Narconomics: How to Run a Drug Cartel

By: on February 06, 2016
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No war is radder than the war on drugs. At least from a business and economics standpoint. Tom Wainwright's Narconomics: How to Run a Drug Cartel isn't your traditional how-to book (sorry, budding drug lords), but it is an unabashed look at how the industry makes its estimated $300 billion a year. A little FYI for you, for me, and for all the Econ undergrads and MBA students out there who can hardly keep their eyes open reading case studies on Morgan Stanley.

From human resources to corporate social responsibility, the narcotics trade must address the same issues and solve the same problems as any Fortune 500 business. Some of those Wainwright illuminates include:

  • Supply & Demand. Well, the second one's easy. As for the first, drug cartels have the luxury of being run by sick, scary SOBs. When supply is low (i.e., when coca fields are destroyed) they just make the farmers eat the costs and absorb price shocks.
  • Research & Development. Ever the bastions of progress, cartels have hired (forced?) Walter White-types to figure out way to increase the yield of coca plants. Today, less acreage grows, but more white stuff circulates.
  • Mergers & Acquisitions. The truly enterprising can't be afraid to shed a little blood, now can they?

In addition to describing and assimilating the drug industry using classical economics and modern business theory, Narconomics: How to Run a Drug Cartel also applies these principles to suggested ways of squashing, or at least crippling it. According to Wainwright, "If mobsters think like businessmen, law enforcers can thwart them by learning to think like economists."

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