Surprise: Cocaine prices falling

John Walsh at the Washington Office on Latin America has issued another thoughtful report on cocaine prices. His 10-page paper has some excellent graphs of cocaine prices.

Contrary to the repeated claims in November 2005 and November 2007 by John Walters that cocaine prices were going up in an "unprecedented disruption" in the cocaine market, the opposite was true. ONDCP obtained a report from the Institute for Defense Analysis (IDA) on July 23, 2008. It was just released in February 2009, but is buried on their website in the middle of 2008 publications.

Contrary to Walters' claims, the average U.S. retail price of cocaine per pure gram was the lowest in history and 22 percent lower than in 1999 at the start of Plan Colombia. The average retail purity of 64 percent was close to the median of 67 percent since 1988.

The price drop is not due to demand. Demand has been relatively stable since 2000.

Walsh's conclusion is that, as the historical pattern reveals, there are disruptions in the supply of cocaine, but they have always been temporary. But these infrequent disruptions are the best we have achieved despite an enormously expensive investment into interdiction, source country control, crop suppression. Walsh notes that "the scope of the failure of supply-side measures must be acknowledged" by policy makers.

But Walsh notes that DEA continues to report price increases that are contradicted by the IDA analysis.

Effective policy making is impossible when the critical data is erroneous, falsified, or concealed. Is the crisis of cartel violence in Mexico, which has been the subject of one dozen congressional hearings since January, another instance of the data problem? Claims of the extent cartel killings since the inauguration of President Calderon now top 10,000. Warnings of spillover violence into Arizona, Texas, California and elsewhere in the U.S. accompany every report. How accurate are these claims?

We need to continue to demand that data be carefully developed, and accurate. If Walters' claims about cocaine were made under oath at a congressional hearing, perhaps Congress should consider whether Walters' claims amounted to perjury, and should be referred to the U.S. Attorney.

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