Economics Has Hit A Critical Homerun: Suspension of the War on Drugs Equals Policy Failure!

The war on drugs has failed!

The law of unforeseen circumstances has finally been revealed.

Or, I have been validated (anew): the fundamental laws of economics have made a critical homerun!

From the Inquirer: (January 31)

The chief of the Philippine National Police on Monday suspended controversial antinarcotics operations to make way for a cleansing of the ranks, after President Duterte admitted that the police force prosecuting his brutal war on drugs was “corrupt to the core.”

Speaking at a news conference at PNP headquarters in Camp Crame, Quezon City, Director General Ronald dela Rosa said Mr. Duterte gave the order to suspend the war on drugs at 3 a.m., after a series of scandals in which officers were caught committing murder, extortion and robbery while using the antinarcotics operation as cover.

“The President said we need drastic actions and this is the drastic action we are taking right now,” Dela Rosa said.

Economics is about people’s actions. It’s about the incentives that impel people’s variable and dynamic actions, as signified by shifts in demand and supply curves coordinated by subjectively determined prices and costs.

And social policies affect people’s incentives to act.

In the name of social weal, the war on drugs has simply skewed incentives to favor institutional abuse. I have repeatedly been pointing this out since the aftermath of the national elections. For instance, Right.Is still carries a blog post of mine where I warned of baneful effects from Prohibition: see Phisix 7,450: The Duterte Regime in the Shadow of Team PNOY; The Coming Failure of Prohibitionist Statutes May 15, 2016 Right.IS

YET NO amount of purging or cleansing of the police or military ranks of corruption will succeed if political actions depend on arbitrariness or the exclusion of the rule of law or due process. It’s political unilateralism, not personal frailties, that leads to the abuse and corruption.

So even without me having to point this out, experiences borne out of similar historical public policies from around the world, have resulted to the same outcomes.

My role was simply to explain and reiterate the economic relevance of prohibition to society.

To add, I raised the perils of the delusional populist expectations of short term political elixirs. See my previous email “Superhero Movies and the Dangers of Extrajudicial Killing as a Local Policy” May 23, 2016 asexample.

The suspension of the war on drugs has simply destroyed populist fantasies pillared on the supposed wonders from the absolutist superhero effect. More importantly, this represents a capitulation or the implicit admission of the program’s FAILURE by the administration. And stunningly, it’s barely a year from its imposition.

In short, this time has NOT been different!

Again, all actions have (intertemporal) consequences. Or consequences will manifest itself differently through time.

The ramifications of such policies will unfold visibly (as the above), or undetected (through the economy or through other social developments).

There have been tremendous costs, which the myopic and gullible public has failed to comprehend, that will have to be paid for, sadly by residents of this country.  

Back to the basics: When the cost of an activity rises, people will do less of the said activity. On the other hand, when the cost of an activity declines, people will do more of the said activity. 

Though the present moratorium on the war on drugs may be temporary, or that the administration may channel the war on drugs more through the “informal economy of death”, the pressure to crackdown on the “corrupt to the core” police will likely diminish the intensity of the implementation of the administration’s core political agenda.

And since, in my view, the war on drugs has signified nothing more than a pretext or smokescreen for the real goal—the swing to the political left or the establishment of socialism Philippine version—the administration will have to look for makeshift means to implement its undeclared political objectives. Perhaps, the ordered closure of 23 mining firms and the suspension of 5 others, the proposed total log ban, the prospective ban on OFW Household Service Worker (HSW) deployment on Kuwait and or the MMDA’s war on shopping malls(where the proscription of weekday sales will be enforced for one year)—all packed within the week, have been no coincidence.

And because the political cost of prosecuting the war on drugs has ostensibly increased at the expense of the administration’s political capital, which intuitively has prompted for its suspension, alternatively, the costs of doing drugs should now fall. To apply an old maxim, when the cat is away, the mouse will play.

So, like the mythical Phoenix, expect the drug trade to rise from the ashes.

But also expect that instead of the previous mode of transactions and operations, the drug trade will likely evolve to more “organized” means which may involve gangster type of undertaking.

People adjust to the incentives created by social policies.

There are lots of things to discuss, but this should be enough.

Yet the message should be simple: there is NO escape from the basic laws of economics.