Are drug dealers different from other business owners?

Book review: Narconomics: How to Run a Drug CartelNarconomics by Tom Wainwright is a pithy and engaging argument on drug law reform.


by TomWainwright

It is sometimesargued that drugdealers are nodifferent fromother businessowners, with thesole differencebeing that theirproduct happensto be illegal. Is thattrue? It's the premise of Narconomics:How to Run a Drug Cartel, by TomWainwright. Wainwright useseconomics to analyse this multibillion-dollar industry and finds thatthere are indeed many similaritiesbetween the cartel kingpins and theaverage multinational.

Despite some grim subject matter,the book is "great fun", says JohnArlidge in The Sunday Times.Indeed, "there are so many well reportedexamples of the smarts ofthe cartels" that "you end up withsneaking respect for some of themost heinous entrepreneurs in theworld". Wainwright does make a"half-hearted" effort to outline someanti-cartel strategies, but the keymessage is that "it will be hard" to getthe estimated 250 million drug users to"kick a habit that they clearly enjoy" his preferred option is legalisation.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

The book is "lively and engaging" and"informed by both dogged reportingand gleanings from academicresearch", agrees David Wessel ofThe Wall Street Journal. Yet it failsto provide "a convincing argumentthat the US could safely legalise andregulate addictive drugs and thatdoing so would reduce the number ofusers". Wainwright himself describes"how many Americans were legallyprescribed the painkiller OxyContinby regulated physicians and becamehooked, with devastating results".

On the contrary, "by looking at thedrug trade as a business, Wainwrightis able to reveal much about why itwreaks such havoc in Central andSouth America," says Misha Glennyin The New York Times. "The violenceit leaves in its wake... is not a randomby-product of gangster culture" thevery illegality of the business meansviolence becomes "the only way toenforce contractual agreements".This book "is one of the pithiest andmost persuasive arguments for drug law reform I have ever read".

Narcoeconomics: How to Run aDrug Cartel, by Tom Wainwright.Ebury Press (£20).

Dr Matthew Partridge

Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.

He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.

Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.

As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.

Follow Matthew on Twitter: @DrMatthewPartri