A Real Solution to the World’s Illegal Drug Markets

by Walton Cook

What would be the reaction to this kind of US policy?

What would you call failing to fully protect American or NATO soldiers in harm’s way? What should be done to change the negligent and narrow views that willfully squelch discussion that would much better protect them, sadly enough, even from persons highly ranked in the Pentagon, the Department of State or the Congress?

Who would aid our adversaries in disfavor of our own children or the sons and daughters of our neighbors? And what if better results were easy relative to current failed policies, but moral at the same time? Would you choose to build harmony and trust, or their opposites? Would you shape events for other’s well being as well as your own? Would you favor values that enhance society as a whole? Would you respect the culture of others while enhancing your own cultural interests—in fact, without compromising any of your own interests?

What is a grand strategy that might accomplish military, social, economic, cultural and moral goals? Would you implement a means to achieve better results in all these domains? Would you insist on a code of conduct that does not violate standards of behavior all human beings can be expected to uphold? Here are some names you will recognize.

Comments by Prominent Public Intellectuals:

I liked the piece you sent me on Afghanistan. I agree that we are being penny wise and pound-foolish…we should be spending much more for reconstruction, development and substitutes for poppy cultivation. —Joseph S. Nye Jr.—Soft Power: The Means to Success in World Politics

…a very interesting idea! —Tim Harford—The Undercover Economist

…this is an interesting idea. Our efforts at dealing with drugs have caused lots of harm in poor countries. It would be a big improvement if we could find a workable approach that helped them instead. —Paul M. Romer—Increasing Returns and Long-Run Growth, Macroeconomics

Thanks for this. It is very interesting and I’m sharing it with some colleagues who have a special interest in Afghanistan. —Peter David, Foreign Editor—The Economist

I read your proposal with great interest and am strongly sympathetic to your suggestion.
Niall Ferguson—The War of the World: Twentieth-Century Conflict and the Descent of the West

…your tightly reasoned case is one of those exceptional instances. The failure of the wealthier states to do their part and the risks attached to the global money flows arising from the drug economies should galvanize international action.—Harm de Blij—Why Geography Mattters

The plan seems sound to me—a nice example of a non-moralistic, but ultimately more moral, solution to the problem than the moralistic ones that politicians and journalists tend to favor. Steven Pinker—The Blank Slate, The Language Instinct, The Stuff of Thought

Yes, I agree with all the others you’ve quoted: this idea makes obvious good sense. J Fallows. (The Atlantic)

Perhaps you don’t remember the famous Candid Camera TV episode that features $20 bills pasted on the sections of glass revolving doors. What is mind-boggling is the tremendous number of people who go through the doors without disturbing the four bills. Could any of them have been economists? Let’s make it bigger bills.

Then perhaps, you will remember the late economist, Mancur Olson’s version, Big Bills Left on the Sidewalk…? In this famous paper, Olson presents an economist, who when seeing a hundred-dollar bill on the sidewalk, says he is not picking it up because if it were real, someone else would already have picked it up.

Is it possible that rich nations as well as poor leave big bills on the sidewalk?

As a much bigger $ incentive, now imagine $300 + billion in U.S. currency, laying about in plain sight, free each year for the taking, and that the money once belonged to terrorists, criminals, corrupt officials and rich nation drug-users. What better group of donors? In a sense, this is like economist Paul Romer’s ’non-rival good,’ also free for the taking, but first, someone has to pick up the money so that all can benefit—a public good—a mutually advantageous transaction. Are price differentials real, big bills to be capitalized? Could this be “moral warfare?”

Moral Warfare: Capitalizing Price Differentials: Transformational Economic Diplomacy

STATE COLLEGE, PA—In a recent address, Walton Cook explained the title concept. He is a proponent of ‘agricultural change’ economic diplomacy; incentives to drug producer nations to cease cultivation. He previously authored a 2005 proposal to pay certain drug producer nations not to cultivate such plants, specifically the opium poppy and the coca shrub. (Ending Poverty) published by UPI’s Outside View outlines what has now become Transformational Economic Diplomacy and now Moral Warfare. In the January 6, 2007 The Economist, this concept was again favorably reviewed.

Here are some key excerpts from his talk:

“Just as U.S. or EU farmers are paid subsidies not to cultivate certain legal crops, short-term incentives not to cultivate illicit crops are now in order. Present U.S. and EU farm subsidies exceed $100 billion annually. We can employ incentives more creatively at a huge profit. How?”

“Capitalize price differentials! It’s an idea so simple an economist will understand it. And it’s worth $300 billion + annually. That’s dollars! Poor nation farmers are paid pennies at the ‘farm door’ for drugs that create expensive world societal problems of great magnitude, particularly in richer, drug consuming nations, like OECD or G-8 members. Illicit drugs represent an average 1.5% of GDP ‘societal’ cost to user nations. Based on a world GDP of $66 Trillion, the composite ‘societal cost’ is $990 billions annually. The OECD share of that GDP, $33 Trillion, represents a ‘societal cost’ of $495 billions annually, just for 30 richer nations. Only two drug plants, the opium poppy and the coca shrub (cocaine) make up approximately 65% of that total, over $300 billion every year. Don’t cultivate these two drug plants—save the money!”

“Stripped down to the basics, this ‘transformational economic diplomacy’ offers to pay farmers the same ‘farm door’ prices they received to cultivate illicit plants, but now for not cultivating those same plants. Since poor farmers suffer no economic loss, they are emotionally and financially prepared to support non-conflict diplomatic solutions. We propose that the subsidy will continue for a decade. This extended period permits former drug farmers to prepare for either new occupations or alternative cultivations. There is also no need to wait until alternate crops or occupations are already in place because there is no break or reduction in farmer income and future cultivation is officially criminalized. Further funding is provided to build educational facilities, construct information resources, build health clinics, provide transportation infrastructures, improve water quality and supply, create local police forces and improve judicial systems and government services. This is what we call ‘winning hearts and minds.”

“When we think of resources, we are likely to think of physical or human resources, assets such as oil or minerals in the ground or a well-educated populace. Some very poor nations have no such assets. It takes a more creative imagination to consider any illegal activity as a potential economic resource and, if even though temporarily—a usable asset. But lest we forget, whether it’s North Korea, Iran, Bosnia, or Sudan, market states already pay large sums to curtail activities that are illegal. When you are poor, but also a world production leader of illicit resources expensive to rich nations, richer nations can realize the huge ‘societal cost’ savings only when the problem is solved. It’s no different than a cure for any societal problem—the costs previously spent become savings—available now for alternate uses. “

“If a cure to drug cultivation were considered in the same vein as a cure to cancer or diabetes or AIDS, the money previously spent on all aspects of those diseases, the ‘societal cost,’ would be saved, and thus available to address other societal needs. This is the essence of my proposal.”

How much savings? According to official ONDCP figures (last covering 2002) of $120-130 billions annually, Mr. Cook then extrapolated 2008 U.S. social costs for just two drugs, opiates and cocaine/crack to be $150 billions annually; money now representing potential savings. An added windfall of perhaps $160-80 billion annually would benefit other rich OECD nations,

“Beyond that, it is important to consider that another 9/11 type terrorism act, funded by drugs, but avoided, would represent a far greater savings, perhaps in the hundreds of billions! Contrasted against the potential savings, we have proposed an agricultural subsidy of $5.6 billion to Afghanistan and $5.4 billion to the Andean region. For all the OECD nations, including the U.S., this represents an approximate annual return of $300 billion on an $11 billion subsidy investment. That’s about 500 times better than a normal 5% annual return. On a personal basis, let me add there isn’t one of us here that wouldn’t fight to be in line to invest.”

“Because of the vast margin between ‘farm door’ prices and rich nation ‘societal costs’, a very poor nation, Afghanistan for example, or even only a rurally poor one like Colombia, can benefit from the cessation of its cultivation of drug producing plants, much more so than from actually producing them, because rich nations can now invest a portion of the savings gained through leveraging the cost differentials toward financing “Transformational Economic Diplomacy.”

In the Q & A, Cook was asked about landowners, not always the actual farmers, but those ‘drug rent-seekers,’ who through ownership or control of lands can extract income, whether or not they are the actual farmers. “Yours is a good future for farmers, but what about ‘rent-seekers’”?

“Since oil or minerals in many lands are there by pure accident of geography, those in control of such resources can tap into the profits of extraction, often without much effort of their own, provided they can maintain control of the resource. Even the presence of a legal source of wealth is too often accompanied by a lack of democracy. You can fill in your own examples. I suggest that the ownership of land in a nation that allows drug cultivation on that land, no matter how poor the nation is otherwise, is positioning drug rent-seeking against rule-of-law.

So long as terrorists, warlords, tribal rulers or other landlords control land upon which drugs can be cultivated, that represents their version of an oil well or a diamond mine. It is a treasure vein that they do not want severed. Yours is a good question because the answer is that ‘drug rent seeking’ and democracy do not mix. Those who control the land must use it otherwise. Rent-seeking through an illicit resource must be eliminated!”

“Two developing nations: Colombia and Afghanistan, fit this description. Afghanistan is at the very bottom range of the bottom-billion in rural poverty, yet it produces 92-95% of one illicit resource—heroin. Rural Colombia is another poverty area, also the world’s largest supplier of cocaine and its derivatives. Colombia also produces the bulk of all heroin consumed in the United States. (Although Afghan heroin is now 20% of U.S. usage) We are trying to support democracy in both nations by capitalizing existing price differentials.”

“As you are aware, the direct linkage between drugs and terrorism is becoming more manifest with each passing year and it is my hope that this diplomacy will offer a means to reduce the threat. As I noted in my general comments, those concerned with potential WMD terrorism against the U.S. are convinced that the likely source of funding would be from Afghan drug trade. Some of those I interview in Homeland Security regularly advance this cautionary vision.”

“People seek enduring relationships and a powerful sense of place. Afghans and Colombians are no different in this desire to settle down—to have life provide more smiles and fewer fears. Americans are the same in wanting some sense of social control of our future. Is this desire universal? Yes, I think it is. Here are some other advantages of such a policy.”

…Reduction of military personnel needed

…More effective use of military and civilian personnel

…Reduction in loss of lives, military and civilian

…Reduction in costs related to NATO and U.S. military presence

…Reduction in conflict levels

…Reduction in terrorism levels

…Reduction in revenues to finance terrorism and insurgencies

…Reduction in regional tensions (Afghanistan, Pakistan, Iraq)

…Reduction in terrorist abilities to recruit among disenchanted youth

…Reduction in terrorist ability to finance a nuclear event

…Increase of recipient ‘budget-support,’ better general economics.

…Increase of recipient nation education

…Increase of qualified expatriate returns to recipients

…Increase in health care and life-expectancy to recipients

…Increase in needed infrastructures for recipients

…Reductions in tensions between EU and U.S

…Improved relations with recipient nations

…Superior returns-on-investment to investor nations

…Reasons for hope, winning hearts and minds—for all of us

If you would support such values to build our nation’s moral authority, let me hear you say so. Thank you!

Walton Cook authored the 2001 political-thriller, Buzzword, in which bio-control organisms are used to restrict the cultivation of drug plants through soil-inoculation.. He has also written Birthright of Freedom, on Social Security reform. waltoncook yahoo.com