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.

The Law of Economics Foretold of the Current War on Drugs Related Police Abuses

Remember this?

What will be the consequence of such absolutist political trend? Will state imposed violence be unopposed? Or, like today’s superhero movies, will there be a structural backlash in the form of counterviolence and the degradation of society's moral fiber? Will arbitrary actions through absolutist politics not lead to the corruption or abuse of the system? Will Lord Acton be proven wrong?  Will people unduly or innocently killed because of political whims simply absorb and swallow personal losses?

I wrote this immediately in the aftermath of the elections: Superhero Movies and the Dangers of Extrajudicial Killing as a Local Policy May 23, 2016

The emergence of the Tokhang for ransom cases seems to be validating my postulations. And it has not just been kidnap for ransom, but the murder that ensued from one case brought such police abuses to the surface. And that’s aside from other forms of Tokhang related scams-extortions.

So the war on drugs has spawned a different monster. 

Such looked quite similar to the era of alcohol prohibition or the ‘war on alcohol’ in the US (Volstead Act 1920-1933) which fomented organized crimes. The difference is that in the US, it was (politically protected) gangsters which emerged.

Yet what seemed as a prediction, has really been nothing more than the realization of the unfolding effects of the basic law of economics

As I have been saying,

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. [Philippine Political Theater: The Deepening State of War: From War on Drugs to Mining to Oligarchy! (8/15/16)]

So when the costs of arbitrary police actions declined, such incentivized police abuses! Hence, the Tokhang for ransom and extortion cases signify the unintended effects of war on drugs that have been grounded on the law of economics.

So again, criminality has only been shifting from drugs to the police.  And this reveals or demonstrates theory and history in action!

Economics is about people. This means the laws of economics don’t just apply to commercial activities. Because people’s actions are interconnected, economics encompasses social and political activities.

Now here’s the emerging dilemma for the war on drugs; if there should be a crackdown on the PNP for its injustices then what will happen?

Let us apply the law of economics again: when the cost of an activity rises, there will be less of the said activity.

Will there emerge internal divisions and frictions within the police institution (as the political costs of Operation Tokhang increases)? Will such spur (materially) lesser intensity to enforce Operation Tokhang? Said differently, will such start leakages in the implementation of the war of drugs? 

And will the new setting bring forth new forms of organized criminality?

Or, will a clampdown on erring policemen constitute nothing more than theatrics?

At the end of the day, politics cannot or will not avoid or elude the law of economics.

The Path to Ochlocratic Socialist Dictatorship: How Phony Statistics Have Been Used as Instruments of Repression!

I have repeatedly been saying here that the Mr. Duterte’s “war on drugs” has truly been intended to impose an ochlocratic socialist dictatorship.

The “war on drugs” has served as MEANs (an instrument) to an END (goal: dictatorship) rather than thepublicized end itself (eradication of drugs).

Given that the Philippine populace has become tremendously short-term focused (high time preference—Austrian economics vernacular), which has signified a pivotal ramification of the BSP bubble ‘trickle down’ policies, attraction to short-term solutions, particularly towards “totalitarian” tendencies have become exceedingly popular.

Hence, Mr. Duterte’s election and drastic and radical implementation of the “war on drugs” represents a backdoor scheme to the establishment of such ochlocratic socialist dictatorship.

Importantly, through popular consent, the means has been used to justify the end. Thus, the ochlocracy (rule of the mob)

Here are more proofs to demonstrate how the “war on drugs” has signified a tool for the twenty-first-centurysocial repression/dictatorship in the Philippines.

One, statistics used in the "war on drugs" have been obscured, are phony, inflated or have no basis at all!

From Reuters (Interaksyon/ Huffington Post, October 25) [all bold mine]

President Rodrigo Duterte ended a recent speech in Manila with a now-familiar claim: Two policemen were dying every day in his violent battle to rid the country of illegal drugs.

But police statistics have shown that figure to be exaggerated. From July 1, when Duterte launched his "war on drugs," to October 12, when he spoke in Manila, 13 police officers were killed. That's an average of one every eight days.

This is not the only dubious claim Duterte has used to justify his bloody anti-narcotics campaign, according to a Reuters review of official government data and interviews with the president's top anti-drug officials.

These officials say that data on the total number of drug users, the number of users needing treatment, the types of drugs being consumed and the prevalence of drug-related crime is exaggerated, flawed or non-existent. But they say the problematic statistics don't matter because the campaign has focused attention on a long-neglected crisis in the Philippines.

More…

In his inaugural State of the Nation Address on July 25, Duterte declared that there were 3.7 million "drug addicts" in the Philippines.

"The number is quite staggering and scary," he said. "I have to slaughter these idiots for destroying my country."

But according to a 2015 survey by the Office of the President's Dangerous Drugs Board, the main drugpolicy and research unit, the Philippines has fewer than half that many drug users.

And rather than being "addicts," as Duterte refers to all drug users, about a third of the 1.8 million users identified in the DDB survey had taken drugs only once in the previous 13 months. Fewer than half of them -- 860,000 -- had consumed crystal meth, or shabu, the highly addictive stimulant widely blamed by officials for high crime rates and other social ills. Most were marijuana users.

The equivocal use of statistical definitions…

Statements by Duterte and other officials not only fail to distinguish between users and problem users, say drug-treatment specialists, but also between users of shabu and marijuana. Shabu is a highly addictive stimulant with side effects that can include aggression and psychosis.

"They are completely different substances in terms of risk profiles and harms," said Robert Ali, director of a University of Adelaide research center on drug and alcohol treatment who works with the World Health Organization. "Shabu has a higher risk of addiction. It is associated with a greater range of physical and psychological harms."

While drug abuse is a real problem in the Philippines, said Ali, it was hard to devise an effective national response based on flawed data. "With public health, whether it's diabetes or drug use, you need a sense of the burden of harm to understand how to use your resources," he said.

Joanne Csete, a specialist in health and human rights at the Mailman School of Public Health at Columbia University in New York, said that the term "current drug users" usually refers to those who have used drugs in the past month. However, the DDB survey counts anyone who has used drugs in the past 13 months, which Csete says could inflate the number of users.

"So the president can make up whatever numbers he likes -- the survey does not adequately estimate current use," she said.

The picking figures from the sky…

The claim that 75 percent of "heinous crime" in the Philippines is drug-related features in an official booklet called "Winning the First Phase of the Drug War." It was handed out by the president's media team in September at a regional summit in Laos attended by world leaders.

According to the booklet, heinous crimes include murder, rape, human trafficking and treason.

It is not clear where the president's media team got the 75 percent figure. The booklet identifies the source of the number as the Philippines National Police Directorate for Investigation and Detective Management. But six officials in the office responsible for the booklet and at the DIDM were unable to point to a specific study or explain how the figure was calculated.

Nimfa Reloc, who monitors heinous crime cases for DIDM, said the office had released no such data or analysis and did not know where the number came from. She said 15 percent of heinous crimes are drug-related.

Benjamin Reyes, the DDB's chairman, said there was "actually no data" on crimes committed under the influence of drugs.

An estimated 18 percent of convicted prisoners worldwide are in jail for drug-related offences, according to the United Nations Office on Drugs and Crime.

So the "war on drugs" essentially pillars its arbitrary violence and repressive actions from a set of conjured spurious numbers which it has used as a political bogeyman for repression.

This reminds me of the great libertarian, Henry Louis Mencken (HL Mencken) in his In Defense of Women

Civilization, in fact, grows more and more maudlin and hysterical; especially under democracy it tends to degenerate into a mere combat of crazes; the whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, most of them imaginary.

Two. Excerpts that reveals how phony statistics are used to justify populist politics…

Police and senior officials have used the claim to justify tough measures against drug users and pushers, and say those measures have been vindicated by a drop in crime since the anti-drug campaign began.

The faulty figures have other real-world implications. They determine, for instance, how many people the government says must be targeted to eradicate drug demand in the Philippines. That has led to the drawing up of police "watch lists" with the names of drug suspects, hundreds of whom have been shot dead either in police operations or by unknown gunmen.

The president's statistical claims continue to drive policy. In September, Duterte said the number of "addicts" would rise to four million by the end of the month and vowed to extend his drug war for another six months -- to June 2017. That statement came after remarks on September 30, when Duterte seemed to compare himself to Hitler and said he would be "happy to slaughter" three million drug addicts.

Burden of harm

A senior law enforcement officer said Duterte's "arbitrary" figures had put pressure on police and government officials.

"The problem is, every time the president says something, it's already some sort of a policy statement," said the officer, who spoke on condition of anonymity. "We have to toe the line."

The officer pointed, for example, to the more than 700,000 people who have registered in the past three months with the authorities as drug users or pushers, a process known as "surrendering." But, he said, authorities were expected to produce at least 1.8 million "surrenderers" to match the number of users cited in the DDB report.

"That's the reason we are having a hard time. We need to produce," he said. "Even if we add up everything ... we are not even close to 1.8 million."

In other words, the war on drugs hasn’t just been about extrajudicial killing, but likewise about "mass arrests" out of mere suspicions and of hitting quotas. This showcases the progression of systemwide repression.

Three. The so-called accomplishments by the administration have been inflated…

Of the 1.4 million shabu users Villanueva had identified by his method, about 700,000 people had already "surrendered" to the police as drug users and pushers, he said.

"We are taking away already one half of the demand," said Villanueva.

Treatment experts dispute this claim, since the severity of drug use among those who surrender is unclear. A spokesperson at the Philippines' Department of Health said he didn't know how many "surrenderers" had been medically screened.

This matters, said Ali, the University of Adelaide treatment specialist, because "drug use is not necessarily drug dependence." Only about 10 to 15 percent of shabu users might require residential care, he said. Ali said he based this estimate on his clinical experience and the experience of treatment services in the United Kingdom.

The DDB’s survey does not distinguish between users and problem users.

"We did not try to categorize them, whether or not they were addicts, problematic drug users, or just plain users," said DDB chairman Reyes.

To calculate the number of problem users, said Reyes, the DDB relied on global estimates from the UNODC that say 0.6 percent of drug users are problem users, which means they require treatment.

Killings based on mere suspicion and inadequate evidence, without due process is MURDER!

This also speaks of the hapless numbers of poor souls, who were slaughtered for political convenience (appease the bloodthirsty mob) and for the leadership’s ego trip.

Forced surrenders are also acts of repression and injustice.

Four. As predicted, murder has now been substituting for drugs!   

As I wrote last August: (Philippine Political Theater: The Deepening State of War: From War on Drugs to Mining to Oligarchy! August 15, 2016)

when the cost of doing murder is reduced, then murder or killings will flourish.

It’s all about incentives.

So the government has only been substituting one vice and crime for another crime. Or the government has been subliminally promoting the replacement of drugs with murder.  The worst outcome is that we may have both.

Back to the article…

While the crime rate has been dropping for several years, under Duterte the murder rate has risen since he launched his anti-drug campaign. In the first three months of his administration, police recorded a total of 3,760 murders, compared with 2,359 in the same period last year, a rise of 59 percent.

"Compared with last year, we are better off this year," said Dionardo Carlos, the national police spokesman. "Most of the victims this time are the drug users."

In Davao City, where Duterte was mayor for 22 years, he led an equally brutal anti-drugs crackdown. There, death squads killed hundreds of alleged drug dealers, petty criminals and street children, said Human Rights Watch in a 2009 report. Duterte denied any involvement in the killings.

Despite the crackdown, Davao still ranks first among 15 cities in the Philippines for murder and second for rape, according to police crime data from 2010 to 2015.

Bullseye!

Statistics can function as a fatal weapon.

As the late great dean of the Austrian school of economics, Murray Newton Rothbard wrote, (Statistics: Achilles' Heel of Government April 28, 2013 Mises Institute)

Statistics, to repeat, are the eyes and ears of the interventionists: of the intellectual reformer, the politician, and the government bureaucrat. Cut off those eyes and ears, destroy those crucial guidelines to knowledge, and the whole threat of government intervention is almost completely eliminated.

Perhaps such questionable statistics applies not only to the “war on drugs”, but also to the government’s economic-financial data. After all, given that these numbers signify a monopoly (not subject to audit), then the government can say what they want to say.

The “war on drugs” should function as notable example of how statistics are abused and can be manipulated to support political agenda (or social repression)

Yet, the economic and political consequences of the war on drugs will be far reaching.