High US cocaine cost shows drug war working-Mexico

Is this good news or not? Being a lazy ass blogger, I don't know. But I am serious with the question.

Mexico's attorney general said on Friday fewer drug-related killings at home and rising narcotics prices in the United States showed his government is winning the war against cartels.

President Felipe Calderon has sent thousands of troops and federal police to combat drug gangs since the start of the year but hitmen continue to carry out daylight revenge attacks across Mexico. A police chief of the central state of San Luis Potosi was killed by gunmen on Thursday.

Attorney General Eduardo Medina Mora said that while cartels were still powerful, the number of drug killings this year in Mexico has steadily fallen, from a peak in March of 319 deaths to 195 in August.

Cocaine and methamphetamine prices are rising across 8,000 U.S. towns and cities and purity is falling, showing fewer drugs are getting into the United States, he added.

The reason I'm asking this question is because of: inelastic demand. I'm sure many of you know about this, but some may not.

Inelastic Demand is something like gas for your car
- when the price goes down, some people will buy more, but not a lot more
- when the price of gas goes up, there is a small number of people that buy less, but, essentially, people still have to have gas to travel by car, so they will continue buying - so we say the demand is "insensitive" to price
- another way of saying the demand is insensitive is to say the demand does not respond to price
inelastic demand is for things that do not have close substitutes

Yes the quoted text above didn't translate well.

OK, back to the topic. What if you need something? I mean really really need it. And the price of what you need keeps going up and up? And what if you can't afford the higher and higher prices?

We need to watch the crime statistics. If cocaine is getting too expensive, are robberies, burglaries, muggings going up too? Are the drug prices making people less safe?

Then there's the other side of the coin. If these drugs get too profitable, more people with have an incentive to get into the trade.

This is where we enter the realm of unintended consequences.

Via Reuters.

Definition via MRK 106.