Former Drug Dealer Explains Black Market Pricing to NPR

Drug prohibition boosts prices and the bottom lines of drug dealers. NPR's Planet Money reporter Alex Blumberg sought confirmation of this economic fact in an interview with former L.A. crack kingpin "Freeway" Rick Ross:

The academic argument against drug criminalization goes like this.

When you make a drug illegal, you make it harder and riskier to produce. That makes it more expensive.

But demand for many drugs is what economists call inelastic: No matter what drugs cost, people will still pay. So making drugs more expensive through criminalization just sends more money to drug dealers.

That's the theory, anyway.

To test the claims of the academic theory, I spoke with "Freeway" Rick Ross, one of L.A.'s biggest crack dealers in the '80s and '90s. Ross was arrested in 1996, and paroled in 2009. So he's a perfect real-world test for the academic theories.

First, I asked him about claim number one: Making drugs illegal drives up the price.

Ross told me that he once grossed $3 million in a single day.

"When I sold drugs, if they'd told me they were going to legalize it, I'd have been mad, because I knew that was going to drive the price down," he said.

Claim number one: Confirmed.

The end of the segment suggests that its hard to evaluate the tradeoff between the costs of higher drug consumption under legalization and the costs of crime and the Drug War under prohibition. No mention of the damage to civil liberties that prohibition causes. 

In any case, I highly recommend viewing Reason.tv's superb American Marijuana Growers Association public service spot thanking the government for keeping pot illegal. (Must be 18 years or older to view it according to YouTube.)