I just need this quick rant. Diane Reims read a letter a moment ago. It went something like this, in regard to the new Afghan offensive: I think Obama is taking big gamble. Success is fleeting. The solution is not guns and rockets. I think we should buy the opium harvest outright.
I’d like everyone to tell me their two favorite reasons this idea is Sofa King stupid? And let’s focus away from the “gun’s and rockets” argument, since Liberals will never succumb to the idea that there exists a thing called aggressor for whom only force is understood.
It’s simple. An attempt to “buy the opium harvest outright” would essentially double the demand for opium in Afghanistan, driving the price up. Of course, if would be more than double. There isn’t a co-op or central distribution center to go and right-out buy the whole lot. You’d have to artificially increase the demand several fold – increasing the price several fold.
If you look at any supply/demand curve, you’ll see the left side levels out at some point while the right side slopes up increasingly into a near vertical.
Think of it in these terms: Bananas are about $.50 a pound. They’re this cheep because that is the market price. If Kroger has bananas at $.75 a pound, I’ll wait until I’m at Meijer to get some. If Meijer put bananas on sale, say $.40 a pound, I might grab an extra one. If something happens and bananas drop to $.20 a pound, it probably won’t matter – I won’t buy more than maybe one extra. I’m already buying the maximum number of banana’s I care to eat. So you see the left side of the graph levels out.
Now look at the right side of the graph. Let’s say the demand doubles. What will this do to the banana price? It means there won’t be enough bananas to go around, so the price will double, triple, and keep growing until the market find its price – all depending on how much people want a banana.
This is the same thing that will happen in Afghanistan with opium. The price will – certainly – more than double. And what happens to either opium or bananas when the price rises, or when the demand goes up? Farmers struggle to fill the demand. Just like when we started funding ethanol fuel, there were food shortages in south America because farmers were switching from the local staple food – corn – to growing corn for fuel. Likewise, Afghan farmers will switch from rice and other staples to opium. And thus the price for staple foods will go up pricing more Afghans out of the market.
Will this take opium from the Taliban and make them unable to sell it and finance their guns and rockets? No, it will just make opium cost more at first, until the farmers catch up. Opium cost to the drug trade at the farmer-buyer lever is like water costs to a tire factory. All the drug trader’s costs are in smuggling and enforcing – and Taliban are probably considered something of both.
And if the US wanted to keep the price up, they’d have to dump more and more money into the drug market every year to compensate for the increased growing, continuing the cycle of skyrocketing food costs. So – it would just be stupid.
This might lead one to image a different market solution. It might seem a good idea to start buying up another crop. If you could raise the price of something besides opium, farmers would grow that instead of opium. There one problem with this – actually two. There’s of course the problem that Afghans already pay most their income for food and are easily priced out. But the fundamental problem is in HOW the crops are priced. Rice or fruit have price curves that are low, because the demand is
dependent on people already at max output – they really can’t spend more on food. And if they could, they wouldn’t buy a whole lot more of it. You only need so much food regardless.
Opium is different. The price curve can rise very high. Opium demand depends on world demand for opioids, efforts governments make at regulating opioids, number of suppliers fighting over the market, trends in opioid use, and all the other regular world trade variables. In other words, even if you multiplied the price for a non-opium Afghan crop by 10, opium would still price its way into holding the amount of crop land it needs to fill the demand – because the actual opium cost in the final illegal opioid drug in pennies on the dollar – if that.
It’s better use guns and missiles to damage the Taliban’s ability to buy and ship opium and what they buy with the opium. Cutting off a smuggling routs and otherwise making the opium business an extremely deadly one drives the price up quite a bit!
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Raging Kitty