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Who Benefits from the War on Drugs?

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Libertarians are absolutely correct about the war on drugs. Governments should have no say in what an adult ingests or consumes. And therefore all laws regulating or restricting the production, sale, or use of any drug or substance should be repealed.

Libertarians are also correct in pointing out the drug war’s disastrous consequences. Drug prohibition has made criminals out of otherwise law-abiding citizens, cost the taxpayers hundreds of billions of dollars, made drugs more dangerous, created powerful criminal syndicates, increased violent crime, corrupted law enforcement at all levels, and expanded the size and scope of government.

As Wendy Kaminer writes,

A sensible person … might wonder why we criminalize the use of cocaine and heroin, not to mention marijuana, while we tolerate and even celebrate alcohol consumption. Of course, we learned long ago that prohibition of alcohol was bound to fail. So a sensible person might propose that we consider ending prohibition of drugs like marijuana, cocaine, and heroin, which pose much less threat to the public safety than alcohol, or at least reduce harsh penalties for their use. But sensible people have had little influence over the nation’s drug policies.

All of this has led many to declare the government’s anti-drug crusade a failure. But one man’s failed government program is another’s success. The war on drugs has transferred a vast amount of wealth and power to those who would otherwise have to find honest work. One doesn’t have to be a public-choice scholar to recognize that the drug war, like any war, is merely “politics by other means,” and that those who benefit from it have no desire to see it ended anytime soon.

Who are the beneficiaries of the war on drugs?

A major beneficiary, of course, is the U.S. government, which has used the drug war as a pretext to shred the Bill of Rights and claim vast new powers over the American people. That the drug war would lead to the depredation of civil liberties and the erosion of the rule of law was inevitable, given that there is simply no way for the government to effectively enforce its drug laws while abiding by the Constitution.

And as libertarians and many other constitutionalists have tirelessly pointed out, Washington’s drug war is illegal because the power to prohibit drugs has never been given to the federal government. Just as with alcohol prohibition, any federal law prohibiting or restricting the production, sale, and use of drugs (marijuana, cocaine, heroin, etc.) would require a constitutional amendment.

The war on drugs generates huge profits that enrich drug dealers and drug warriors alike. The dealers get very wealthy shipping and selling their contraband. The drug warriors, for their part, receive billions of dollars a year from the taxpayers and bank a sizeable portion of the war booty their raiding parties routinely snatch up. And this plunder includes more than just “drug money” but any property they suspect might be involved in narcotics trafficking. As the economist Robert Higgs writes,

The drug war has been a bonanza even to law-abiding cops, as the altered forfeiture laws have given the police free rein to seize private property more or less at will. … If in the process of padding their budgets the police arrest a throng of street-corner entrepreneurs who subsequently land in prison, well, c’est la guerre. (PDF)

Largess from asset forfeitures and federal grants allows local police departments to augment their salaries, expand payrolls, and purchase sophisticated surveillance equipment, high-powered weaponry, and other menacing-looking paramilitary gear. Indeed, the militarization of America’s police departments over the last 35 years has largely been a function of the drug war.

And behind the frontlines of this war is a vast legal-industrial-imprisonment complex employing thousands of judges, prosecutors, criminal-defense attorneys, bail bondsmen, prison guards, and vendors. For the corporations operating privatized “correctional facilities,” the drug war provides a steady supply of warm bodies to fill their prison cells.

Another major beneficiary of the drug war is the banking system, which takes in hundreds of billions of dollars annually from narcotics traffickers. The United Nations Office on Drugs and Crime (UNODC) describes money laundering as “the method by which criminals disguise the illegal origins of their wealth and protect their asset bases in order to avoid suspicion of law enforcement agencies and to prevent leaving a trail of incriminating evidence.”

Money laundering is more than just an opportunity for greedy bankers to collect fat commissions. The huge amount of cash churned up by the illegal drug trade has become a vital source of liquidity for the rickety fractional-reserve banking system. UNODC’s director, Antonio Maria Costa, told the British newspaper the Observer in late 2009 that proceeds from the illicit drug trade were “the only liquid investment capital” available to many banks on the brink of collapse. In fact, “a majority of the $352 billion of drugs profits was absorbed into the economic system as a result.”

According to Costa, “Inter-bank loans were funded by money that originated from the drugs trade and other illegal activities. … There were signs that some banks were rescued that way.”

The CIA has long been involved in drug trafficking. This conflux of the intelligence netherworld and the narcotics-trafficking underworld has been written about by a variety of credible journalists and scholars. The reports usually involve the CIA working with drug traffickers, providing them assistance in return for intelligence and material support. Alfred C. McCoy, author of The Politics of Heroin in Southeast Asia, writes,

In most cases, the CIA’s role involved various forms of complicity, tolerance or studied ignorance about the trade, not any direct culpability in the actual trafficking … the CIA did not handle heroin, but it did provide its drug lord allies with transport, arms, and political protection. In sum, the CIA’s role in the Southeast Asian heroin trade involved indirect complicity rather than direct culpability.

Peter Dale Scott, a retired professor and the author of many books including Cocaine Politics: Drugs, Armies, and the CIA in Central America, and Drugs, Oil, and War: The United States in Afghanistan, Colombia, and Indochina, believes McCoy understates the extent of CIA involvment. Scott believes rather than being passively drawn into “drug alliances,” the CIA actively engages in narcotics trafficking in pursuit of certain “national-security” objectives and to finance “off-the-books” operations. Scott writes, “Far from considering drug networks their enemy, U.S. intelligence organizations have made them an essential ally in the covert expansion of American influence abroad.”

Robert Parry’s Lost History: Contras, Cocaine, the Press, & “Project Truth” and Alexander Cockburn and Jeffrey St. Clair’s Whiteout: The CIA, Drugs, and the Press are two well-researched books supporting Scott’s contention. And perhaps most notable is the reporting of the late Gary Webb. His “Dark Alliance” series published in the San Jose Mercury News in 1996 sparked a firestorm of controversy by asserting the CIA had engaged in cocaine smuggling as part of its covert operations supporting the Nicaraguan Contras. Though Webb was criticized at the time and driven out of the mainstream press for his investigative journalism, much of what he reported in the series was validated later by an inspector general’s investigation of the CIA.

The war on drugs has created shared interests for the world’s largest banks, drug cartels, and the U.S. intelligence apparatus. As the economist Michel Chossudovsky writes,

This trade can only prosper if the main actors involved in narcotics have “political friends in high places.” Legal and illegal undertakings are increasingly intertwined, the dividing line between “businesspeople” and criminals is blurred. In turn, the relationship among criminals, politicians and members of the intelligence establishment has tainted the structures of the state and the role of its institutions.

The drug war is not about squashing narcotics trafficking, nor is it about protecting Americans from the ravages of drug addiction. The ugly truth is the war on drugs is one of America’s most lucrative industries, funding police salaries and supporting the country’s vast prison system. It is apparently also propping up a bankrupt financial system and reportedly providing the spooks at Langley with cash to finance their black ops.

Ending the drug war would require fundamentally rethinking decades of official policy, closing down multiple government agencies, as well as undermining the powerful, entrenched corporate interests that have developed over the last 40 years. Perhaps this is why U.S. government will make sure the war on drugs never ends. Meanwhile, civil liberties are violated, the Constitution is trashed, lives are ruined, and the death toll mounts.

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    Tim Kelly is a columnist and policy advisor at The Future of Freedom Foundation in Fairfax, Virginia, a correspondent for Radio America’s Special Investigator, and a political cartoonist.