Losing The War On Drugs: Rewards For Organized Crime, Part 9

ILLEGAL DRUGS, INDECENT PROFITS

Banning Drugs Inflates Their Value. As A Result, Organized Crime Grows More
And More Powerful

On Feb. 14, 1929, three men in police uniforms and two others in civilian
clothes approached a Chicago garage known to be a shipping centre in the
illegal alcohol trade. They found seven men inside. Pointing their
machine-guns, the police ordered the men up against a wall.

As the seven stood with their hands in the air, the officers opened fire,
killing them all.

The killers weren't police officers. They were hoods acting on the orders
of Al Capone. The murders they committed would come to be known as the
Saint Valentine's Day Massacre.

Today, we tend to see the Prohibition era -- the speakeasies, the booze,
even thugs such as Al Capone -- in a romantic light. But there was nothing
romantic about the Saint Valentine's Day massacre. The killings were no
more than the settling of a trade dispute: The murdered men worked for
"Bugs" Moran, who had hijacked shipments of Capone's "Old Log Cabin"
whiskey after Capone refused to supply Moran's speakeasies.

Capone always insisted he was just a businessman supplying customers with
what they wanted. It just happened that what customers wanted was illegal,
so when businessmen like Capone and Moran had the usual disagreements that
are a part of any business, they settled them with machine-guns.

The violence of the illegal alcohol trade hit the United States the instant
alcohol was banned in 1920: The first three armed robberies of booze
shipments took place within an hour of Prohibition coming into effect. As
the illegal trade boomed, so did the number of violent crimes. Robberies,
burglaries and assaults multiplied. Some 800 gangsters died in turf wars in
Chicago alone. The murder rate hit record highs.

The mayhem continued into the Depression. Then, in 1933, alcohol was
legalized. Violent crime dropped immediately. The murder rate plunged.

Today, brewers and distillers still compete fiercely but they don't hijack
each other's trucks or gun down competing executives. And they didn't
before Prohibition. That fact is rife with implications for today's
policies on illegal drugs.

"Al Capone didn't shoot people because he was drunk," notes Ira Glasser,
executive director of the American Civil Liberties Union. "Drug dealers
today don't shoot people because they're high. They shoot people because
they're engaged in disputes with competitors or customers. They can't go to
court to deal with these disputes. So it gets resolved by the rule of the
jungle.

"That is always the alternative to the rule of law."

Illegal drugs are tightly linked to violence. From Colombia and Afghanistan
to the streets of New York City, Montreal and Vancouver, drug traffickers
conduct their trade with methods that Al Capone knew well. In the Mexican
city of Tijuana, 1,000 people have been killed fighting over the drug trade
in just two years. Drug-dealing gang members armed with machine-pistols
have become symbols of the rot at the core of American cities. In Quebec,
biker gangs fighting a ferocious war for control of the drug trade have
killed 150 people since 1994; new biker chapters in Ontario and other
provinces threaten to expand the conflict.

This is all referred to as "drug-related violence," an imprecise
description that obscures important distinctions in the violence and crime
linked to illegal drugs. These distinctions must be made in order to think
rationally about drug policy.

In reality, there are three very different types of violence and crime
associated with illegal drugs.

The first is violence inspired by the chemical effects of the drugs
themselves. This is a hazy area of public discussion, because a drug
cannot precisely be said to "cause" acts of violence. It's more accurate to
say that a drug can, in some circumstances, promote or foster violent acts.
And even in the more limited sense of promoting violence, only one drug has
been clearly implicated: alcohol. "There's no cause-effect relationship
between the consumption of alcohol and crime," cautions Neil Boyd, a
criminologist at Simon Fraser University, "but we know that alcohol is kind
of like gasoline to a fire when there's provocation and anger involved."

Unlike alcohol, most illegal drugs have not been shown to promote
violence. Heroin, notes Mr. Boyd, "causes people to be sleepy." So does
marijuana.

In fact, says Mr. Boyd, "the only illegal drug that has any relationship to
violence in terms of its consumption is cocaine," which is a stimulant. But
even cocaine's link to violent crime pales next to that of alcohol.

Still, police officials often claim that illegal drug use is a major
catalyst of crime. They usually avoid saying drug use "causes" crime
because that's unsupportable. Instead, they imply it, as in the claim made
in one RCMP paper on drug policy that "more drug-related crime is committed
by people under the influence than by gangs in drug turf wars." Or they
claim, as one RCMP policy paper did, that 50 per cent of federal inmates
were "under the influence of a drug or alcohol" at the time they committed
the offence that landed them in prison.

Superficially, that looks like evidence that drugs "cause" crime. But
Patricia Erickson, a criminologist with the Centre for Addiction and Mental
Health (formerly the Addiction Research Foundation), disputes this. She
notes that criminals tend not to be people focused on long-term goals.
"They're into short-term gratification," which helps explain why they
became criminals. The same focus on short-term gratification that leads
these people to commit crime also leads them to use more drugs more
frequently than others. "And that leads to this misassociation of drugs and
crime," she says. "It may be true that a lot of criminals use drugs, but of
all the drug use that is going on out there, the vast majority of it is not
by criminals."

So how much crime can be blamed on the effects of taking illegal
drugs? Despite decades of confident claims by politicians and law
enforcers that it is very high, comprehensive research that could answer
this properly has never been done. The Canadian Centre on Substance Abuse
is currently leading a three-year study aimed at answering questions about
drugs and crime. It is to report in full by the end of the year. Based on
the limited research that has been done, it appears that just a small
fraction of all crime can be blamed on the pharmacological effects of
illegal drugs. There is also significant evidence that an even smaller
fraction of violent crime can be blamed on illegal drug use. A 1989 study,
for example, looked at all 193 "cocaine-related homicides" that occurred in
New York City in the previous year and found that in only one case was the
killer under the influence of cocaine at the time of the murder. A 1993
Statistics Canada survey of wife assaults found that 29 per cent of women
claimed alcohol was a precipitating factor in the abuse they suffered, but
only one per cent said the same about illegal drugs.

l

The second type of drug-related crime is that committed by users,
particularly addicts, in order to pay for drugs. The image of the "junkie
criminal," so popular in the public mind, isn't inaccurate. "If someone who
feels they can't get by without drugs doesn't have any money, crime is one
way of generating income," says Ms. Erickson. But most addicts who turn to
crime to pay for drugs don't commit violent crimes or serious
robberies. They just want to make cash quickly in ways that draw as little
attention as possible, so they generally stick to petty property crime,
such as snatching items from parked cars. "A lot of people sell drugs and
make enough money that way," Ms. Erickson notes. Others get involved in
prostitution.

But Ms. Erickson cautions against equating addicts with criminals. "There's
usually a sub-group of addicts who account for a large proportion of all
addict crime, and then the rest of the addicts get tarred with that brush."

Neil Boyd says property crime related to drug abuse varies widely from
neighbourhood to neighbourhood. Police estimates, typically not based on
scientific research, often blame the large majority of property crime on
drug addicts, but based on the research Mr. Boyd has seen, he is "sure it's
a minority of property crime" -- between five and 30 per cent.

But drug addiction is not the ultimate cause of this property crime. By
banning drugs, the criminal law forces drugs into a black market, where
their value is so spectacularly inflated that a typical heroin or cocaine
addict is likely to be quickly bankrupted, leaving crime as the only
option. The black market is the crucial factor, which is why alcoholics and
prescription drug addicts, who don't have to pay black market prices for
the drugs they need, are not associated with property crime.

A Swiss project that gave heroin to 1,100 addicts found that the percentage
of income the addicts derived from illegal activity rapidly fell -- from 69
per cent to 10 per cent. England had a similar experience between the 1920s
and late 1960s, when doctors were permitted to prescribe heroin or cocaine
to addicts; throughout that period, researchers consistently found that the
rate of property crime committed by English addicts was a small fraction of
that committed by American addicts who were forced to get their drugs on
the streets. When England abandoned this system, property crime committed
by addicts rose to American levels. It seems fairly clear, if paradoxical,
that the criminal law itself is the ultimate source of most drug-related
property crime.

l

The third type of "drug-related crime" is that committed in pursuit of the
illegal drug trade. It's the crime of Al Capone and other Prohibition
gangsters, the crime of Mexican drug lords, Hells Angels and the
neighbourhood dealer. This type of crime is no more caused by the effects
of using drugs than the Saint Valentine's Day Massacre was caused by
whiskey. It is the prohibition of drugs, not drugs themselves, that is the
source of this crime.

Again, it's difficult to say precisely how much "drug-related crime" is
made up of this type of activity. But the 1989 study of New York's
"cocaine-related homicides," for example, found that 87 per cent of the 193
murders were a result of business rivalries and disagreements in the
illegal cocaine trade. The law banning cocaine, not cocaine itself, was the
source of these murders.

The violent crime that is a basic tool of the illegal drug trade is
virtually impossible to stamp out. No one was ever convicted of the Saint
Valentine's Day Massacre, in part because Chicago gang members usually
refused to co-operate with police even when they or their colleagues were
victims.

The same story is playing out today in Canada's biker war. That fight is
all about the illegal drug trade. For the Hells Angels and the Rock
Machine, illegal drugs "are their biggest money maker, no question about
it," says Chief Supt. John MacLaughlan, an RCMP specialist in the fight
against organized crime. About 75 per cent of their total revenues come
from drugs, Chief Supt. MacLaughlan estimates, including marijuana grown in
hydroponic operations. The struggle to monopolize control of those revenues
could accurately be called a "drug war," if that phrase hadn't already been
taken by the forces of law and order.

Despite the expanded resources given to law enforcers to deal with the
mayhem, the biker war has raged almost without interruption since 1994, and
has spread into Ontario and other parts of Canada. About 150 people have
been killed. Half of the 30 murders committed in Montreal in the first six
months of 2000 were linked to the biker war.

Police say the Hells Angels' presence in Ottawa is growing, as the bikers
work to seize total control of the local illegal drug trade. A particular
target of acquisition is the trade in "club drugs" -- particularly Ecstasy
- -- which had, until now, been peacefully distributed by small-time,
independent dealers. The bikers have robbed and beaten the independents
out of the business.

What is happening in Ottawa fits the classic pattern of illegal drug
distribution. When a drug becomes popular, there's little conflict for a
brief period because dealers have more customers than they can supply. When
supply rises to meet demand, things become competitive, which, in black
markets, means violence. Trafficking groups rob, assault and murder
competitors to seize market share. If one group attains a monopoly, as has
nearly happened in Ottawa, things quiet down -- at least until another
group comes along to challenge the monopoly. If not, as in Quebec where
neither the Hells Angels nor the Rock Machine has eliminated the other, the
fighting goes on.

The police are unable to intervene and end such turf wars, in part because
the participants typically refuse to co-operate in investigations; even
bikers lying on hospital beds, recovering from bullet wounds, won't talk.
Some law enforcement officials have publicly admitted the biker war is
likely to go on as long as the foot soldiers can stomach it, or until one
side is wiped out.

It might be tempting to think that thugs killing thugs isn't such a
terrible problem, but that would be a mistake. Numerous bystanders have
been injured in the biker war, including a waitress hit with a stray bullet
when two masked gunman entered her Montreal restaurant in July and murdered
a biker.

Gangs also use violence and intimidation against ordinary citizens. Farmers
and landowners, especially in Quebec, have been threatened by bikers who
want to use their land to plant marijuana. Booby traps sometimes guard
these clandestine growing operations. When Bloc Quebecois MP Yvan Loubier
sought police help for intimidated landowners last year, he himself was
threatened and needed police protection.

As experience in American inner-cities such as East Los Angeles shows, gang
wars left unchecked can turn streets into battlegrounds. Lawful authorities
can lose effective control of whole neighbourhoods to gangsters, who then
insinuate themselves into the social fabric of neighbourhoods. Then it's
not so easy to cheer the deaths of thugs in gang warfare since they are
often the children of law-abiding residents lost to the drug-derived power
and money of the gangs.

Violence is also just one of two main tools available to criminals in the
illegal drug trade. The other is corruption.

Drug-related corruption in Third-World nations such as Colombia, Burma and
Mexico, is notorious. But it's a delusion to think that illegal drug money
doesn't taint Western nations. One study cited in 1999 by Jorge Madrazo,
the Mexican attorney general, claimed that internationally 40 per cent of
the profits of the drug trade are spent on bribes. The UN pegs the value of
the illegal drug trade at $400 billion U.S., while the RCMP claims the drug
trade in Canada generates $4 billion a year at the wholesale level and $18
billion at the street level. If the study cited by Mr. Madrazo is even
remotely accurate, the money spent on corruption is immense. That money
greases the passage of drugs, making it highly likely that it is corrupting
officials and institutions in every nation involved in the trade --
including the rich, consumer countries of the West, such as Canada.

Last week, Giuliano Zaccardelli, the RCMP's new commissioner who previously
headed the force's anti-organized crime efforts, shocked a press conference
when he claimed, "There are criminal organizations that target the
destabilization of our parliamentary system." The commissioner insisted he
has evidence to support that claim, but when he refused to reveal it, some
commentators condemned him for scare-mongering.

But John Thompson, an expert on organized crime with the Mackenzie
Institute, a Toronto think-tank, insists that successful organized crime
groups invariably attempt to influence political systems. "You name the
organized criminal group," he says, "and they have all got into politics at
one point or another. They've all started to woo politicians."

Alcohol prohibition in the United States spawned political corruption on a
grotesque scale. Profits from the criminal alcohol trade saturated
electoral campaigns. Gangsters had enormous influence over major cities,
and even state governors. Al Capone even set himself up as the de facto
mayor of Cicero, a city outside Chicago. The presidency of Warren Harding
was one of the most corrupt in American history, thanks largely to the
"Ohio gang" of hangers-on who surrounded the president and took every
opportunity they could to line their pockets. Some of the biggest money
came from the booze traffickers. The attorney general, Harry Daugherty, was
found to have taken millions of dollars in bribes from liquor traffickers
in exchange for immunity from prosecution. This bribery only came to light
when one of Daugherty's "clients," angry at having been convicted despite
making generous payments, told all.

Of course, corruption in general was much worse in the United States of the
1920s than today, but the vast profits made in the illegal alcohol trade
greatly exacerbated the corruption. Combined with the gangs' firepower on
the streets, bribery made organized crime a major force in society.

Whether organized crime is as powerful in developed nations today is
debatable, but experts feel that it is significant and rapidly growing. New
information technologies and economic globalization have made it possible
for organized crime groups to co-operate on an unprecedented scale, and
given them daunting new methods to hide their activities and foil
investigation. And as organized crime grows, so too will violence and
corruption.

Some experts talk of organized crime literally threatening the stability of
nations such as Colombia, Russia, even Mexico. "The income of the drug
barons is greater than the American defence budget," Colombian high court
Judge Gomez Hurtado noted in an address warning that not even Western
nations are invulnerable. "With this financial power, they can suborn the
institutions of the State and, if the State resists ... they can purchase
the firepower to outgun it.

"We are threatened with a return to the Dark Ages."

Organized crime may have little interest in actually crippling nations but
the existence of such criminal power is inherently threatening. The single
greatest source of that power is the illegal drug trade.

Let's return to the United Nations' estimate of the value of the illegal
drug trade at $400 billion U.S. The UN also puts international organized
crime's total revenues at $1 trillion U.S. These numbers are largely
guesswork, but if the proportions between the two are roughly accurate,
illegal drugs account for 40 per cent of international organized crime
money, making it by far the single largest source of criminal revenue. As a
report released this year by the American State Department noted, "the drug
trade's wealth, power and organization equal or even exceed the resources
of many governments."

In Canada, the federal government conservatively estimates illegal drug
revenues at $7 billion to $10 billion a year. That makes the illegal drug
trade, according to the RCMP's 1999 report on drugs in Canada, "the
principal source of revenue for most organized crime groups" in the
country. This money doesn't finance just biker gangs. Chinese and other
Asian-based criminal gangs are the primary suppliers of heroin in Canada,
and often use this country as a trans-shipment point for drugs smuggled
into the United States. Organized crime based in eastern Europe,
particularly Russia, is also a growing presence here, largely to carry out
illegal drug trafficking. Jamaican posses, Colombian and Mexican cartels,
the Sicilian mafia: they're all in Canada, and they're all involved in drug
trafficking.

Many critics, including Nobel Prize-winning economist Milton Friedman, have
long argued that the best way to deal with organized crime is to cut off
the money that is its lifeblood. That cannot be done by law enforcement
alone, they say, because the economic law of supply and demand (if people
demand certain goods and services, someone will supply them, somehow) has
to be reckoned with. Instead, governments must legalize goods and services
they have banned. When these are supplied by lawful companies, organized
crime will lose them as sources of revenue. Illegal drugs are the biggest
revenue sources; to hit organized crime, legalize drugs.

National governments have refused even to examine this option. When the G-8
countries met in 1998, international organized crime was at the top of the
agenda, yet the leaders unanimously rejected legalization as an option
because, as they said at a press conference, drugs are "strongly linked"
with "wider international and domestic crime." That this link might exist
because these same governments made drugs illegal was something the leaders
did not address.

Law enforcement agencies are also unanimously opposed to the legalization
option. In part, that's because they feel legalization would lead to other
social harms. But it's also because they believe it wouldn't truly hurt
organized crime. Barry King, chief of the Brockville Police Service, chairs
a Canadian Association of Chiefs of Police committee that advises the
federal government on drug policy. Chief King points to the experience of
alcohol prohibition in the United States. "Even after they did declare
alcohol legal again, they still had problems with it."

Chief King is partly right: Legalizing alcohol did not wipe out the
gangsters who thrived on the illegal alcohol trade. But it drastically cut
into their revenues. The better-organized among them scraped through the
hard times by shifting to other rackets, including the nascent illegal drug
trade. "The Capone mob," notes John Thompson, "pretty well stayed intact
but they lost a lot of easy money so they rolled back into prostitution.
But their big drive was in gambling in the '30s and '40s. That's what they
were really pushing but they had to create the gambling industry almost
from scratch."

But for smaller and weaker gangs, Prohibition ended and "that was it.
They're out of business altogether. They just didn't have the resources to
push on into the next industry," says Mr. Thompson. "That's one reason why
we don't have an Irish mafia now. They weren't able to survive the end of
Prohibition." The legalization of alcohol didn't wipe out all organized
crime but it severely diminished the wealth, power and violence of
organized crime.

The lesson is this: Criminalizing drugs merely shifts the trade to
criminals, giving them money and power. Legalizing drugs returns them to
ordinary businesses that operate within the bounds of law and government
regulation. To the extent that the trade is shifted back to lawful
companies, legalization diminishes organized crime.

Drug enforcement agencies routinely argue, as one RCMP policy paper puts
it, that unless drugs are made legal and available to absolutely anyone
(including children), "there will always be a 'black market.' " That's
true, but misleading. Black markets in alcohol did continue after alcohol
was legalized in the United States, and they still exist in Canada. But
they are only a tiny fraction of the size they would be if alcohol were
illegal. They simply aren't profitable enough to sustain organized crime,
which is why the Hells Angels and the Rock Machine aren't fighting a war
over the beer trade.

Moreover, to the extent that alcohol (and cigarette) black markets exist,
they do so because government taxes raise the price of the legal product so
high that they create an economic opening for smugglers to make a profit by
undercutting the legal price; these black markets can largely be controlled
simply by lowering taxes.

Contrary to the public's image of organized crime -- shaped primarily by
The Godfather and its sequels -- modern organized crime groups are not
tightly knit hierarchies. "They are loose, floating societies of
individuals who co-operate with each other as the mood takes them," says
John Thompson. These groups don't have "godfathers" and they can't be
taken down by arresting a few bosses. They are fluid and responsive to
economic incentives. In a sense, trying to break organized crime is much
like trying to suppress market forces, and about as difficult.

Even success can mean little. When the FBI took apart the Italian-American
mafia in the 1960s and 1970s, it did little to damage the drugs,
prostitution and other black markets the Mafia had been supplying. New
groups simply moved in.

Further head-on law enforcement is no more likely to diminish organized
crime than it has in the past. It will, though, make organized crime
smarter and more dangerous.

l

In 1929, the smartest and most ruthless gangster was Al Capone, but
ordering the Saint Valentine's Day Massacre turned out to be his greatest
mistake. Sickened by Capone's violence, wealth and power, a group of
notable Chicago citizens travelled to Washington D.C. in 1929 and pleaded
with President Herbert Hoover for a special police team to tackle
Capone. But more importantly, they insisted, alcohol had to be legalized.

Hoover ignored the group's demand to end Prohibition, but he did send
Elliot Ness to fight Capone. Ness and his men, the famous "Untouchables,"
seized a great deal of liquor and made quite a splash in the press, but
they failed to make Capone pay for his terrible crimes. The discovery that
the Chicago kingpin had failed to pay income tax on a mere $165,000 finally
landed Capone an 11-year prison sentence in 1931.

But even with Capone in prison, the booze kept on flowing. Successors
scrambled to fill the opening in the black market, got rich, and fought gun
battles in the streets. The bloodshed and corruption only began to abate
when alcohol was legalized. On Dec. 5, 1933, 12 years and 10 months after
"the noble experiment" had begun, the glory days of the gangsters finally
ended.

Dan Gardner is a Citizen editorial writer.