In these days of pandemic stupidity, I often find myself dreaming of inhabiting a world where I’m always the stupidest in the room. In the evident impossibility of relocating permanently to Antarctica (see uncle Tony’s episode to understand what I mean), the next best thing is to read enlightening books written by remarkably smart people. Anything from Carlo Rovelli or Lee Smolin, although I’m sure that sooner or later the faces I pull on the Tube when negotiating some passages of The Trouble with Physics will land me in a meme.
Narconomics is one such title. Written by Tom Wainwright, editor of TheEconomist and previously the magazine’s correspondent from Mexico, it’s a remarkably intelligent book. (little-known fact: an ally of then-PM Berlusconi once dubbed Wainwright’s employer TheEcomunist for having dared critiquing Silvio and, therefore, being a Commie. Another little-known fact: dolphins get a high on pufferfish toxins and, apparently, pass the joint – erm the fish – around. I wanted to fit it into a post for ages).
This is a smart and, let’s say it, ballsy book. Wainwright – who, based on the photos on Google, reminds me of those eternally youthful, slightly shy but supremely witty software engineers and data scientists that make my work bearable – went all-in on a market that is mostly managed by people wielding AK-47s and he did so from an innovative angle: how does the drugs market work? Does it follow the same rules as other capitalistic enterprises? What are its challenges? How is it being affected by innovations such as the Internet?
The results make for an incredible read. I don’t want to spoil the pleasure but, at the same time, I can’t avoid lingering on a few concepts that made me go wow. Sometimes loudly. Often on a crowded Overground train. So, spoiler alert and all that. You’ve been warned.
One of the first chapters makes quick work of the war on drugs. I mean, it’s not particularly hard to prove that it’s been a costly failure but it’s so much better to do it with economics. Think, for instance, at the habit of destroying coca crops that is a staple of the war on narcotics: the idea is that the less coca is produced, the more the retail prices will go up and the less white lines will be stacked by New Yorkers on their crystal tables.
Except that it hasn’t. As the book suggests, this is due to two factors: first, cartels – being, indeed, cartels – are monopolistic buyers. If you’re a campesino and the government burns half your crop of coca, it’s highly unlikely that the local patron will buy what remains at double price. Because you’ve got nobody else to sell it to (and, should you find another buyer, it’s likely that the patron won’t like it), you’ll have to accept the usual price and take the loss. The second reason has to do with profit margins. A couple of numbers from the book for you: a kilo of cocaine requires roughly a ton of coca leaves. This costs $400 in Colombia while the retail price of that brick of coke in the US is roughly $150k. Even if the raw product price doubled and, somehow, the entirety of this hike was to be offloaded to the customer that kg of cocaine will now retail for $150,400. I sincerely doubt that the yuppies will all switch to Tide pods because of a 0.3% increase in costs.
There are also some incredibly interesting insights into the reality of franchising in a cartel – and the dangers it might bring when the franchisees don’t stay on brand – or the fact that skilled workers are in such short supply (and the impact of hiring muppets so damn expensive) that gangs like MS-13 have embraced tattoos as the ultimate form of employee retention: it’s hard to switch side when you have the name of the local mara splattered across your forehead, isn’t it? And legal employment opportunities are going to be scarce too.
Narconomics is an incredible read because it’s entertaining, vivacious, insightful but because, more importantly, it forces the reader to think at so many things, above all at how our entire array of answers to the question of drugs has had little impact and even less economic sense.