What can LA’s biggest crack dealer teach us about the economics of illegal drugs?

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NPR’s wonderful Planet Money has an audio interview with a former drug kingpin who offers up some first hand confirmations — and contradictions — of economists’ theories about the business of illegal drugs. Two that stood out:

1) Does making drugs illegal raise the price? Agree.

Economists: Yes

Drug Dealer: Yes

2) Do employees in the drug world demand a “risk premium” — more money to compensate them for the added danger the profession presents? Disagree.

Economists: Yes

Drug Dealer: No

“Freeway Rick Ross” explains:

“When you come from where I was when I started selling drugs, you feel hopeless. You don’t think you’re going to live past 24 years old. Go to jail, come out with stripes. Really wasn’t any risk.

Everything I had going on at the time, it was nothing. I was like a lump on a log. The risk most people would look at — you could get killed, go to prison — was Ok.”

You can listen to the whole thing here.

If you’re curious about this kind of stuff you really should read my post: You just committed murder. What should you do now? and check out the amazing book Codes of the Underworld: How Criminals Communicate.

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