlled Substances Act (21 U.S.C. 812) and take such actions as necessary to oppose any attempt to legalize the use of a substance (in any form) that--

1. is listed in schedule I of section 202 of the Controlled Substances Act (21 U.S.C. 812); and
2. has not been approved for use for medical purposes by the Food and Drug Administration;

|7.27.09 @ 4:49PM|#

This law also shows the "catch 22" built into it.
The FDA cannot approve marijuana as a medicine until scientific data and studies proving medical
applications have been done,but the DEA,the deciding agency,cannot allow the tests or studies to be done. And if they have studies that prove medical uses,they are charged with refuting those studies,with what ever means available,including false data and rigged studies if necessary.