WHY COCAINE'S STREET PRICE KEEPS FALLING

The Atlantic -- July-August

Demand for cocaine stays steady, Colombia's coca fields are
destroyed, yet the drug's street price in the U.S. continues to fall.

The Atlantic's Ken Dermota explains how drug smugglers and dealers
have eked out efficiencies in their operations to keep their prices
low. The U.S. Coast Guard has been able to catch only a small
percentage of the drugs entering the country since President Nixon
declared a "war on drugs" in 1971. In 2000, the U.S. decided to
switch tactics and take the fight to Colombia, which produces 90% of
the cocaine sold in the U.S. Since then, it has spent $4.7 billion
fighting rebels who grow and sell the crop, as well as destroying coca fields.

The price of cocaine -- the pure version, not crack -- has kept
falling. In the early 1980s, the price of a gram of cocaine was about
$600. By the late 1990s the price had fallen to about $200. According
to the Drug Enforcement Administration, the street price of a gram of
cocaine in 2005 was $20-$25 in New York, $30-$100 in Los Angeles and
$100-$125 in Denver.

Some of the price decrease has come from more efficient distribution
networks. Labor costs also have decreased. Street vendors take a
smaller cut of the drug's proceeds. A lot of the drug dealers who
fell prey to an aggressive imprisonment campaign in the 1990s are now
leaving prison. Their felony conviction and minimal job experience
means they have few other ways to make money and are willing to take a pay cut.

The falling street price also reflects the lower risk of handling the
drug. The violence of the 1980s crack boom has faded and, since 2001,
federal drug prosecutions have fallen 25% as agents get diverted to
the hunt for terrorists.