(Blog)

I came away from reading economist Steven D. Levitt’s recent book, Freakonomics, with a Republican’s disdain for the (illegal) drug industry. The crack boom helped knock blacks a few decades backward in catching up to white America’s socioeconomic status, fuel a crime wave that lasted until the early 1990s, and basically screw up society in general. But, now I’m starting to think that just as the “crime wave” peak of the 80s was followed by a just-as-large trough, we could be seeing the waning popularity of drugs in the coming years.
Why? Let’s think about why drugs sell. Folks sell drugs because it’s a lucrative underground industry. It’s lucrative because the “war on drugs” keeps it lucrative. But I think that’s chancing, and with that, profit margins won’t be what they used to, and other income sources on the horizon might convert sociopathic drug kingpins into sociopathic identity theft kingpins or sociopathic hacking kingpins.

Yesterday, Yahoo! News (via Reuters) reported that for the first time, “global cybercrime generated a higher turnover than drug trafficking in 2004 and is set to grow even further with the wider use of technology in developing countries”.

The article takes a turn toward fearmongering, with a quote from Valerie McNiven, cybercrime adviser to the U.S. Treasury, stating that “no country is immune from cybercrime” and “cybercrime is moving at such a high speed that law enforcement cannot catch up with it.” If law enforcement is having a hard time going after cybercriminals, that means it’s probably less dangerous for criminals than drug trafficking, and if its slated to become infinitely more profitable than drugs in the coming years, this underground industry is going to attract a horde of criminals the same way crack attracted every them in the 1970s. It’s going to be a criminal goldrush. Perhaps these criminals will even learn to code and find a job at Google or Amazon.com to be a better prospect than stealing credit cards online.

As the drug industry becomes less attractive to criminals and they focus their attention on something less damaging to society, like identity theft (it still sucks, but its not as bad as drugs), we’ll find that addicts have less sources for their next fix, and that this fix will become more and more expensive as demand exceeds supply. More consolidation in the industry will create more visible cartels, and less business in general will make the job of busting these cartels easier for the DEA. Maybe we’ll have a few high-profile “celebrity” cartel members get carted off to federal prison like we did in the 80s. There will always be a demand, but this industry could fall into decline soon.