Overseas/Interdiction

They're So Scared They Put 20 Tons on One Ship!

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If you thrill to the sight of boats chasing boats, this video of the Coast Guard's "Top 10 Drug Busts" is for you. In a recent press release, the Coast Guard brags that it's been "a record year for cocaine seizures with 355,755 pounds seized, worth more than $4.7 billion." It claims smugglers are "desperate" and cites unusually large seizures as evidence.

Is a rising seizure total a sign of success or a sign that the volume crossing the border has increased? Is an increase in large-volume seizures a sign of smugglers' desperation or a sign that smugglers are not terribly worried about interdiction, treating the risk as a cost of doing business? The press release acknowledges that "smugglers adapt their tactics in response to effective counternarcotic measures." So even "effective" interdiction efforts cannot have a substantial, lasting impact on drug consumption, as Antonio Maria Costa, director of the U.N. Office on Drugs and Crime, conceded in a speech at the International Conference on Drug Policy Reform earlier this month.

However much the Coast Guard seizes, enough drugs always get through to meet the demand. The most drug warriors can expect is to temporarily increase prices by raising traffickers' cost of doing business. Since the cost of replacing seized drugs is very small compared to their retail value, with most of the markup occurring after they arrive in the U.S., interdiction is a highly inefficient way of discouraging drug use. But don't tell John Walters. The drug czar thinks "every load of drugs seized represents that much less that can be used to poison our young people and harm our nation."

[Thanks to Veronique de Rugy for the tip.]

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  1. The United States Coast Guard. Knee deep sailors. 😉

  2. I guess the acid test of whether interdiction works is whether the street price of drugs has changed. My understanding is that it has remained fairly constant. Is this accurate?

  3. “every load of drugs seized represents that much less that can be used to poison our young people and harm our nation.”

    I think maybe now I really am immune to the stupidity of drug war rhetoric. There is no claim so outrageous drug warriors won’t make it. And with a straight face.

    It’s harder for me to accept how unchallenged they are.

  4. Living in South Florida, I can tell you that the net effect on the flow of drugs, cocaine specifically, is trivial at best.

  5. But the authorities have to keep seizing cocaine, to make up for the fact that they keep losing it:

    http://www.thesun.co.uk/sol/homepage/news/article590416.ece

    Fake passports and ammo are also missing.

    Somebody’s going to have a damn fine vacation!

  6. To be fair, blaming the Coast Guard doing their jobs is like blaming the Army for being in Iraq. Instruments of policy, not makers of policy.

    I still reserve the right, however, along with my fellow navy people here, to make fun of both of them.

    (the oath of enlistements hier are good equal opportunity fun.)

  7. OT — my favorite drug bust:

    I knew a guy in high school who had a T-shirt that read “IT’S A BUST!” and had a cartoon of two pot-heads in their living room, jumping out of their chairs in alarm as a huge pair of naked breasts came bursting through the door.

    Juvenile. But still kind of funny. Not unlike this guy.

  8. The Marine “oath” on that site is hilarious.

  9. But the authorities have to keep seizing cocaine, to make up for the fact that they keep losing it:

    Or using it.
    http://www.ny1.com/ny1/content/index.jsp?stid=6&aid=76736

  10. Just once I would like to hear a government official say, “I don’t really give a shit if poison gets to our children. If little bastards are dumb enough to use the stuff, it will just thin the gene pool out a little bit. As for adults, any one who is degnerate enough to get hooked is an animal anyway.”

  11. Drug interdiction is like a flu booster. They come out with a new one every year, but everyone still gets the flu.

  12. The most drug warriors can expect is to temporarily increase prices by raising traffickers’ cost of doing business.

    Even if interdiction didn’t raise the cost of business, it would restrict supply, which raises prices.

  13. Fake passports and ammo are also missing.

    But handguns are banned, so there’s nothing to use the ammo in. All is well.

  14. I guess the acid test of whether interdiction works is whether the street price of drugs has changed. My understanding is that it has remained fairly constant. Is this accurate?

    Actually the price of Cocaine has sharply decreased. Indicating a dramatic increase in supply.

    http://www.briancbennett.com/charts/fed-data/cocaine-prices.htm

    A kilogram of cocaine costs about 15,000-20,000 today, it went for about $10,000 in 1980. Adjusting for inflation a key of coke from 1980 would cost $25,506.92 in 2007.

    That’s using the government CPI figures which are extremely conservative. The actual price may be much lower in comparison. Kids in High School are using coke these days. Kids couldn’t afford it in the early 80’s.

  15. Ty: It could also indicate a dramatic drop in demand, or a combination of supply increasing while demand dropping.

    Nephilium

  16. You know what the hardest drug to obtain in high school was? Alcohol.

  17. Think of the brokers!

    Imagine If the US were to succeed in shutting down all cocaine imports for a period of time.
    Collectively, Wall St would go batshit crazy pessimistic and set off the market’s curcuit breakers 3 times a week for a month.

  18. Just curious here. How would a rational smuggle respond to an increased risk of interception (assuming the gov’t is right and they are getting better at this)?

    Would he (a) split his shipments, so the inevitable interception wouldn’t hurt so much, or (b) put all his eggs in one basket.

    I tend to think the former. Aren’t big single shipments a sign that the smugglers aren’t as worried?

  19. “…the Coast Guard brags that it’s been “a record year for cocaine seizures with 355,755 pounds seized, worth more than $4.7 billion.” It claims smugglers are “desperate” and cites unusually large seizures as evidence.”

    What other industry could stay in business after losing $4.7 billion in product? I didn’t understand the amount of money a good drug dealer could make until I saw “Blow”, with Johnny Depp. They had so much money that they rented a house to store it in and measured the boxed currency by the pound. That is more money than most people could make in their whole entire lives. Mind bogglingly staggering amounts of cash and they couldn’t spend, store it or launder it fast enough.

    I think it is the prohibitionistas who are “desperate” to show they are doing something about the flow of illegal drugs. I still think about how illegal drugs and even cigarettes are smuggled into prison.

    How do the prohibitionistas think they stand a chance against organizations, which use military hardware, high technology, better human intelligence, better information networks, graft, corruption, corrupt state and local officials and an insatiable appetite for illegal substances?

    The war on some drugs is over folks, the drugs won, people are still being locked up and we are all on the hook for the bill. Party on!

  20. I think it is the prohibitionistas who are “desperate” to show they are doing something about the flow of illegal drugs. I still think about how illegal drugs and even cigarettes are smuggled into prison.

    This is telling. How do they expect to stop drugs from getting through our enormous border when they can’t even stop drugs from getting in the most secure (non-military) places in the country?

  21. “Just curious here. How would a rational smuggle respond to an increased risk of interception (assuming the gov’t is right and they are getting better at this)?

    Would he (a) split his shipments, so the inevitable interception wouldn’t hurt so much, or (b) put all his eggs in one basket.

    I tend to think the former. Aren’t big single shipments a sign that the smugglers aren’t as worried?”

    I am not so sure about that. If the liklyhood of getting caught rises significantly, perhaps it is harder to get people to agree to smuggle the stuff. If you have fewer mules, you have to put more into each run. Further, the US has effectively shut off a lot of avenues for getting drugs into the country. For example, only a lunatic would smuggle drugs straight through the Carribean and into Florida like they used to back in the day. The Coast Guard guys I know, tell me that most of the smuggling done by boat these days come up through the Pacific going hundreds of miles off shore and looping into California. If you have fewer avenues and opportunities to get the stuff in, you are more likly to put more in one shipment.

  22. Also, how are we going to stop these guys once they have their own home nuclear reactors?

    http://www.nextenergynews.com/news1/next-energy-news-toshiba-micro-nuclear-12.17b.html

    I have no idea how that relates but that is the coolest thing I have ever seen.

  23. Worth noting also, the “4.7 billion” is presumably the end retail value–it’s not like the drug producers lost billions–more like a couple thousand $$ in lost goods, a crappy boat and some easily replaceable mules.

    It’s a pretty compelling business model–if I made cupcakes for $0.25/per and sold them for $25.00/per, I wouldn’t care too much if I lost a few.

    If only there were a way to make the cost of drugs more closely the match their production costs. . . .

  24. Easy plan to win the War on Some Drugs;

    Incarcerate the bankers that launder the money, the lawyers who protect the kingpins and the corrupt government officials who play along with the game.

  25. You know what the hardest drug to obtain in high school was? Alcohol.

    Not for me. Michigan had an 18 year old drinking age back then. Some HS seniors were 18. Not that weed was hard to get. I wouldn’t have known how to get coke, acid or horse. Times have changed.

  26. “If only there were a way to make the cost of drugs more closely the match their production costs.”

    There is, legalization. Legalize cocaine and the price would fall to like a rock. Give it a couple of years and the coco farmers in South America would be demanding price supports and subsidies to stay in business.

  27. Then they’d want more subsidies so they could figure out how to make their cars run on it.

  28. John,

    . . . would be demanding price supports and subsidies to stay in business.

    Heh. Just like everyone else. There is so much irony in that situation I don’t where to start.

  29. Just curious here. How would a rational smuggle respond to an increased risk of interception (assuming the gov’t is right and they are getting better at this)?

    Would he (a) split his shipments, so the inevitable interception wouldn’t hurt so much, or (b) put all his eggs in one basket.

    An engineering question!!!

    Spliting the shipments in half and sending twice as many shipments doubles the probability that any given shipment will be seized, but cuts in half the probablity that no shipment will get through.

    If the problem you are trying to solve is detection, the fewer shipments would be better.

    If you are trying to ensure some availability of product on the other side, then more shipments would be better.

  30. Just curious here. How would a rational smuggle respond to an increased risk of interception (assuming the gov’t is right and they are getting better at this)?

    Would he (a) split his shipments, so the inevitable interception wouldn’t hurt so much, or (b) put all his eggs in one basket.

    I tend to think the former. Aren’t big single shipments a sign that the smugglers aren’t as worried?

    I tend to agree with John. If the probability of getting caught per shipment is p then dividing it in two shipments would beget a probability of getting caught of 2p, and so forth.

    Is there jail time involved when smugglers are caught? That would be a very high cost of doing business.

  31. Is there jail time involved when smugglers are caught? That would be a very high cost of doing business.

    It would be a very high cost if it was the drug producers that got caught, but as long as it’s the mules (and as long as there continues to be a plentiful and inexpensive supply of them) getting caught, I would say it’s a comparatively negligeable cost.

  32. negligeable – I mean negligible.

  33. Supplies may be up right now, but Tom Sizemore just got out of the joint! Econ 101 teaches us that meth prices will soar dramatically in the upcoming weeks.

  34. “Supplies may be up right now, but Tom Sizemore just got out of the joint! Econ 101 teaches us that meth prices will soar dramatically in the upcoming weeks.”

    Just like booze prices when Hitchens moved to DC.

  35. Based on John idea that splitting the shipments makes good sense, does that mean that for every 355,755# that the feds capture, at least that much gets through?

    And these guys are bragging because they got half the job done?

  36. I tend to agree with John. If the probability of getting caught per shipment is p then dividing it in two shipments would beget a probability of getting caught of 2p, and so forth.

    Fairly unimportant math point, but if you assume that the two shipments getting caught are independent of eachother, then the probability of getting caught with 2 shipments is 2p-p^2.

  37. Hey, hey;

    To heck with the blow, I need to be selling those backyard nuclear power plants…er…surely Chertoff, CPSC, EPA, DHS and the rest will be moving to bar such in CONUS.

  38. I doubt the Columbian drug cartel is overly worried about running out of people willing to take stupid risks for money. That will be thing that will never be in short supply.

  39. Actually the price of Cocaine has sharply decreased. Indicating a dramatic increase in supply.

    Or a sharp decrease in demand, probably attributable to the ONDCP’s new alien abduction and talking dog ads.

  40. Just curious here. How would a rational smuggler respond to an increased risk of interception (assuming the gov’t is right and they are getting better at this)?

    Would he (a) split his shipments, so the inevitable interception wouldn’t hurt so much, or (b) put all his eggs in one basket.

    More big baskets.

    Even if interdiction didn’t raise the cost of business, it would restrict supply, which raises prices.

    Any businessperson who deals in a perishable product knows the answer to this one. If the government is seizing 1/3rd of the drugs coming in, you simply import 150% of what you need. The government confiscates the extra 50%, leaving you 100% of what you need to meet demand.

    They had so much money that they rented a house to store it in and measured the boxed currency by the pound. That is more money than most people could make in their whole entire lives. Mind bogglingly staggering amounts of cash and they couldn’t spend, store it or launder it fast enough.

    Remember the story a couple years back about the drug smugglers who were building a submarine? They didn’t get caught, and I bet they didn’t give up.

    Most countries can’t afford to build a submarine.

  41. To be fair, blaming the Coast Guard doing their jobs is like blaming the Army for being in Iraq. Instruments of policy, not makers of policy.

    Kolohe, if you voluntarily join the instrument of policy, knowing what that policy is when you join, or you fail to leave that instrument when you realize what the policy is, I see no reason to make any moral distinction between the makers and the instruments. You don’t get a pass because you’re “just following orders”.

  42. Gov’t interdicts, at best, 20% of production (by their own estimates). The amount of cocaine out of Colombia seized today is more than was produced there in 20+ years ago.

    With the falling dollar more cocaine is heading to Europe where the currency is stronger. Interruption of supply causes prices to rise, prices rise and profit margin goes up… its win-win for the cartels…

    As for as arresting the bankers… hah! When Al Giordano was sued by the the Bank of Mexico for reporting on their money laundering, Al won in Mexico’s courts. When they sued AL in the US, Al won in the US courts. The annual global trafficking in drugs is worth an estimated $500 billion (UN’s #). Prohibition engenders corruption, and $500 billion buys a lot of holes in any border security.

    Drugs win again!

  43. Don’t be baggin’ on the Coast Guard now, my buddy Keith wouldn’t like that. Imagine. A career Coast Guard dude who is also……a libertarian.

    Also the only guy I know who was eaten by a bear and lived to tell about it. You think I’m BS’ing? Not even, Man.

    My My.

  44. Notice something, lately? How the seizures are described: in pounds. Why the lesser measure? Why not announce their ‘success’ in tonnage, as Mr. Sullum has?

    Perhaps because the mental and emotional impact of the word ‘tons’ (think of something enormously heavy, ponderous, and can cause a lot of damage if it is in motion and hits you or falls on you) implies might cause the readers to make the same questioning of policy ‘successes’ as have been trumpeted especially these past 7 years. ‘Thousands of pounds’ sounds like a more effective way of presenting what amounts to an illustration of abject failure.

    It used to be the DrugWarriors clapped their hands in glee and beamed proudly when they confiscated a few score pounds. We’re winning, they’d intone, without a single glimmer of the irony of it. Then the amounts began to increase, from pounds to hundreds of pounds. Still, they claimed they were winning. And now, it’s tons. And tons. And tons. And yet more tons. Since the percentage they capture is a trickle compared to the rushing river of white powder they can’t stop, to keep making the same statement month after month, year after year, when the evidence doesn’t support it, is kinda embarrassing isn’t it? Maybe that’s why they try to deflect people (in a sophomoric attempt, I might add) by dropping back and punting by using the lesser means of measurement. How typical.

  45. same reason they measure oil spills in gallons instead of barrels.

  46. Also, how are we going to stop these guys once they have their own home nuclear reactors?

    http://www.nextenergynews.com/news1/next-energy-news-toshiba-micro-nuclear-12.17b.html

    It’ll never get off the ground. It uses lithium as a moderator. Lithium can also be used in the manufacture of meth, so we can’t be leaving piles of it around, can we?

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