Former Drug Dealer Explains Black Market Pricing to NPR

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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.)

NEXT: Reason.tv: Keynes vs. Hayek Rap Video, Round 2

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  1. Causing scarcity in the face of high demand raises prices. Who the fuck doean’t realize this by now? In other news, water is wet.

    1. This just in, grass is green and the sky is blue. In the next segment we will talk to an expert to confirm what is already known to be fact, then feign surprise at the results. Your welcome America.

    2. The problem with the Drug War isn’t that it makes Drugs really expensive or cheap.

      Look, California’s MMJ dispensaries still sell weed for $15 a gram.

      The problem is that dispute resolution can’t be done in court (or private arbitration); it must be handled with guns and preferably in the street (so that the next motherfucker won’t think it’s a good idea to challenge you).

      1. You make Bailey’s point. The only reason MMJ is cheaper than black market pot is because MMJ is legal in California.

  2. “No mention of the damage to civil liberties that prohibition causes.”

    That is because to the people at NPR that is a feature of prohibition not a bug.

    1. Plus, you’re assuming NPR even recognizes the concept of civil liberties in the first place. They’re more focused on identity politics.

    2. “No mention of the damage to civil liberties the federal, state, and local police payrolls and civil forfeitures that ending prohibition would cause.”

      There fixed.

  3. “higher drug consumption under legalization”

    I’m doubtful there would be more than a marginal increase in drug consumption under legalization.

    1. That is absurd. Easier access, cheaper cost, safer product, more variety…

      1. I really doubt there are a significant number of people who don’t do drugs now but would start doing them if they were legal. (Which shows how ineffective the drug laws are at their ostensible purpose)

        Existing users might use more, but that’s a maybe.

        1. Really? You don’t know hordes of people whose morality is so conventional that they simply could never imagine consciously violating something that is both (a) a legal prohibition and (b) a social taboo?

          We are so different.

          I’d expect more people using drugs under legalization. After some rocky years of social experimentation, people would (probably) stick to cannabis and opium. But I have near perfect confidence that demand would (initially) rise significantly. But so what?

          1. I’d expect more people using drugs under legalization.

            And you’d be wrong. I know many people who, after obtaining their medical MJ cards, have either radically reduced the amount of intake, or quit altogether.

            Under your theory, people will drink as much booze as humanly possible, because, after all, it’s legal.

            Right?

    2. Well, we can compare drugs ‘n’ alcohol. Did alcohol use skyrocket after re-legalization? And let’s face it, drugs are pretty easy to acquire now – I think the vast majority who are likely to consume illegal drugs are already doing so.

      1. Did alcohol use skyrocket after re-legalization?

        Consumption increased substantially.

        1. They had accurate surveys to support this?

          1. I’ve read in Samuel eliot Morrison’s History of the American People that history confirmed alcohol prohibition had all the effects it’s supporters claimed that it would: increased productivity; lower domestic violence and petty crime; etc.

            The people who repealed Prohibition knew all of that, they just found that the benefits didn’t justify the costs.

            1. lower domestic violence and petty crime

              At the expense of wildly increasing government corruption and organized crime.

        2. Consumption increased substantially.

          Citation?

        3. Consumption increased substantially.

          Citation?

        4. Alcohol is different. It was a nearly universally consumed drug in our society before Prohibition. Far fewer people had moral issues with using it than currently have issues with, say, cocaine.

      2. I think it’s almost a certainty that use will go up. The pertinent question is less that than ‘how many new users become problem users’? I would think that a *much* smaller percentage of the new users who try legal drugs would become unfunctioning addicts than of the current population of drug users. In addition, many of the people who are problem users now would be able to seek treatment without the legal hassles of being an illegal drug user.

      3. Did alcohol use skyrocket after re-legalization?

        Hard to answer this one, but I can guarantee that methanol consumption fell to nearly zero after legalization.

    3. Legalized consumption will probably be easier to measure, which may or may not give it the appearance of being greater.

      1. Yes
        If -starting right now- Walgreens didn’t ask for a prescription, how soon would they run out of narcotics?

        1. Would narcotics still be illegal in your scenario?

          1. In my hypothetical Walgreens changed their policy immediately in response to drug legalization. I expect their business to skyrocket while heroin dealer sales remain flat.

            1. Why would you assume that heroin dealer sales would stay flat and not plummet to near zero?

              1. In the short term.

                Once Walgreens starts carrying smack it’s all over for the dealers

        2. Can we stop threatening to prosecute doctors for writing prescriptions under the current system for a while before we take the measurements?

    1. “I did twenty years in prison and beau coups of money went into making this name and what it is today. I feel it was mine, I own it and I want it back. “It’s mine”

      Isn’t California one of the states were you can’t profit from your crime?

      1. Doesn’t sound like he’s trying to profit from the crime. Simple UCC trademark and image dispute….careers should be made off this one.

  4. Unrelated:

    http://thehill.com/blogs/floor…..y-the-mile

    And a bonus is that the GPS device necessary to do this can track wherever you go.

    1. I am positive that any device in my car planted by the federales would quickly suffer a catastrophic malfunction.

  5. The academic argument for addition goes like this.

    When you add the number 1 to another number 1, you get the number 2. Because when you combine a certain quantity with another quantity of equal amount, you get twice the original quantity.

    That’s the theory, anyway.

    To test the claims of the academic theory, I spoke with “Kindergartner” Ricky Woss, one of L.A.’s biggest children. Ross got a B+ on his math quiz. So he’s a perfect real-world test for the academic theories.

    1. LOL… I was going to comment on how asking a drug dealer for his interpretation of economic theory isn’t exactly “confirmation” of an academic claim, but you have done so in a far more entertaining fashion.

      Huzzah to you, good sir.

      But Chicago doesn’t suck.

  6. Meanwhile, the same menagerie of imbeciles in the Montana Legislature who run around tearing their hair out and shrieking about evul furrin dope cartels have decided the way to “fix” the medical marijuana “problem” is to make it illegal for anyone to receive payment for providing marijuana to another person.

    This guy should come explain this stuff to them.

    1. We should try that with gasoline and food. That should take care of those high prices on those, too.

  7. Can’t even proofread my dadgum name.

    derp

    1. I thought your Greek cousin was commenting.

  8. 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.

    Only if you’re feeble-minded. Anybody with three brain cells to rub together should be able to comprehend that the costs (whatever that means) of higher drug consumption (which won’t be much higher, based on, you know, experience and facts) would be much lower than the costs of prohibition.

    1. We can’t legalize drugs, there is too much money in it.

      http://www.rawstory.com/rs/201…..uch-money/

      http://www.liveleak.com/view?i=634_1297349780

  9. the costs (whatever that means) of higher drug consumption (which won’t be much higher, based on, you know, experience and facts) would be much lower than the costs of prohibition.

    Plus, those costs are borne by the actual drug users, for the most part, rather than shifted onto the rest of us.

    1. Not if your worldview contends that every human has a “right” to health care.

    2. 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.

      Not so, drug use has negative downstream effects on society, i.e. health care costs, lost productivity at work, increased crime. We all pay for that. We all pay for each other health care thru insurance so we all have an interest in keeping everyone off drugs. That is why it is illegal to use drugs because they harm society, so thy have to be illegal. The laws are tho only way to stop all drug use.

      No mention of the damage to civil liberties that prohibition causes.

      If you are not doing anything wrong it is no problem.

      1. You want a ‘right’ to drugs, how about my RIGHT to live in a drug free society?

        Medical marijuana is a scam, I can see it could be medicine, but there are many safer, federally approved drugs available by prescription. In this country, drugs must be FDA approved, states cannot circumvent that. It is just a way for those to fake ‘symptoms’ so they can get high. Only someone with brain and chromosome damage from pot doesn’t know this.

        1. What about my RIGHT to live in authoritarian dipshit free society?

          1. This^ , as well.

          2. “You’re feeding it”

        2. In the entirety of human civilization there have been perhaps one or two “drug free societies”. Off of the top of my head I can only think of one; the inuit that live around the arctic circle. So good luck with your RIGHT.

          Not to mention that incarcerating others for behavior that doesn’t directly harm you isn’t really a “right”. It’s more an uninformed tendency towards fascism.

        3. You want a ‘right’ to impose laws, how about my RIGHT to live in a FREE society?

        4. Looks like post-op Juanita is back.

        5. Medical Marijuana is far from a scam,just watch this video and tell me they weren’t obviously helped by smoking marijuana:

          http://www.youtube.com/watch?v=B8_5Ebsjk8I

          As far as “many safer, federally approved drugs available by prescription”, what planet do you live on that these drugs are far safer? Have you taken a look at the side effect portion of any prescription pills? They are almost always longer than the symptoms they are designed to cure in the first place. It’s like a vicious cycle, take this pill, get this side effect, then take this pill to fix that. It’s a money scheme like the rest of America’s politics and corporations. Don’t believe me? Then why are they developing yet another synthetic marijuana replacement, and attempting to put a choke hold on the federal level to stop anyone else from legal producing anything THC related?

          http://www.alternet.org/drugs/…..na_market/

        6. You are wrong. I have MS with severe muscle cramps/spastic muscles. Nothing “federally approved” helps me in any way. They do not relax the muscles or mask the pain. They do make me so groggy I am unable to function. Marijuana does relax the muscles and relieves the pain. Try again asshole when you actually know what you are talking about.

        7. What’s stopping you from freely associating with other non-drug users like yourself, leaving those who wish to consume whatever drugs they wish to do as they wish? If their behavior doesn’t directly harm you, you have no right to use force in return.

          1. Their behavior creates demand for drugs, which creates supply, which may entice other users, who may have problems. It is user accountability. Drugs fund terrorism. We live in civilized society and there are laws which are democratically created and must be followed.

            1. Question: Why don’t alcohol or tobacco fund terrorism?

              Think long and hard about your answer so as not to look stupid.

            2. Hiding Jews from the democratically elected Nazis in Germany was against the law too but would you have agreed with this? What bothers me is I suspect you would say yes…

        8. juanita is more concise

          1. If you are not doing anything wrong it is no problem.

            You want a ‘right’ to drugs, how about my RIGHT to live in a drug free society?

            chromosome damage from pot

            Obvious troll is obvious.

        9. Your “right” to live in a drug free society means forcing other individuals to live by your rules against their will.You have no right to dictate to others what they will do with their bodies…North Korea called…they have a vacancy for an authoritarian like you.

      2. drug use has negative downstream effects on society, i.e. health care costs

        So don’t socialize health care.

        lost productivity at work

        This cost is directly allocated to the individual via reduced wages/job prospects.

        increased crime

        This is far from a foregone conclusion. If the price of meth were not dramatically artificially inflated perhaps junkies would work low end jobs instead of stealing copper plumbing out of houses to pay for their addiction.

        We all pay for each other health care thru insurance

        Insurers are able to address this through increasing prices on riskier customers. Smokers pay more for insurance, why would it be otherwise for drug users?

        1. The logic, it’s hurting my brain!!!

      3. The laws are tho only way to stop all drug use.

        Guffaw!

        how about my RIGHT to live in a drug free society?

        I’m guessing you have a progressive definition of “rights”.

      4. Society’s are non existent abstractions and those don’t possess rights….only real existing human beings do…and that includes their rights to life, liberty and property…which means ingesting drugs into their bodies if they choose to.

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