How to fix the opiod epidemic.
The following was written as a short response to another classmate's argument. In it, she offered the idea to reduce opium trafficking from Afghanistan (which is responsible for 90% of the world's illicit supply) by replacing poppy crops with other economically viable alternatives. This is widely agreed upon to be a good idea, the problem is that there aren't currently any crops that can match the profit margin of opium cultivation. This is the same idea, but I attack the idea laterally instead of head-on.
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Hi Kristen!
Good post this week! Attacking the problem through an economics vector as opposed to military/law enforcement does appear to be a viable method, as long as we can figure out how, exactly, to pull such an act off. Like you said, most forms of that argument seem to revolve around the idea of replacing opium poppy with some other crop that's equally economically viable. The problem, so far, is that no one has come up with a crop that is as economically viable.
In a weird twist, the poppy market is just like the US taxi market before the medallion system was implemented in 1937 with New York's Haas act. In 1907 Ford introduced the Model T, which allowed nearly anyone to become a taxi driver because of the low cost of production. As you might imagine, many new immigrants saw such a job as the ideal foray into the American economy. Taxi driving had a relatively low cost of entry and low educational and skills requirement (speak a little English and know when to hit the gas/brake). Unfortunately for the drivers, it also had no economy of scale. By the early 1930s, the market was so flooded with drivers that drivers could not make any money since they would all undercut each other right down to cost, if not under cost.
[Enter stage left] - the Haas Act, which established the medallion system. In order to drive a taxi in New York and other major metro areas, drivers had to purchase a medallion. New York started by issuing 16,000 such medallions at auction, which went for about $150 (in today's money). That number was reduced to 11,787 after World War II and inched up to 13,587, which is where that number sits today. The result borders on slave labor. Medallions currently go for about $1,000,000 on the open market, and drivers spend half their shifts just covering the $130 they owe to the medallion owner (most drivers rent a medallion). This same economic structure is why Uber and Lyft are such incredible losers. Uber has, to date, lost $3.2 billion and has never made a profit (Sherman, 2017).
As you stated, prior to 2001, a kilo of opium prior to 2001 (and our massive interdiction efforts) was only $30, and that number is now closer to $800 (like the medallion). The demand is the same if not growing (like the people wanting cabs) and the government's interdiction efforts artificially reduce the supply (the medallions). These interdiction efforts subsequently raise the price of opium to the point where it becomes economically viable to cultivate and traffic. At $30/kilo, it is not hard to imagine that the risk is no longer worth the reward for most people, and so cultivation and trafficking slow down.
While the solution is certainly counter-intuitive, does it not make more sense to flood the market with opium to bring the cost down? If the cost is low enough, farmers will find more economic benefit in growing corn and tomatoes (or whatever) than opium. Of course, this appears the opposite of "tough on crime" or "war on drugs" so is probably not politically viable, but attacking the problem laterally instead of head-on, in my experience, often works better.
References
Sherman, L. (2017). Why Can’t Uber Make Money? Retrieved May
20, 2018, from https://www.forbes.com/sites/lensherman/2017/12/14/why-cant-uber-make-money/