OVER THE Over the past few decades, criminal gangs in Central America have diversified their businesses. They no longer just smuggle drugs from South America into the United States, as Pablo Escobar, Colombia’s most notorious drug lord, did in the 1970s and 80s. Now they are also involved in illegal gold mining, human trafficking, synthetic-opioid production (especially fentanyl), and exploitation of those who work in perfectly legal markets, such as farming avocados and limes.
However, drugs remain an important part of their business model. In 2020, for example, global production of cocaine reached a record high of 1,982 tons, according to the United Nations Office on Drugs and Crime (UNODC), although that is likely an underestimate. North America remains the biggest consumer of the drug, with around 2% of people aged 15-64 (or 6m people) estimated to have taken it that year. But the global reach of cocaine is spreading. Guinea-Bissau has become an important route for South American cocaine to Europe. A coup attempt earlier this year, in which gunmen attacked the presidential palace, was blamed on drug gangs. Much of Europe’s cocaine is shipped through Rotterdam in the Netherlands, which has led to an increase in gang violence there. The head of the Dutch police union has warned that the country is at risk of becoming a “narco-state”.
Cocaine remains an important part of gang income not because it is addictive but because it is profitable. Estimates of what a kilogram of the drug costs in different areas because, like any illegal market, it’s tricky to read. UNODC, however, publishes a range of estimates showing how large the benefit margins are. In 2019, the most recent year for which data is available, a kilogram of cocaine in Colombia cost $1,491 at retail prices. In Mexico that kilo was $12,433 at retail prices. In El Salvador it is $28,873.
But the real income comes from outside Latin America. A kilo at retail prices in the United States typically costs $69,000 in 2019. When it’s the best, it’s the most expensive coke. In China, where Colombian gangs are said to be hoping to increase their profits even more in the next decade or so, a kilogram costs $69,380 on the mainland and $72,510 in Hong Kong. In Australia it is a kilo in 2017, the most recent prices available, usually worth $152,207.
As long as cocaine remains illegal in rich countries, gangs will continue to invest their profits in recruiting members, buying weapons and corrupt officials. Legalization would cut off a major source of income for gangs and make the product safer. That is why Economist he argues that it is time to legalize things. ■
Read more about this topic:
Joe Biden is very scared. It’s time to legalize cocaine
The increase in cocaine production shows that the war on drugs has failed
The demand for drugs has led to an increase in child labor in Peru