The Social Costs of the Illicit Drug Markets

My friend has a son who is now a drug addict. He was considered gifted in 5 areas. He is a genius in one area, he is very conceptual and has excellent language skills. He is a person who makes his own clothes, he is a professional chef, cuts his own hair, an artist and all this at 22 years old. Like all young men they grow up in a culture of alcohol and drugs and it is easy to get involved in it. This young man joined in with the others and was seeking a high, he wanted to explore it, try everything. He has been on drugs for around 5 years. My friend said it is soul destroying for her as a mother to watch her son going down hill and the terror he may be found dead, she feels concern everytime the phone rings. He was found only a few weeks ago not breathing in an alley, he had an overdose. Then my friend found out he had stolen a purse from someone so he could get a fix, a random guy came after him, he gave the purse back and then he was beaten badly, it was assault. We discussed the guy will be thinking ‘I’ll teach him a lesson’, he is seeing him as a thief not an addict with a problem. The drug is what moves him to steal not a lack of respect of people. He was bashed in the head 10-12 times, he was pinned on the ground, the guy had his elbow on this boys neck and he couldn’t breath. He was terrified. He pleaded for the guy to stop. He said to his mother he watched the woman watching him being beaten (it was her purse), he called out to her ‘aren’t you a mother, can you really watch this’. She did nothing. Then when the police came they spoke to him as if he was scum of the earth and pinned him down with pressure on his neck, pressure points which were agonising. They leaned on his back, one policeman was standing on the back of his knees while repeatedly telling him that he was ‘filth’. Wow when I heard this I was stunned at the ignorance of the police. We talked about the need for society to understand the reality of drug addiction and the additional abuses taken out on him in the name of justice. An eye for an eye does not bring justice nor does it create behaviour change. His mother told me later she bathed his bruised and battered body and he was just sobbing, he had never been beaten before and what hurt him was being treated as ‘shit’. My friend had always raised him to feel self esteem and he was exposed to wise men. He has fallen between the tracks and the heroin has a hold on him. He was never a thief until he became a heroin addict. My friend said he wouldn’t harm anyone, he is very placid and generous to a fault, will give anything to anyone. However, the heroin has a hold on him and his cravings are a horror for him. He has to get a fix, that is all he can think of. His mum is trying to get him into detox but legally she can’t force him. So she is in a space of not knowing what to do, there is no support for her. So she is staying with me and trying not to enable him. She said her gut feeling is that he is not long for this world. I feel she is probably right. It is a daily fear she lives with. She just told me he had an overdose 4 times and he was released after resuscitation, no hospitalisation or help. How do we help him? As I said to my friend, no-one thinks about it unless it happens to their child. Her experience affected me, as I met her son, he is a handsome, intelligent boy who was planning to study Philosophy, yet he may not last another year or week. Someone has profited from his demise and the world loses with every child or adult taken from drugs. Sadly society does not see them as having a health problem, the victims are seen as criminal and are treated accordingly. My friend informed me that she read in a Melbourne newspaper recently that 9,000 people had overdosed in a year – extraordinary statistics. We require education in community, political and institutional forums to show us how to help young people and to create strong and safe societies that are drug free. Alcohol hasn’t been mentioned but it leads people to stronger drugs and we accept it, celebrate it and ignore the social costs of addiction. That is not in our best interests. This is a real social problem locally and globally.

That lead me to think more deeply about the drug trade and the social destruction that it creates in societies across the world. I remember the issues regarding illegal drugs in Central and South America. The criminal gangs in El Salvador were operating out of jails, bus drivers were being shot at the time. They wanted political power. As I travelled I read about the US interventions there during the 1980’s to prop up dictators and assert US interests. I thought about the poppy trade (opium) in Afghanistan to fund the warlords and violence there. When I was in Bangkok, my friends on the peace program decided to look at the Red light district. My friend was horrified when she came back. She told me women were walking around naked. She said the men were throwing 100 baht at them, their eyes were dead. The conversation we had just haunted me. Then as part of the Rotary Peace and Conflict Studies program we went to Rayong in Southern Thailand, we visited a HIV centre run by an Italian Catholic priest. This centre housed prostitutes and children with HIV Aids, we heard stories how innocent young girls were coopted into the prostitution rackets, they got on drugs and then they were trapped. Others were in poverty and needed to survive, others did it to be high class hookers. I remember imagining the horror of having man after man, no love just being used. They even explained the types of internal condoms they had to insert. No respect for the dignity of women, yet in truth it is really a reflection of the lack of respect these men feel for themselves, they know not love or healthy relationships. All lose.

The drug trade links to warfare, prostitution and crime which fuels an illegal drug industry profitability that is staggering ($20 billion). I’ve just had an insight and what I see is a dark energy created by corruption, negativity, self interest and hatred. Energetically when an area in saturated by negativity such as a war zone, criminal activities and corruption in a city, I feel it attacts more of it. You can feel the depressed energy of such places. I sense it with the energy generated by peep shows (lust) and casinos (greed). If police interventions are negative it adds to negativity and attracts more. My sense is if you want to disappear these activities you have to acknowledge the negativity that drives it and encourage the opposite. It comes back to strengthening social infrastructure, building strong and healthy societies with positive values, integrity, balanced home lives and positive communities.
If police are positive and look at problem solving such as community building approaches through public meetings, discussions, neighbourhood watch and community responsibility I feel they will facilitate positive outcomes. Other possibilities for Councils or local government is to bring in positive businesses, develop more open parks with recreation facilities, community places to gather. Proactive responses such as this will break up the negativity and empower communities. Moreover, implement UNESCO’s Culture of Peace Initiatives encourage the public to be proactive in helping people and upholding codes of social behaviour and norms, rather than walking past (tacit consent). This ensures hopelessness and anger is fostered or festers. I don’t feel dark industries can exist in places where people are positive, it feeds off negativity and vulnerability. When comunities are strong it will never get a foothold. When communities come together and reflect on the serious affects to young people and who they are as a society, concluding that they wish to build strong communities, then you won’t see drugs on he street. I feel this strongly.

For dark industries to flourish there is a need to keep communities disempowered, impoverished and in fear. Young people who are lost or aimless or feeling anger may come or be lured to these spaces. The young people take in this dark energy as it matches their own. Like attracts like is my sense. I am not surprised in the drug reports to see that Afghanistan and Myanmar are the places producing heroin, both are places where violence and corruption exist. Robert McNamara states, former US Defence Secretary from his own experience has made calls to stop wars. I recall former US President Dwight Eisenhower warning about the power of the Industrial Military complex which sells armaments. Why is it poppies always pop up when there are wars? It seems to be a quick cash crop that fuels finances to buy more arms, hence profitting others. In afghanistan there is a landmine for every man, woman and child. How can they grow food? So when societies are disempowered and they see the corruption all around them backed up by violence, they feel they cannot stop these negative factors that fuel their misery. I would say to them keep the candle of hope burning, engage in underground schools, hold onto the value of your culture and await the right time to reclaim your society. The international community should immediately intervene as a responsiblity to protect citizens and break up the cartels that feed of the drug trade and war. Positive values must exist in the international arena otherwise it is negative lip service parading as policy. So it is easy to see how power corrupts and absolute power corrupts absolutely when good people do nothing.

This information below was sent to me from a colleague who studies the illegal drug trade and money laundering. This information is from the World Drug Report, 2005. It is a massive industry and in respect of my work in peace, when we move away from universal values of love, compassion, truth we see the opposite emerge, greed, insecurity and exploitation.

This is what he said about information available and his own comments below:

“The “Bible” of drug stats is the World Drug Report. I wrote the chapter in 2005 on the economics of the global drugs trades – http://www.unodc.org/pdf/WDR_2005/volume_1_chap2.pdf, but the more recent reports have updated data on trafficking quantities and prices around the world, and analyses of trends – http://www.unodc.org/unodc/en/drug-trafficking/index.html. The downside is that, in spite of their own data showing that it is counter-productive, these reports only present the “war on drugs” perspective. For the other side you could start with the Families and Friends for Drug Law Reform – http://www.ffdlr.org.au/, and particularly http://www.ffdlr.org.au/resources/docs/Crime%20and%20Illicit%20drugs.htm.

Estimating the value of illicit drug markets

The illicit drug industry operates outside the law. Its ‘companies’ are not listed on any stock exchange, they are not valued by any private accounting firm, and the dynamics of the drug industry are not regularly pored over by analysts, economists and forecasters. Yet the
overall size of the illicit drug industry is known to be large and, therefore, a potential threat to a number of economies in terms of the financial power generated.

The funds generated can be used to intimidate (including by means of violence) or corrupt government officials or, in some cases, political systems as a whole, as well as to crowd out licit economic activities, thus jeopardizing a country’s future. If the illicit drug industry is to be successfully controlled, there is a need to come to an understanding of the likely amount of money involved and where these funds are being generated.

The utility of undertaking such an exercise is clear from both a policy and a trend analysis perspective. Knowledge of the market’s value is indisputably useful for policy formulation. An informed estimate of the size of the drug markets also will enable analysts to look at the relative importance of the size of the markets vis a vis local economies and it will facilitate the comparison of the importance of different drugs in economic terms. In addition, knowledge of the size of these markets will give us an element for comparison with other illicit markets – an important issue when it comes to allocating scarce economic resources to fight various illegal activities.

The obscurity of the global illicit drug market makes the exercise of estimating its size difficult. This is not because the drug market does not behave like most others in terms of supply and demand – there is a growing acceptance that it does. It is rather because the most basic inputs that are needed for such an estimation – data on production, prices, quantities exported, imported and consumed – are themselves often estimates and are frequently based on deficient data. A number of attempts to measure the size of the illicit drug industry have been made in the past, including by the Financial Action Task Force and the United Nations. The Financial Action Task Force (FATF) estimated that in the late 1980s, sales of cocaine, heroin and cannabis amounted to approximately US$124 billion per year in the United States and Europe1, of this total some US$85 billion or 70% was considered to have been available for money laundering and investment.2 Taking inflation into account, the FATF estimate of the size of the illicit drug industry for the late 1980s would be equivalent today to some US$200 billion (expressed in 2005 US dollars).3

Other United Nations estimates, based on cash flows from international banking and capital account statistics, suggested that up to US$300 billion per year could have been available for money laundering in the late 1980s.4 Based on 1995 drug production estimates, UNDCP arrived at a global estimate of $360 billion, with a range from $85 billion to $1,000 billion.5 Given this broad range and the high degree of uncertainty about the validity of some of the assumptions made, UNDCP’s 1997 World Drug Report estimated a likely turnover of the illicit drug industry at around $400 billion.6 This figure was questioned by some experts in the field as possibly too high. However, no alternative calculations on the likely size of the global drug industry were provided.

Another attempt as part of a broader exercise to estimate the total value of money laundered annually (from criminal activities) was started by the Financial Action Task Force in the late 1990s. It was decided to begin this exercise by looking into the illicit drug market, given the fact that it was better studied than most other illegal markets. A number of expert meetings were convened, bringing together expertise from various international, regional and national organisations. Given the extreme data limitations, existing weaknesses and contradictions of some of the data, the experts could not agree on the most appropriate methodological approach. The basic question was whether a topdown approach (starting from global production estimates) or a bottom-up approach (starting from country estimates based on prevalence rate and estimates of expenditure per drug user which would then have to be aggregated) offered a better chance to arrive at a realistic estimate of the total value of the drug market. Recommendations were made to encourage countries to improve their drug data collection systems and to encourage them to undertake drug market estimates at the national level.7 Thus far only a limited number of country estimates on the value of the illicit drug market are currently available. These alone would be insufficient for generating global estimates.

Using the valuable lessons learned from these past exercises UNODC has continued work in this area. The organisation’s objective is to have a reliable idea of the size of the value of the market, and to stimulate further research. Three principles guided the production of these estimates: first only readily available data were used; second, the methodology and the model were kept straightforward and the assumptions transparent; and third, it was ensured that by distilling the market down to its most basic economic rules, the model would be easily updateable. In addition, the methodology chosen tries to combine, as far as possible, the top-down with the bottom-up approach. While UNODC is fully aware that the results will never have the same level of accuracy as could be expected from a comparable analysis of a licit market, and must be thus treated with caution, the new valuation methodology provides the best possible results, based on existing knowledge and data provided by Member States to UNODC. The methodology used and the results will be discussed in this Chapter.