The cost for LatAm: The war on drugs

Although initially sponsored by the US government, the war on drugs comes at significant cost to LatAm as well. Beyond the social cost, there is significant economic cost too.

The war on drugs may have been started by the United States over 40 years ago, but its effects are felt with strength in LatAm, even during the current year. For all its controversy, the systematic pursuit of growers, producers, distributors and consumers of drugs stayed as a United States priority until very recently, and the bulk of these efforts came down upon LatAm.

Billions of dollars in military aid from the US came into LatAm with the exclusive purpose of fighting organizations linked with drug trafficking. But to what avail? Drug consumption in the US increased by 8.3% in the period between 2002 and 2013, while the war was on full effect. What is more, many US states are starting to legalize the consumption of marihuana, while abroad, the war technically continues.

Close to its peak, in 1997, the global illegal drug business represented $400 trillion according to the United Nations Office for Drugs and Crime (UNODC), or nearly 8% of the world’s total international trade, or nearly twice the total amount of circulating US currency.

Without advocating for drug trade and consumption, it is important to make the remark that a significant portion of the massive revenue from drug trade could have found itself in the pockets of hard working people if some substances were to be legalized, instead of in the hands of armed criminal organizations. At the very least, keeping drugs illegal was a lost opportunity for government and people alike, in countries which could’ve benefitted from additional income.

A key part of the war on drugs was to encourage LatAm governments to prosecute people involved in drug distribution and consumption, as a result, prison population in the western hemisphere sky-rocketed due to drug offenses. The burden of a higher prison population on a nation’s economy cannot be undermined.

For starters, governments built more prisons. Halfway through last decade, Chile completed a 4-stage penitentiary development program, which built 10 prisons at an average cost of 28 million dollars per prison. An impactful number, but even more so when you consider that in all of Latin America there are 423 penitentiary institutions. At the same average cost seen in Chile, the region’s penitentiary infrastructure cost governments in excess of $11 billion dollars.

The real problem is that governments don’t make a profit upon penitentiaries, quite the opposite, they get populated by inmates, which mean billions of dollars in additional expenses.

Latin America’s total prison population is around 2.2 million, but the cost per inmate from varies from country to country. Whereas in Bolivia an inmate runs the government for $26.3 dollars a month, in Costa Rica, every inmate costs the government $478 a month. In many cases, the cost of keeping a person in prison exceeds the national minimum wage, which serves to illustrate the substantial change that this money would generate in the hands of the right people.

With prison population still on the rise, and with governments refusing to spend more on penitentiaries, overcrowded prisons are now commonplace in Latin America, and what could have stayed as an economic issue is now a public health and human rights issue.

Additionally, high incarceration rates create what is called a permanent underclass, as people involved in drug offenses lose whatever social mobility they had. With a criminal record it becomes harder to attain well-paying jobs or to qualify for welfare in many LatAm states.

However, it seems that the war on drugs is finally taking a bow, or at the very least it is operating with significantly less intensity. Mexico and Uruguay made great steps towards legalizing marihuana, whereas Evo Morales in Bolivia is keen on decriminalizing coca leaf plantations in their traditional form. Colombia, on the other hand, has stopped fumigating coca leaf plantations with glyphosate, and is working on offering alternatives to coca growers instead of prosecuting them.

Maintaining this course of action will work wonders towards reducing tax burdens of governments, as the costs of prosecuting and incarcerating every actor remotely involved with drugs fall.

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