Skip to content. | Skip to navigation

Personal tools
Sections
You are here: Home Focus The Economics Behind the War on Drugs

The Economics Behind the War on Drugs

For some, the conviction of famous Mexican drug lord Joaquin "El Chapo" Guzman represents a major victory in the so-called "war on drugs".

This may be something of a misconception, however, even if El Chapo's lawyers do not succeed in securing a new trial after it was revealed that one of the jurors failed to follow the judge's instructions.

After all, the economics behind the war on drugs make for stark reading, while they also highlight precisely how much the U.S. government spends in pursuit of relatively meagre returns. With the combined federal drug control budget request having also risen from $23.8 billion in 2013 to $27.57 billion last year (it's likely to increase further under Donald Trump's administration too), the government's approach to tackling this social issue remains under considerable scrutiny.

We'll explore this further in the post below, while asking whether or not it's time to call an end to the war on drugs and adopt a different approach to this most troublesome of social issues.

Exploring the War on Drugs and its Fundamental Economics

By most estimates, this conflict has raged for more than 40 years now, ever since President Richard Nixon first declared war on drugs back in 1971.

From this date until 2012, federal spending on drug law enforcement and preventing the supply of contraband into North America has totalled a staggering $545 billion, with this number continuing to rise incrementally with every passing year.

This cost is inflated by the way in which the American government stages its war on drugs, through its enforcement centric approach and focus on cutting off the supply lines to the States.

In many ways, this embodies the utopian approach of successive U.S. governments, which demands large fiscal budgets and fails to recognise the social and economic realities of drug use in society.

When addressing such a large spend, it's is also important to analyse the impact of the war on drugs and its various measures. This is where the war on drugs really falls down, as America's $545 billion investment has yet to reveal any tangible rewards.

More specifically, various Census data has revealed that the amount spent per 100 citizens on preventing drug abuse actually increased to a staggering $9,000 at the turn of the century, with this number having risen further in the 18 years since.

Despite increased spending, the last decade has also seen a gradual rise in the proportion of drug users to an estimated 10 out of every 100 citizens. This number peaked at 20 when the war on drugs first commenced, but it had declined to just five for much of the 1990s.

These statistics highlight the ineffectiveness of the war on drugs, which is clearly based on a utopian objective rather than a clear understanding of core social and economic issues. This is embodied further by Donald Trump's proposed border wall, which is being sold as a way of cutting the supply of drugs into the States despite the fact that the majority of substances like heroin are now smuggled through legal points of entry.

The Cost of Healthcare and an Alternative Approach to Drugs

The increasingly forlorn war on the drugs in the States has also incurred additional costs, including the treatment of addiction, healthcare and the loss of productivity in the economy.

Along with law enforcement, these costs contribute to a total economic burden of $78.5 billion every year in the U.S., at least according to the National Institute on Drug Abuse which accounts for a huge amount of institutional investment strategy and asset management.

The key takeaway here is obvious; as despite spending large amounts annually on enforcement and prohibition, the U.S government is still facing significant costs in terms of treating addiction. As a result, it's clear that the approach is as ineffective as it is outdated, while it continues to impact negatively on the national economy.

Ultimately, the time may have come for the U.S. government to revolutionise its approach to combatting drug abuse, perhaps by following Switzerland's people-centric policies that focus on treating addicts in a safe and protected environment.

This innovative approach not only recognises the availability of drugs and their vast societal impact, but it has also drastically reduced debts while cutting crime rates and the overall cost to the Swiss economy.

Document Actions
EU Alerts

EUbusiness Week no. 848
Protecting our 5G future
→ EUbusiness Week archive

The Week Ahead no. 440
The future of energy systems - water reuse - marine litter- G20 summit

Subscription options