Meth Arbitrage

The Government has scored another drug war success. Homeless people are now supplying meth precursors to underground drug labs.

At the height of the methamphetamine epidemic, several states turned to a new weapon to disrupt the drug trade: electronic systems that could track sales of the cold medicine used to make meth.

Tracking sales by computer allowed pharmacies to check instantly whether a buyer had already purchased the legal limit of pseudoephedrine — a step that was supposed to make it harder to obtain raw ingredients for meth.

But an Associated Press analysis of federal data reveals that the practice has not only failed to curb the meth trade, which is growing again after a brief decline. It also created a vast and highly lucrative market for profiteers to buy over-the-counter pills and sell them to meth producers at a huge markup.

In just a few years, the lure of such easy money has drawn thousands of new people into the methamphetamine underworld.

"It's almost like a sub-criminal culture," said Gary Boggs, an agent at the Drug Enforcement Administration. "You'll see them with a GPS unit set up in a van with a list of every single pharmacy or retail outlet. They'll spend the entire week going store to store and buy to the limit."

Inside their vehicles, the so-called "pill brokers" punch out blister packs into a bucket and even clip coupons, Boggs said.

In some cases, the pill buyers are not interested in meth. They may be homeless people recruited off the street or even college kids seeking weekend beer money, authorities say.

But because of booming demand created in large part by the tracking systems, they can buy a box of pills for $7 to $8 and sell it for $40 or $50.

The tracking systems "invite more people into the criminal activity because the black market price of the product becomes so much more profitable," said Jason Grellner, a detective in hard-hit Franklin County, Mo., about 40 miles west of St. Louis.

You would think that the people writing the laws have never heard of supply and demand.

But it is the same story ever since we declared War On Some Drugs in 1914 with the Harrison Narcotics act. Politicians write new laws. And the market adjusts until supply meets demand at the supply/demand equilibrium price.

You would think that the people writing the laws could figure out some way to fix what needs fixing without setting up price supports for criminals. You would be wrong. Drug user are smarter. And their suppliers are continually outsmarting the enforcers. Politicians and those who support their anti-drug ventures are dumb as a box of hammers. Like Wily Coyote they keep getting fooled by the same tricks and yet keep repeating their failed strategies. I wonder if the problem is genetic? Or maybe it is a matter of incentives. Politicians keep promising the impossible ("We can curb human appetites by passing laws.") and the voters keep voting for them. I guess the continual dog and pony shows - the piles of drugs, guns, and money trotted out every time the prohibition agencies are looking for funds are enough to fool most of the people marks most of the time.

What is striking to me is that leftists who normally can't evaluate the economics of almost any situation can do an exquisite analysis of drug prohibition and those on the right who are normally excellent at economic analysis are suddenly idiots when it comes to drugs. Proof positive I guess that drugs make people stupid. Especially people who don't use them.

Cross Posted at Classical Values