Debeers, Artificial Scarcity, and the Drug War

“If you look at the effect that the law has on the price of narcotics, it is clear that the function of the law is to protect the Cartels.” – Milton Freidman, Nobel Prize winning economist

In order to understand the Drug War, a good place to start would be the diamond industry.

Did you know that diamonds are actually worthless?  Their value is created by manufacturing an artificial scarcity.  A company called Debeers has a virtual monopoly on all diamond mining.  Not only that, they have the world’s largest reserves of diamonds locked in a huge underground vault in Europe.

If you understand the basic economics of the inversely proportional relationship between supply and demand, then its obvious why Debeers hoards all these diamonds:  to release them all to the market at once would be devastating to the price of the product.  Basically, as supply goes down, price goes up, and vice versa.

And thus we have the hallmark of late-stage capitalism: the commoditization of goods once freely and readily available via the manufacturing of an artificial scarcity that forces the consumer to pay more for the product.

Bottled water is a classic example of this.  Water used to be free.  Then, water supplies became polluted.  Now, you have to pay for purified water, being sold by the some of the same companies that polluted the water supply in the first place.  They create a problem, then sell you the solution.  The treatment is always more profitable than the cure.

The same thing is happening with the drug war.  At one point in time, drugs were freely available.  If not for the interference of governments backed by big business, drugs would grow everywhere.  They would grow out of the cracks in the sidewalk.  People could quite easily grow poppy, coca, and cannabis in their own gardens, and these plants would essentially become worth about as much as tomatoes, bananas, or any other easy-to-cultivate agricultural product.

The government often calls its actions against the drug supply “eradication efforts”.  It would be more appropriate to call them “scarcity efforts”.  Because the goal of these operations is not to eradicate the crops, but only to make them more scarce.  If the most powerful governments in the world wanted to erradicate a plant, I assure you that they easily could.  Erradication isn’t the point: the point is control of the supply, control of where the money goes, and, most importantly, creating an artificial scarcity that makes these crops worth trillions instead of pennies.

NATO’s newest opium erradication effort is a classic example of what I’m saying.  Notice, they aren’t going after the opium farmers, they are only going after the labs within Afghanistan that turn raw opium into heroin.  They don’t want to screw with opium farmers who ship their raw product to European countries like Turkey to be processed into heroin and distributed by the Eurpoean cartels.  They just want to cut the Afghanis out.  They aren’t trying to erradicate the supply, they are just trying to control it.

The entire purpose of the drug war is to take a product worth pennies and make it a product worth trillions by creating an artificial scarcity.  That is the one and only purpose of the drug war.  And all these “sheeple” voters who think that the Drug War is for the purpose of saving their precious children from the jaws of addiction are simply being duped.  I would feel sorry for them if I weren’t so disgusted by the bigotry in their hearts that makes them willing to put non-violent drug offenders in jail for no morally justifiable reason.

And thus, in trying to convince these types of people that the drug war is bad for humanity, I have abandoned moralist and idealistic arguments in favor of more effective appeals to their self interest.  We must explain to these people, how much the drug war costs them personally.  Even if you’ve never done drugs and have no intention of doing them, the Drug War still hurts you.  Its a huge tax burden, its a social injustice that causes civil unrest in the homeland, and it exposes us to national security risks by effectively shipping hundreds of billions annually to our worst foreign enemies.  If not for prohibition, this money could stay within our country.