Trafficking

Organized Crime | Week 4, Lecture 8

Professor Julian E. Gerez

April 22, 2026

Roadmap: Trafficking

  • Last time: protection as a commodity and mafias
    • Any questions from Monday?
  • Today:
    • The global drug prohibition regime
    • What drug markets actually look like
    • Trafficking beyond drugs

The global drug prohibition regime

What is a drug?

  • Natural or manufactured chemical compounds consumed or administered by individuals
  • …that pass from body to brain and interfere normally transmitted chemical signals
  • …and ultimately affect the body and/or mind in some way

Minoan “Poppy Goddess”, Crete, Late Bronze Age

Helen of Troy fleeing Menaleus as depicted on a krater

Jesus depicted turning water into wine on a fresco

Then Helen, daughter of Zeus, took other counsel.
Straightway she cast into the wine of which they were drinking a drug
to quiet all pain and strife, and bring forgetfulness of every ill. (Homer’s Odyssey)

Social construction of illicit drugs

  • Illicit drugs: drugs produced, traded, and consumed for purposes prohibited by law
    • The prohibition is not self-evident: it is a social construction
  • Social construction: cognitive frameworks that shape how we perceive and interpret reality
    • Frames determine what we notice and how we categorize it
    • What counts as a “drug,” who counts as a “user,” and what “use” means are all contested
    • E.g., caffeine is pharmacologically a drug but rarely framed that way
  • Drug use is often framed not just as criminal, but as a violation of social norms
    • Stigmatizing language: “crack fiends,” “dopeheads,” “junkies”
    • Othering: classifying someone as “not one of us”
      • E.g., defining the drug user as deviant, not a citizen with a health problem

Discussion: drug addiction versus substance abuse

  • Conduct an internet search for images of “drug addiction” versus “substance abuse”
  • What do the results suggest about who uses drugs and what they deserve?

The US drug prohibition regime

  • Late 19th–early 20th century: the US constructed a domestic prohibition regime
    • Certain drugs criminalized through social construction, not purely pharmacologically
  • Moral entrepreneurs: actors who seek to influence society to adopt and enforce new norms
    • Rule creators: Congress, federal agencies
    • Rule enforcers: state and municipal police, courts
  • Intersecting political drivers:
    • Racial cleavages: opium = Chinese; cocaine = Black Americans; marijuana = Mexican
    • Class and economic competition: working-class anxieties about labor market rivals
    • Immigration: drugs linked to “foreign” threats to social order

“The women, all white, girls hardly yet grown to womanhood, worshipping nothing save the pipe that has enslaved them body and soul.” White women were seduced by “cruel cunning” and “crafty submissiveness” of the Chinese.

Jacob Riis, journalist, 1890

“Most of the attacks upon the white women of the south are the direct result of the cocaine-crazed Negro brain.”

Christopher Koch, Pennsylvania Pharmacy Board, testimony before Congress, 1914

“I wish I could show you what a small marihuana cigarette can do to one of our degenerate Spanish-speaking residents… most of who [sic] are low mentally, because of social and racial conditions.”

Floyd Baskette, Daily Courier, Alamosa Colorado, letter read before Congress, 1937

Building the global drug prohibition regime

Domestic

  • Harrison Act (1914): record-keeping across the drug supply chain
    • Differentiated recreational vs. medicinal
    • Addiction not a medical condition
    • Taxation of drugs production and imports
  • Jones-Miller Act (1922): closed US borders to most narcotics
    • Outlawed heroin manufacturing
    • Created Federal Narcotics Control Board

Global

  • Spanish American War (1898)
    • US now controls Philippines; opium retail
  • International Opium Convention (1912)
    • First major international drug regulation
    • Driven in part by U.S. reform movements (including missionary groups)
  • WWI (1914–18): drug control measures incorporated into the postwar settlement
  • WWII (1939–45): postwar US influence shaped drug control in occupied countries
  • Modern global drug control regime formalized under institutions like the UN

Criminalization opens opportunities for illicit markets

  • The global drug prohibition regime criminalized supply but did not eliminate demand
  • Drug trafficking: production, transport, sale of controlled substances across jurisdictions
  • Criminalization has predictable consequences:
    • Prices rise: legal suppliers exit, risk premium inflates profits
    • Quality becomes unregulated: no consumer protection
    • Disputes settled by violence: no courts, no contracts
    • Enforcement creates barriers to entry

Drug markets

How cocaine and heroin markets are structured

Reuter (2012)
  • The supply chain is shaped like an hourglass:
    • Lots of farmers at the top and retailers at the bottom
    • Much fewer smugglers in the middle
  • Why is the top so wide and so far from consumers?
    • Poor countries with weak state capacity (recall L2)
    • Cheap land and labor; few enforcement costs
    • Cheaper and less risky to grow far away and smuggle
    • …than to grow nearby
  • Why does the middle get so narrow?
    • Enforcement risk is highest at the point of smuggling
    • Senior traffickers limit who they deal with
      • Every contact is a potential informant (recall L6)
  • A few, small, well-insulated enterprises dominate trafficking

Price and purity across the supply chain

Stage Cocaine — 1 kilogram Heroin — 1 kilogram
Raw price Purity 100% pure Location Raw price Purity 100% pure Location
Farm-gate $800 100% $800 Colombia $900 100% $900 Afghanistan
Export $2,200 91% $2,400 Colombia $3,400 73% $4,700 Afg. neighbors
Import/Wholesale (kg) $14,500 76% $19,000 Los Angeles $10,000 58% $17,000 Turkey
Mid-level/Wholesale (oz) $19,500 73% $27,000 Los Angeles $33,000 50% $66,000 England & Wales
Retail $78,000 64% $122,000 United States $105,000 44% $239,000 United Kingdom

Source: Reuter (2012), 2005 dollars

  • Production is a tiny slice of revenue
    • A kilo of cocaine earns the Colombian farmer $800; the final US retail value is $122,000
  • Most of the markup happens at the bottom of the chain
    • 70–80% of total revenues come from the last two or three transactions
  • But most individual retailers earn very little
    • High markup × tiny volume = modest income (recall Levitt & Venkatesh, L5)
    • The big money is concentrated at the top among very few people

Cocaine commodity chain

Andean region Central America US–Mexico border United States Coca farmers Cocaine base lab Colombian transporters Mexican DTO US wholesaler Street dealer US Consumer Grow & refine Move north Cross US border Distribute

Source: UNODC

Heroin commodity chain

Afghanistan Intl. smugglers Consumer countries Opium farmers Brokers (middlemen) Criminal labs Wholesalers Assorted intl. transporters Street dealer End consumer

Source: UNODC

Think-pair-share: what do these chains tell us?

  • Different parts of the chain have different functions (grow, refine, transport, distribute)
  • Different kinds of organizations specialize at different stages
  • For discussion:
    • What kind of organization would you expect at each stage?
    • Think about: who they are, how big, how durable, how risky
    • And: why do organizations specialize rather than run the whole chain themselves?

The balloon effect

  • Enforcement in one location suppresses production locally, but not globally
    • Squeeze the balloon in one place; it expands somewhere else
  • Policy implication: supply-side enforcement displaces rather than eliminates production

Source: CATO Institute

Think-pair-share: where does production concentrate?

  • Next, look at where production concentrates:
    • Coca: Colombia, Bolivia, Peru
    • Opium: Afghanistan, Myanmar
  • What do these places have in common?
    • Think about opportunity factors or theories of criminal behavior
  • Who benefits from weak enforcement?
    • Are states always victims of trafficking or sometimes beneficiaries?

Beyond drugs

Trafficking as arbitrage

  • Trafficking is not fundamentally about any single commodity
    • It is a response to structural conditions
  • Arbitrage: exploiting a price gap between two markets to make a profit
  • Prohibition \(\rightarrow\) gap between production cost and final price
    • Demand persists \(\rightarrow\) someone will supply
    • Enforcement creates risk \(\rightarrow\) risk gets priced in
  • …But not just prohibition!
    • Taxes create similar gaps, e.g., cigarette smuggling
    • Quotas create similar gaps, e.g., weapons production limits
    • Any policy that raises the cost of legal supply relative to demand creates an opportunity

Other examples of trafficking

  • Human trafficking
    • Migration restrictions + labor demand
    • Consent is absent or coerced
  • Wildlife
    • Bans on endangered species products
    • Rhino horn, ivory, exotic pets
  • Arms
    • Export controls, domestic restrictions
    • Demand by states and non-state actors
  • Counterfeit goods
    • Intellectual property law
    • Pharmaceuticals, luxury goods, electronics

Think-pair-share: so what do we do?

  • Suppose the evidence is clear: we want to reduce consumption of some good
    • Cocaine? Opioids? Tobacco? Sports betting? Handguns?
  • Three policy regimes, each with tradeoffs:
    • Prohibition / heavy restriction
    • Legal but taxed and regulated
    • Fully legalized?
  • For discussion:
    • Pick a good from the list above
    • Which regime would you choose, and what tradeoffs are you accepting?
    • What would make you change your mind?

For Monday: street and prison gangs

  • Today:
    • The global drug prohibition regime
    • What drug markets actually look like
    • Trafficking beyond drugs
  • Next lecture: street and prison gangs
  • Questions?

Read before Monday:

Lessing, Benjamin, and Graham Denyer Willis. 2019. “Legitimacy in Criminal Governance: Managing a Drug Empire from Behind Bars.” American Political Science Review 113(2): 584–606.

(Available on Perusall via Canvas)