[Following are comments on a presentation by Dr. John Collins, Executive Director of the LSE IDEAS International Drug Policy Project, who spoke on “The economics of the war on drugs” on 5 May 2017. The lecture was part of  “Drug issues: different perspectives: a policy forum” held on 5-6 May 2017, at the GT-Toyota Asian Center Auditorium. A video of Dr. Collins’s presentation is found here.]

 

Let me first thank the organisers of this forum, especially the FLAG Anti-Death Penalty Task Force and my own institution, UP Diliman, for bringing together such eminent experts on the science, health, and public policy aspects of the drug problem to provide us with fresh perspectives on and alternative solutions to a problem that seems to be the all-consuming passion under the Duterte administration. In less than a year, thousands of citizens’ lives have already been lost. It is especially important then to take stock of whether the country is headed in the right path or walking rapidly to its own ruin. In this regard nothing is more helpful and enlightening than the experience of other societies that have confronted the same problems, tried various approaches, and come out the wiser.

I will confess that a good deal of the literature Dr. Collins cites and reviews is new to me—drug policy is not my field. In the last few months, however, I have had no choice—despite my own inadequacies—but to urgently read and interpret scientific papers on the neuropsychology of drug abuse and on various alternative approaches to drug policy, their pros and cons. This was if I was at least to try to halt the on-going national slaughter in the only way I can—by distilling information and formulating reasonable arguments. It was in the course of that desperate effort that I was happy to come across the published work especially of Dr. Carl Hart and the LSE group headed by Dr. Collins, among others. It was an unparalleled feeling of relief to discover kindred spirits and comrades-in-arms, if only through print and computer screens, who could provide reliable commentary and advice based on experience and evidence. That fellow-feeling is enhanced today to see our guests in the flesh in the midst of a crisis that grips us.

Let me now turn to Dr. Collins’ presentation. We do teach the economics of prohibition and control to undergraduates at the School of Economics. Most of the criticism we level against prohibition— whether this involves selling rice above price-ceilings, import prohibitions, jueteng, or illegal drugs— deals with its unintended institutional consequences: law enforcement resources are diverted from equally or more urgent uses; criminal syndicates take over what were previously legal activities; owing to their ability to enforce illegal contracts; social institutions and organizations are corrupted, particularly the police, the courts, government at all levels; consumer information and safety are sacrificed because illegal sources cannot be monitored and tested.

In all this, however, we have not doubted that enforcement will have at least some effect of raising the price of the prohibited good. That is what goes some way toward reducing the demand for it, although the resort to illegal supply will undoubtedly mitigate this. Among the novel things I learned today, however, is how in other jurisdictions and country-experiences, not even the war on drugs has managed to raise the price of drugs. If this also occurs in the Philippines, it certainly undercuts some of the rationale for conducting this war on drugs.

At the moment, there are reports that price of shabu has indeed risen. News reports[1] from October last year quote pdea as saying the upper bound for a gram of shabu had risen to ₱25,000 (from ₱11,000 as of last June), or a 127 percent price increase.[2] It remains to be seen whether this is a short-term phenomenon.

There are two comments to be made here that derive from the extreme nature of the drug campaign being waged by the Duterte administration. First, the current war does not seem to implicitly rely on a price effect, although pdea might officially view price increases as one channel of demand reduction. Duterte’s verbalised policy however is somewhat different: not price increases but instilling terror and fear, as well as the physical elimination of drug users is the administration’s main means to reduce both supply and demand. The cynical and cruel hypothesis is that fear and physical elimination will lower the demand curve, even as terror is also supposed to drive out supply. In this scheme of things, the price effect is of second-order importance.

Having said that, I can think of several mechanisms that prices may not rise too far. The paper by Reuter, Pollack, and Pardo[3] [2016] make the argument that drug prices may not rise as expected because parts of the supply chain may not behave like a perfectly competitive industry, so that the extra costs and risks of enforcement are not passed on.

One the reasons they cite has to do with competitive rent-seeking, particularly in smuggling (since corrupt officials may compete with one another and therefore keep bribes down). This is relevant to our case: there is a good chance that the general corruptibility of the bureaucracy and the penal system will facilitate the “normalisation” of drug prices. So the more general point is that that drug prices may not fall and usage may not decline significantly after some time owing to the decentralised and pervasive nature of corruption. It is another question whether a more authoritarian but less corrupt country can perform better in this respect.

A second channel stems from the fact that in the Philippines, retail dealers are generally poor, as are their customers. So it is possible that the additional cost and risk from stricter enforcement will simply be borne as reduced margins on the part of small dealers rather than passed on as higher prices. In short it could be the margins of the small dealers that are squeezed, keeping drug prices lower than they are. (Here, the fact that many retail pushers and users are marginalised with few alternatives is significant.[4]) In the extreme, there may be a backward-bending supply of effort in the drug trade, so that a higher price for input supply may not mean higher prices but is made up for by an increase in time and effort by

A third possibility that could ultimately result in the lack of movement in prices or changes in prevalence is substitution among drugs. If the market for drugs becomes tighter, then cheaper or more adulterated drugs could be substituted. This is standard in the prohibition literature. More research is needed, but one can surmise that shabu itself already represents an adjustment of this sort. Equal prohibition of substances in a low-income environment can lead to the spread of cheaper drugs as a kind of inferior good. It is not far-fetched to imagine, for example, that shabu consumption might be reduced if marijuana were legalised. (Shabu has some characteristics that make its production cheap and easy to conceal; unlike marijuana which is more time consuming and land-intensive.)

But ultimately, I still believe it is the corrupting influence on institutions that represents the main danger from the war on drugs. Limited bureaucratic capacity, an inadequate public health system, corrupt law enforcement, and an overburdened court and penal system were already real problems even before this administration’s “war”. But the already-existing defects and transgressions of these institutions have now been amplified by the new demands made upon them. This can be seen in the overcrowded jails, the slow progress of court cases, the risible public rehabilitation efforts, the cases of police extortion and kidnapping, and above all the extrajudicial killings. The war on drugs disturbed an admittedly imperfect pre-existing equilibrium and has possibly set the system adrift towards a worse one.

Harm reduction on the supply side is the other new idea by Dr. Collins. Harm is usually thought of as involving the demand side. It typically involves the treatment of drug use and abuse as health issues, rehabilitation. An important first step is decriminalisation, which Vice- President Leni Robredo has bravely broached. Here we should first note how great a distance there is between this and the current de facto drug policy of the Duterte administration.

Harm reduction on the supply side, on the other hand, proposes a new approach and use of policing (enforcement). It recognises that stricter policing per se worsens the situation by:

  • increasing violence: because self-selection yields the field to the more violent organisations able to enforce informal contracts.
  • increasing risk: owing to less healthy practices, such as needle-sharing; but also because people may refusing even to answer surveys, thus undermining public health data and monitoring
  • exacerbating poverty: especially among families that are affected by EJKs.
  • damaging legitimacy: by further displaying the inadequacy and corruption of the justice and penal systems.

The suggestion therefore is not to spread resources too thinly but to smartly distribute enforcement resources through: focussed deterrence: to protect areas and certain categories of citizens, individuals targeted, e.g., school areas, residential areas and especially the youth; not necessarily eradicating illegal markets but allowing these to adjust; perhaps this would include targeting some types of drugs more than others.

All this presumes a less corrupt and unbiased bureaucracy and law enforcement. In a corrupt environment, this could degenerate into a selective application of the law to favour a few. It also presumes an administration leadership that is open to scientific and fact-based policy recommendations, one that is capable of nuance and recognises the importance of a humane policy.

Instead however we see the folly of a government of old men implementing outdated ideas, plunging headlong with a blanket offensive against a part of its citizenry without a recognition of its limits and the adverse consequences of its actions. I am reminded of Adam Smith’s words in the Wealth of Nations. He warned of protectionist regulations not only because of their deleterious effects, but because they introduce “disorders, which it is often difficult to remedy, without occasioning…still greater disorders”. (I am always struck by government’s statistics claiming that the incidence of index crimes has declined, without including the 6-7,000 EJKs (sorry, homicides) that were directly or indirectly the result of its own drug war.)

Unfortunately, Dr. Collins’ presentation, welcome as it is, catches us in medias res. It is a wonderful plea for a more nuanced policy, informed by scholarship and enlightened public discussion and prudent social experimentation. Our problem however is that we are already in the midst of a killing spree that has claimed thousands of our fellow citizens’ lives, and we are confronted with a hardened official attitude that is unreceptive to alternative approaches and frankly dismissive of science and research.[5]

We would have wanted a calm, dispassionate discussion until we found a safe and humane way to proceed. That is not forthcoming, however, and even as we discuss matters here, in the meantime, the lives of mostly poor people are surely being snuffed out.

So, even as we are allowed to dream of harm reduction through supply in the form of a smart, carefully crafted enforcement policy that is based on research and prolonged social experiment, or we aspire to that state that sees harm reduction on the demand side, in terms of the grandiose plans Secretary Reyes outlined to us this morning—I’m afraid however that the first order of harm reduction in the Philippines is far more basic and simple:

Stop the killings. Now.

Thank you.

 

(A video of these comments during the event can be found here. The text may vary in parts from the delivery.)

 

 

[1] See, e.g., http://newsinfo.inquirer.net/822144/shabu-costs-p25k-per-gram.

[2] Rates of increases vary across localities.

[3] Available at: http://www.lse.ac.uk/IDEAS/publications/reports/pdf/LSE-IDEAS-After-the-Drug-Wars.pdf.

[4] In this connection the work of Dr. Carl Hart showing the importance of providing alternatives to drug abusers is relevant.

[5] The continuing misunderstanding and misrepresentation of the number of drug users in the country is an example of how poorly scholarship informs the current antidrug campaign.