The economics of crack-related violence

Violence related to the sale of crack cocaine in the US is way down. Steven Levitt, the author of the excellent book Freakonomics, looks at why, in an article in the NY times:

…as of 2000 — the most recent year for which the index data are available — Americans were still smoking about 70 percent as much crack as they smoked when consumption was at its peak.

If so much crack is still being sold and bought, why aren’t we hearing about it? Because crack-associated violence has largely disappeared. And it was the violence that made crack most relevant to the middle class. What made the violence go away? Simple economics. Urban street gangs were the main distributors of crack cocaine. In the beginning, demand for their product was phenomenal, and so were the potential profits. Most crack killings, it turns out, were not a result of some crackhead sticking up a grandmother for drug money but rather one crack dealer shooting another — and perhaps a few bystanders — in order to gain turf.

But the market changed fast. The destructive effects of the drug became apparent; young people saw the damage that crack inflicted on older users and began to stay away from it. (One recent survey showed that crack use is now three times as common among people in their late 30’s as it is among those in their late teens and early 20’s.) As demand fell, price wars broke out, driving down profits. And as the amount of money at stake grew smaller and smaller, the violence also dissipated. Young gang members are still selling crack on street corners, but when a corner becomes less valuable, there is less incentive to kill, or be killed, for it.

So one of the most pressing problems for big cities in the US went away more or less on its own. Not through increased police presence, tougher laws or anti-drug programs. But through economics. This tells me, that we could use a similar approach to solve similar problems. Rather than fight it (by declaring war on poverty, terrorism, hunger or poverty) but by changing the economics involved. Interesting thought, huh?

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