Drug Policy and the Decline of the American City

Sam Staley

• Publisher: Routledge
• Year: 2017
• eBook ISBN: 9781351521581
• Topic: Social Sciences
• Subtopic: Global Development Studies
• Index: Social Sciences

The drug trade is a growth industry in most major American cities, fueling devastated inner-city economies with revenues in excess of $100 billion. In this timely volume, Sam Staley provides a detailed, in-depth analysis of the consequences of current drug policies, focusing on the relationship between public policy and urban economic development and on how the drug economy has become thoroughly entwined in the urban economy. The black market in illegal drugs undermines essential institutions necessary for promoting long-term economic growth, including respect for civil liberties, private property, and nonviolent conflict resolution. Staley argues that America's cities can be revitalized only through a major restructuring of the urban economy that does not rely on drug trafficking as a primary source of employment and income-the inadvertent outcome of current prohibitionist policy. Thus comprehensive decriminalization of the major drugs (marijuana, cocaine, and heroin) is an important first step toward addressing the economic and social needs of depressed inner cities. Staley demonstrates how decriminalization would refocus public policy on the human dimension of drug abuse and addiction, acknowledge that the cities face severe development problems that promote underground economic activity, and reconstitute drug policy on principles consistent with limited government as embodied in the U.S. Constitution and Bill of Rights. Designed to cross disciplinary boundaries, Staley's provocative analysis will be essential reading for urban policymakers, sociologists, economists, criminologists, and drug-treatment specialists.

PART I

INSTITUTIONS, ECONOMIC GROWTH, AND THE MODERN CITY

1

Setting the Stage: Central City Decline and the Rise of the Drug Economy

On a warm August night, a five-month-old baby boy was sleeping contentedly in a Manhattan apartment. At about 12:30 A.M., a loud noise woke the child’s grandmother. Another loud noise prompted an exodus of people from the apartment next door. Gunshots in this building on 109th Street are a common event. This time, however, a small child lay covered with blood in his bed, the victim of a “stray” bullet crashing through the wall from the adjacent apartment. The family, which had intended to move to an apartment in Queens at the end of the month, now plans to move back to their native Haiti. Once again, the American dream was shattered by violence.

In New York, six children ranging from nine years old to only five months were shot by “stray” bullets during a two-week period in the summer of 1990. Four died. In each case, the bullets were intended for someone else and details of the shootings remained “vague.” During the last week of July, 1990, an average of two hundred shots per day were reported to the New York Police Department.

Few causes for this increase in violence can be pinpointed precisely. James Q. Wilson, a leading criminologist, observed that “the best we can do is speculate,” but suggested that most of the violence is drug-related.¹ Instrumental in this rise in violence appears to be the role of organized gangs. Drug-driven people, heavily armed, translate into “gang warfare” that “has ceased being ‘West Side Story’ and has become instead Beirut.”²

Moreover, throughout the country, reports of violence and murder are on the rise. In almost all cases, the rise is being attributed to drug-related violence. As a result, the illicit drug industry has risen to the forefront of contemporary public policy debate. Few, however, have attempted to thoroughly analyze the role of the illicit drug industry in urban economies and explain the intricate interdependence between contemporary, impoverished inner cities and the rising importance of a drug-industry culture.

Virtually every corner of the American society is influenced by illicit drugs in one way or another. In October 1990, one of the nation’s leading political figures, Washington, D.C. Mayor Marion S. Barry was sentenced to six months in prison for cocaine possession. Barry was a prominent crusader in the drug war as America’s national capital became the central battleground for the “hearts and minds” of inner-city residents. In the end, “the enemy” was so strong that even the highest ranked “generals” were corrupted. As Barry was sentenced in federal court, the mayor lamented the “American injustice system,” claiming he was the victim of a racist conspiracy against black leaders.³

In Kentucky, Gatewood Galbraith, an attorney turned gubernatorial candidate, electioneered on a platform of legalizing the sale and production of marijuana. In some counties, 40 percent of local farmers grow marijuana to stave off unemployment and poverty.⁴ Indeed, Galbraith sees the marijuana industry as a potential tool to revitalize Kentucky’s sagging rural economy. Given that marijuana is Kentucky’s largest cashcrop, valued at over $1 billion, Galbraith’s position does not seem that distant from political acceptability.

Public concern over drug abuse in the United States is clearly reflected in the results of recent public opinion polls. The George Gallup organization found that the percentage of people indicating that drug abuse was “the most important problem facing the country” soared from only 2 percent in 1985 to 38 percent in 1989.⁵ In contrast, while it was the second largest category, only 10 percent of the respondents believed poverty was the most important problem. In an independent Media General/Associated Press poll, 61 percent of the respondents indicated “drugs” were “the most important problem facing this country today” compared to the federal deficit, the economy, the environment, and homelessness.⁶

The rising importance of the drug problem in the eyes of the American public may well be connected to its link to children and education. In fact, public opinion polls reveal that the American public believes drug use tops the list of the “biggest problems” public schools must deal with.⁷

Drug use and trafficking are widespread in the United States. The prevalence of drug use during the twentieth century even resulted in titling a widely regarded history of U.S. narcotic control The American Disease.⁸ Indeed, of a population of about two hundred and forty million people, at least twenty million Americans currently admit using marijuana regularly, another six million are estimated to use cocaine periodically, and between eight hundred thousand and nine hundred thousand use or have used heroin. This contrasts with over one hundred million alcohol drinkers and another fifty million smokers. In many social circles, drugs as disparate as alcohol and cocaine are used routinely.

The prevalence of drug use, illegal, legal, or prescription, has generated a large subeconomy earning hundreds of billions of dollars per year. The retail value of illicit drug sales alone exceeds $100 billion and is by most accounts a growing market.⁹ Cocaine profits may have exceeded $80 billion already.¹⁰ Technical innovations such as “crack,” or rock cocaine, have reached even further into our social fabric by making mind-altering substances even more accessible to children and the poor in urban areas.

Moreover, marijuana is America’s largest cash crop. In 1986, the National Organization for the Reform of Marijuana Laws (NORML) calculated that the estimated value of marijuana crops totaled $26.7 billion.¹¹ In contrast, the estimated value of corn for grain was $10.8 billion, hay $9 billion, soybeans $9 billion, and wheat $4.8 billion. California, Hawaii, Oregon, Kentucky, and North Carolina each produced over a billion dollars worth of marijuana. The Drug Enforcement Administration (DEA) calculates that the annual value of the domestic marijuana harvest exceeds the NORML estimates, reaching $41 billion.¹²

In the midst of the widespread use (and abuse) of drugs in American society, and the huge underground economy it generates, twentieth-century public policy has consistently attempted to thwart its development Indeed, the current Reagan-Bush “War on Drugs”—a policy of complete prohibition (except for highly restrictive medical uses)—represents a well-financed attempt to use criminal law to destroy the illegal drug economy via the principle of law and order. The combined direct cost of the “Drug War” on local, state and federal levels is expected to exceed $12 billion in 1990.¹³

The focus of this book is the strategic use of drug prohibition to control drug use and the implications for economic development in urban areas. These two issues are so thoroughly intertwined that, from an economist’s viewpoint, their separation is incomprehensible. Indeed, many of the ill effects of the drug trade are linked directly to attempts to eliminate the market for illicit drugs. Through attempts to restrict the supply of drugs, governments on all levels have created the avenues for elaborate, sophisticated, and often violent black markets that support and promote their use. Thus, despite the tendency to relegate drug abuse and drug use problems to physiological research and health care specialists, a surprising amount of economic analysis can be used to better understand the contemporary drug problem.

This book will further argue that drug prohibition undermines the process of economic development in America’s cities. The social costs of maintaining the underground drug economy through prohibition far outweigh the potential social costs of deregulation as an alternative. In effect, the unintended consequences of the drug war are so pervasive that the economic and cultural future of American cities is jeopardized.

The Social Costs of the Drug Economy

The social costs of drug abuse and the drug war can be measured in several ways. The most prominent are the costs to economic productivity, public health, and civil liberties. The most common, of course, are attempts to count the number of drug addicts and calculate their lost productivity. Indicators of the ill effects of drugs are also evident in the emergency rooms of hospitals as drug users overdose on their drug of choice, experience complex chemical and physical reactions from multiple drug use, or suffer physical reactions to poor quality street drugs. Still others include in their calculus the loss of civil liberties resulting from a wholesale war on drugs that sacrifices rights to privacy, property, and freedom of expression to ensure some obedience to “law and order.”

Most observers are discovering that the consequences of the drug war move beyond the traditional “body count” of overdose deaths or emergency room visits. The costs of drug abuse and the drug war must include crimes committed to generate enough income to sustain drug use and the costs of “enforcing” contracts on the street, usually through violence. The use of gang-related violence in many major cities, the spread of gangs to new markets in smaller cities, and the rising prominence of drug-related murders in cities (sometimes as high as 80 percent of all murders) are all costs of the drug war.

Yet, as disparate as these indicators appear, they are related. They all provide a glimpse of the wrenching social and economic transformations experienced by central cities in recent years. The malaise of America’s cities is at least a partial reflection of how urban economies have adapted to several decades of economic decline. The drug economy represents a stilted, perverse attempt at economic rejuvenation.

More important, the rising prominence of the drug economy in central cities reflects the destruction of the institutional framework necessary to encourage and promote sustained economic development. Ironically, the policies that form the core of the Drug War strategy are hastening the destruction of central city economies by abrogating the institutions that are most likely to lead to economic rejuvenation: private property, respect for civil liberties, and smoothly operating markets.

An important theme running through this book is that the drug war is unwinnable. This observation is not new or unique. In fact, as the following chapters will detail, several observers and critics of the drug war have already reached this conclusion. The argument in the following pages differs from earlier critiques by moving beyond the cost-benefit analysis to explore the interrelationships between public policy and economic development. Social and economic progress depends on a crucial set of institutions that are being systematically destroyed by our current drug war strategy and contemporary economic development policy in American cities. The implications of this critique of drug policy are that the Drug War is not just unwinnable, but economically and socially counterproductive.

The ways in which public policy undermines the processes necessary for encouraging productive economic and social development requires an understanding of the changing economic environment of central cities. Central city decline is a necessary (but not sufficient) condition for the expansion and growth of the drug economy. As later chapters will detail, the decline of the central cities and the inability of urban areas to adapt to the complexities of the late twentieth century urban economy are important for understanding the supply-side aspects of drug trafficking.

Indeed, without the complex transportation and communications systems available through many of America’s largest central cities (such as New York, Los Angeles, or Miami), drug trafficking would be far more cumbersome and expensive. Drug trafficking, in fact, is extremely well suited to the “new city” transformed from a traditional manufacturing to a high-technology, advanced services economic base.

Two elements make up the current drug problem in the United States. The first is the most talked about: the demand side. Americans enjoy and want to rise drugs of all kinds. This demand encourages drug producers to supply illicit drugs to drug users through a black market if the price is high enough. Unfortunately, an approach that emphasizes only the demand side of the problem is extremely narrow, ignoring many more important and salient consequences of the drug economy. Indeed, many of the costs of the drug economy stem directly from the growth and development of the supply side, or drug trafficking.

The problems often associated with drug trafficking and the drug economy are largely urban in character. Drug traffickers tend to recruit in densely populated urban areas. Major cities serve as principal distribution centers for a myriad of drug trafficking organizations, from small street-level retailers to mid-level wholesalers to large organizations operating as cartels. While the user population tends to be more decentralized, drug trafficking tends to be centralized, and retailing tends to be very hierarchical. Central cities provide a variety of natural defenses against detection by law enforcement authorities.

Unfortunately, lost in the anecdotal news stories about individual dealers, drug abusers, law enforcement personnel, and other victims, is the story of how central cities have provided a lucrative supply of labor to black marketeers. Public policies have created a vast underground economy that fuels a perverse form of economic development in many inner-city neighborhoods, undermining a wide range of social and cultural institutions that are necessary to sustain productive communities. The true consequences of the drug economy and the startlingly persistent attempts to destroy it through an...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Dedication
• Contents
• Figures and Tables
• Foreword
• Preface
• PART I: INSTITUTIONS, ECONOMIC GROWTH, AND THE MODERN CITY
• PART II: FOUNDATIONS OF THE DRUG ECONOMY
• PART III: PUBLIC POLICY AND THE DRUG ECONOMY
• PART IV: CONCLUSION
• Index