Comments on: Quick Hits

By: Gulliver

Gulliver — Thu, 03 Sep 2009 21:41:23 +0000

It means they’re not addressing any of the fundamental reasons why opium is grown, they’re just counting their blessings.

Agree with this. It sort of demonstrates the absurdity of the entire poppy situation, though, at least as far as the coalition is concerned: ISAF has no control over demand, and thus can’t do much to control prices except continue an interdiction campaign that drives them up. You can’t encourage production to drive prices down, certainly not before finding a way to cut the Taliban out of the process, because the protection prices, intimidation, and extortion probably don’t trend downwards just because market price does.

By: Joshua Foust

Joshua Foust — Thu, 03 Sep 2009 21:17:10 +0000

Actually, it kind of is. CN is inherently about market controls—trying to restrict supply or drive up cost. What’s we’re seeing if prices dropped is that the entire CN campaign didn’t work, and (basically) greedy production did.

That is, if UNODC is right and the decline in production is mostly due to prices, and that price drop is due mostly to hyper-saturation, AND if there is really a 10,000 MT+ stockpile hidden away in Afghanistan.

It means they’re not addressing any of the fundamental reasons why opium is grown, they’re just counting their blessings.

By: Gulliver

Gulliver — Thu, 03 Sep 2009 20:34:11 +0000

While it’s nice to see opium cultivation drop, it’s mostly because of price pressures. That is, macro-economics: oversupply has crashed the global price. Aggressive counternarcotics tend to raise the price of opium. Shouldn’t that tell us that a non-aggressive counternarcotics program—say, the economy—would be most effective at reducing its strangehold on the Afghan economy? Oh, and it’ll be fun to see how all those drug cartels react when they notice their tens of thousands of pounds of surplus opium has scarce value.

Yesterday on Marketplace on NPR they were talking about BP’s discovery of a new oilfield, something like six miles below the surface of the Gulf of Mexico. It’s going to be expensive as hell to get out, and will provide something like 350,000 barrels per day in a global market that consumes 83 million per day. And so while this is a windfall for BP and its shareholders, it’s not going to do much for global prices. The moral of the story was that they’re going to go get it, even though it’s expensive to do so, because there’s still profit there.

None of which really has all that much to do with what you’re saying here, except that one of the commentators was quoted saying something like (paraphrasing) “paradoxically, nothing lowers prices like high prices.” It’s a really simple, logical chain, of course: prices go up, people are willing to expend more resources to find/get/create the valuable commodity because of increased margins, more of the commodity is found/gotten/created, markets have more access, prices go back down.

All of which is to say that market controls probably ain’t gonna end the drug business in Afghanistan, or anywhere else. (Not that that was your argument.)