Freeway Rick Ross On The Economics Of Drugs : Planet Money Do economists' theories about drugs hold up in the real world? To find out, we asked "Freeway" Rick Ross, one of L.A.'s biggest crack dealers in the '80s and '90s.
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A Former Crack Kingpin On The Economics Of Illegal Drugs

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A Former Crack Kingpin On The Economics Of Illegal Drugs

A Former Crack Kingpin On The Economics Of Illegal Drugs

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The U.S. government has passed laws that make drug dealers rich and increase violence on the streets. That's according to several prominent economics papers on the impact of making drugs, including cocaine and heroin, illegal.

Planet Money's Alex Blumberg reviewed these papers, then ran their conclusions by another expert, an actual drug dealer.

ALEX BLUMBERG: The academic argument against drug criminalization goes like this: When you make something illegal, you make it harder and riskier to produce, and that makes it more expensive. You have to sneak it across the border. You have to pay people more to transport it, since they're facing jail time. So, illegal drugs are much more expensive than they would be if they were legal.

But, and here is the key, demand for a lot of drugs is what economists call inelastic. No matter what the drugs cost, people will still pay for them. So making drugs more expensive by criminalization just sends more money to drug dealers. That's the theory, anyway.

Mr. RICKY ROSS (Former Drug Dealer): My name is Ricky Ross. I'm known on the streets as Freeway Rick. But when I sold drugs, if they'd have told me they were going to legalize it, I'd have been mad because I knew that that was going to drive the price down.

BLUMBERG: Freeway Rick Ross was one of L.A.'s biggest crack dealers in the '80s and '90s. He was arrested in 1996, given a life sentence but paroled in 2009. So he's a perfect reality check for these academic theories. And I started him off with claim number one. Making drugs illegal drives up the price. Check.

Mr. ROSS: The most I ever made in one day was $3 million, went through my hands. Out of that 3 million, I could make, off of a million bucks I could make anywhere from 400,000 to 200,000 profit.

BLUMBERG: Next up, claim number two. At least some of the money Ross was getting wound up in the hands of criminals. Again, check.

Mr. ROSS: I had a crew. You know, I had guys around me that were ruthless and were tough. You know, if I gave the word, they would hurt you.

BLUMBERG: And Ross' money wasn't just going to his own crew. He'd also distribute cash to other big players around the neighborhood.

Mr. ROSS: You know, I had a fund where I'd take care of what's called the big homies - the shot callers, the guys that ran the neighborhood because, you know, they kidnap drug dealers in South Central.

BLUMBERG: It's sort of like you were paying protection money to these people, right?

Mr. ROSS: Absolutely. You can call it protection money or big homey money or whatever but it's all the same thing. They were robbers, they was killers, jackers, as we call them, absolutely.

BLUMBERG: These days, Ross runs an organization that he says is trying to undo all the harm he did to his community by selling crack. He says a big part of the reason he got into drug dealing in the first place, he was illiterate. That's right, he ran a multi-million-dollar drug business for years without knowing how to read. He finally learned in prison.

In talking to Ross, you realize there was this other incentive that doesn't always show up in the economics literature. At least when you get to Ross's level, drug dealing is not only lucrative, it's complex and engaging.

Ross was a CEO, he was a manager, his own publicist, an accountant. Society had done everything it could to make Rick Ross hate his job and give up. His product was illegal. His costs were enormous. He was a hunted man. And yet...

Mr. ROSS: I loved it. I felt like I was on top of the world. I felt I was powerful. I felt I had came - I didn't have to answer to nobody. I mean, it was a dream. It was every man's dream to be free.

BLUMBERG: How much of it was just sort of like the actual job, and how much of it was just the feeling of being good at something and running this enterprise well?

Mr. ROSS: Well, you love the feeling that you're good. So it didn't feel like it was a burden, you know, to sneak around at night. I've been sneaking around at night since I was 17 years old, stealing cars. You know, we'd been hiding all our life.

BLUMBERG: So does all this mean we should legalize drugs like crack and heroin? If we really wanted to make the Freeway Rick Rosses of the word miserable, we'd take away their earning potential, right? And some of the economists I spoke to said, yeah, make them legal.

Other economists weren't so sure. Economist Peter Reuter has written many, many pages on the topic of drug criminalization. And he says if you legalize drugs, sure, crime would go down. But drug use, that'd go up.

Mr. PETER REUTER (Economist): How do we compare the bad outcomes in the two cases - a very large increase in addiction with a very large decrease in crime? They're - you know, I take them both to be real, but I don't know how - that's a value judgment.

BLUMBERG: How do you - which is better?

Mr. REUTER: As to which is better, right.

BLUMBERG: As for Freeway Rick Ross, his basic take, and a lot of academics agree with him: You need to attack the demand side, try and reduce the reasons people want to use drugs in the first place.

I'm Alex Blumberg for NPR News.

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