Econ Question

So I took a break from the Level 2 material and went to McDonalds to get a late snack. I’m pretty sure I saw a drug deal going on in the parking lot while I was in the drive thru. Fine, whatever. Then on the way home my mind starts racing over the drug deal and economics. Drugs are part of the black market which is not reflected in GDP. Does anyone here have a recommendation for a book/website regarding how the drug trade really works? I’d be interested to learn more about the size of the market share, supply factors, etc. Or does anyone know how this really works? I’ve read Freakonomics which described some of the drug trade. Finally, I thought back to Ron Paul’s stance on ending the war on drugs. Seeing that drug deal go down in plain sight in a McDonald’s parking lot really reiterated how big of a waste of money that war on drugs really is.

Don’t do it man. There is severe negative skew in the risk/reward curve.

Agreed. But I am curious. How does cocaine get from the fields to the high school in my city (big coke bust not too long ago)?

ditchdigger2CFA Wrote: ------------------------------------------------------- > Agreed. But I am curious. How does cocaine get > from the fields to the high school in my city (big > coke bust not too long ago)? Drug Lord to Distributor, Distributor to Supplier, Supplier to Dealers, Dealers to End User. Drug Lord- Columbian that makes the billions with risk is other Drug Lords coming to kill you or the US Special Ops sniping you. You pay off politicians and try to distance yourself from the drugs as much as possible. Distributor - typically Columbian with US connection (Supplier). They help organize the way the drugs make it to the US. Supplier - Gang or individual with Columbian connection (distributor). They take the big bulk and chop it into smaller qtys. (kilos). Sell to Dealers. Dealers- 15 year kids that want to make $3-5K/week and own the corners. End User- anyone with $150 for some blow.

just go to Amazon and type “drug trade” This looks good: Drug Wars and Coffeehouses: The Political Economy of the International Drug Trade by David R. Mares (Paperback - Dec 30, 2005)

ConvertArb Wrote: ------------------------------------------------------- > ditchdigger2CFA Wrote: > -------------------------------------------------- > ----- > > Agreed. But I am curious. How does cocaine > get > > from the fields to the high school in my city > (big > > coke bust not too long ago)? > > > Drug Lord to Distributor, Distributor to Supplier, > Supplier to Dealers, Dealers to End User. > > Drug Lord- Columbian that makes the billions with > risk is other Drug Lords coming to kill you or the > US Special Ops sniping you. You pay off > politicians and try to distance yourself from the > drugs as much as possible. > > Distributor - typically Columbian with US > connection (Supplier). They help organize the way > the drugs make it to the US. > > Supplier - Gang or individual with Columbian > connection (distributor). They take the big bulk > and chop it into smaller qtys. (kilos). Sell to > Dealers. > > Dealers- 15 year kids that want to make $3-5K/week > and own the corners. > > End User- anyone with $150 for some blow. Where do the Mexican cartels fit into this? In most cases the cartels now have control over the source and have agents that travel by land, sea, or air to Mexico. Also, wouldn’t you say that the dealers on corners are just soldiers that work for a larger local supplier that probably makes the $3-5k per week while the soldiers stand to only make minimum wage(or less) working a corner?

ConvertArb Wrote: ------------------------------------------------------- > ditchdigger2CFA Wrote: > -------------------------------------------------- > ----- > > Agreed. But I am curious. How does cocaine > get > > from the fields to the high school in my city > (big > > coke bust not too long ago)? > > > Drug Lord to Distributor, Distributor to Supplier, > Supplier to Dealers, Dealers to End User. > > Drug Lord- Columbian that makes the billions with > risk is other Drug Lords coming to kill you or the > US Special Ops sniping you. You pay off > politicians and try to distance yourself from the > drugs as much as possible. > > Distributor - typically Columbian with US > connection (Supplier). They help organize the way > the drugs make it to the US. > > Supplier - Gang or individual with Columbian > connection (distributor). They take the big bulk > and chop it into smaller qtys. (kilos). Sell to > Dealers. > > Dealers- 15 year kids that want to make $3-5K/week > and own the corners. > > End User- anyone with $150 for some blow. Where does Sublimity fit into this? His posts resemble those of someone high on drugs every time. Or is this the stuff he is researching on for his Phd?

ConvertArb Wrote: ------------------------------------------------------- > ditchdigger2CFA Wrote: > -------------------------------------------------- > ----- > > Agreed. But I am curious. How does cocaine > get > > from the fields to the high school in my city > (big > > coke bust not too long ago)? > > > Drug Lord to Distributor, Distributor to Supplier, > Supplier to Dealers, Dealers to End User. > > Drug Lord- Columbian that makes the billions with > risk is other Drug Lords coming to kill you or the > US Special Ops sniping you. You pay off > politicians and try to distance yourself from the > drugs as much as possible. > > Distributor - typically Columbian with US > connection (Supplier). They help organize the way > the drugs make it to the US. > > Supplier - Gang or individual with Columbian > connection (distributor). They take the big bulk > and chop it into smaller qtys. (kilos). Sell to > Dealers. > > Dealers- 15 year kids that want to make $3-5K/week > and own the corners. > > End User- anyone with $150 for some blow. Where does Sublimity fit into this? His posts resemble those of someone high on drugs every time. Or is this the stuff he is researching on for his Phd?

JOE2010, I am high on life.

sublimity Wrote: ------------------------------------------------------- > JOE2010, > > I am high on life. You better stop insulting me then, have always been nice to you.

you called me (or implied that I was) a liberal arts major, i will never forgive you for that

sublimity Wrote: ------------------------------------------------------- > you called me (or implied that I was) a liberal > arts major, i will never forgive you for that What if you were? At a certain stage it stops mattering what you did for your Bachelors, and experience counts. Much ado about nothing.

This question reminds of Office Space where the guys were looking up money laundering in a dictionary.

ConvertArb Wrote: ------------------------------------------------------- > > Drug Lord to Distributor, Distributor to Supplier, > Supplier to Dealers, Dealers to End User. > > Drug Lord- Columbian that makes the billions with > risk is other Drug Lords coming to kill you or the > US Special Ops sniping you. You pay off > politicians and try to distance yourself from the > drugs as much as possible. > > Distributor - typically Columbian with US > connection (Supplier). They help organize the way > the drugs make it to the US. > > Supplier - Gang or individual with Columbian > connection (distributor). They take the big bulk > and chop it into smaller qtys. (kilos). Sell to > Dealers. > > Dealers- 15 year kids that want to make $3-5K/week > and own the corners. > > End User- anyone with $150 for some blow. This makes alot of sense, thanks.

Also, Gangs (especially Latino speaking) have started to control the distributing, supplying, and dealing. MS13, Mexican Mafia, Nortenos. They traffic, split, and deal as BrianR mentioned. Gangs were usually formed to protect a neighborhood or ethnic group from others because they are minority. They have evolved to become huge drug organizations and all about the $.

Freakonomics had a good chapter on this. Why do low level drug dealers engage in a dangerous criminal activitiy for essentially what they could make at McDonalds slinging bugers? The answer was for the potential to someday become higher up and make the real money. Kind of like I-Banking… For further reference, I’d highly recommend “The Wire”

JackA$$ Wrote: ------------------------------------------------------- > Freakonomics had a good chapter on this. > > Why do low level drug dealers engage in a > dangerous criminal activitiy for essentially what > they could make at McDonalds slinging bugers? The > answer was for the potential to someday become > higher up and make the real money. > > Kind of like I-Banking… > > For further reference, I’d highly recommend “The > Wire” uh drug dealing makes you some serious dough, you can make $2k in couple hours. MCD pays $6/hour. Also, you can hang out, be your own boss, and not get grease burns (I have worked a deep fryer and it’s not fun)

ConvertArb Wrote: ------------------------------------------------------- > JackA$$ Wrote: > -------------------------------------------------- > ----- > > Freakonomics had a good chapter on this. > > > > Why do low level drug dealers engage in a > > dangerous criminal activitiy for essentially > what > > they could make at McDonalds slinging bugers? > The > > answer was for the potential to someday become > > higher up and make the real money. > > > > Kind of like I-Banking… > > > > For further reference, I’d highly recommend > “The > > Wire” > > > uh drug dealing makes you some serious dough, you > can make $2k in couple hours. MCD pays $6/hour. > Also, you can hang out, be your own boss, and not > get grease burns (I have worked a deep fryer and > it’s not fun) He is referring to the end dealer’s take. The margins decrease down the line. I recall reading this portion of the book, end dealer needs to pay their dues.

http://economics.about.com/od/incometaxestaxcuts/a/marijuana.htm This guy does some work on it. He is a econ prof.

Here is his full paper. http://www.prohibitioncosts.org/decrim.pdf