African Economic, Trade and Mining Policies : The Economics of Drugs and Drug Abuse

African Economic, Trade and Mining Policies : The Economics of Drugs and Drug Abuse: The Economics of Drugs and Drug Abuse In 2001 Portugal came to the conclusion that with approximately half its prison population in ja...

The Economics of Drugs and Drug Abuse

The Economics of Drugs and Drug Abuse

In 2001 Portugal came to the conclusion that with approximately half its prison population in jail because of drug related offences that changes in laws were absolutely necessary. In that year the government embarked on what is still to this date the most radical experiment in the management of illicit drugs of any country. Rather than legalize drugs, something that would gotten the very unwanted attention of the US government as well its EU partners Portugal decided to decriminalize all dugs, both hard and soft, and start to treat those who were drug addicts as a public health rather than a criminal issue. Decriminalization means it is still illegal but use is treated as a misdemeanor rather than a felony. After all a crime normally has a victim and in this case, unless the drug addict commits another crime  as a result of their addiction, then there is no victim apart from addict and their family.

Since then the Portuguese experiment has been dissected by virtually every country and despite what one would expect the actual rate of addiction has not increased. In April 2009, the Cato Institute published a White Paper about the decriminalization of drugs in Portugal. Data about the heroin usage rates of 13-16-year-olds from and claims that decriminalization has had no adverse effect on drug usage rates The results of the Portuguese experiment are impressive. The rates of HIV have decreased and so have drug related crimes.  However, Portuguese officials themselves will tell anyone who is willing to listen that decriminalization is not a panacea for drug abuse and that there are many other aspects of the country’s drug abuse problem that were addressed.

In the USA the government maintains a policy that has only changed slightly since President Nixon launched the War on Drugs in 1971. Penalties for the pushing of drugs remain draconian and  a large portion of the prison population in the USA are small time drug pushers and users.  Yet the criminalization along with mandatory prison sentencing has resulted in a massive increase in prison populations in the USA. All drug lords know their economics- the more severe the penalties  for selling,  the higher the price and given a normally price unresponsive demand the greater the profits. You will never find the drug lords advocating either decriminalization or legalization. They know that it is their ‘retailers’ and their mules who go to jail and this is a  minor inconvenience to the drug lords

Last year in the USA it  was estimated that some 50,000 people died of drug overdose. The majority are based on dangerous opioids such as heroin and fentanyl.  This annual death rate is roughly the same as the number of Americans who died during the Vietnam War over a period of nine years. The main substance are opioids which are also used in common pain killers like codeine. One of the main ‘gateways’ for opioid abuse in the USA are not the heroin pushers on the mean streets of American cities but the family doctor who commonly  prescribes opioid based pain killers to help people deal with severe pain. From this people graduate to more deadly opioids.   

Two weeks ago Ms Cheryl Green was arrested in Walvis Bay for growing marijuana for what she claims are medical reasons to help her partner Reiner Kring, who suffers from amyotrophic lateral sclerosis (ALS), which is a progressive neurodegenerative disease that affects nerve cells in the brain and the spinal cord. There are several scholarly articles which support the contention that cannabis does appear to have positive effects for ALS sufferers.

Ms Green was reportedly charged under Act 41/1971 Section 2A which relates to the possession and dealing in prohibited dependence producing drugs or a plant from which such drugs can be manufactured. The law under which Ms Green was arrested was a colonial law from the apartheid era which has in effect been struck down by the courtsin South Africa recently. In many states of the USA Ms Green would simply have go to a doctor and get a letter permitting her to grow a certain quantity of marijuana for her partners condition.

Cannabis for medical uses is  legal in many countries including Australia, Canada, Chile, Colombia, Croatia, Cyprus, Finland, Germany, Greece, Israel, Italy, Norway, the Netherlands, New Zealand, Peru, Poland, and Thailand. In the United States, 33 states and the District of Columbia have legalized the medical use of cannabis, but at the federal level its use remains prohibited for any purpose. Cannabis has without reasonable doubt positive medical advantages and to imprison people for using it for medical purposes seems to be a  destructive pandering to a small minority of voters  whose knowledge of and interest in the facts regarding the medical advantages of cannabis in  treating some diseases.

Two countries, Canada and Uruguay have legalized cannabis for recreational purposes, South Africa has, following a Constitutional Court ruling, also legalized the recreational consumption of marijuana and  it is time that Namibia starts a national dialogue on reforms of antiquated colonial laws that does not reflect current best practice and medical knowledge. It is an election year and it is doubtful that President Geingob and the Minister of Health would lose votes by asking the country’s Law Reform Commission to publicly review the law especially as it pertains to medical use of cannabis but also for its recreational use.

There can be no doubt that the consequence of abuse of hard drugs are dreadful and addiction to hard drugs often destroys its victims and breaks up families. Yet the question arises as to whether serious drug abuse ie opioids and coca based substances are best treated as criminal  activities as is currently the case, or should users be treated as individuals having a disease, whether social or psychological. The more humane and cost effective way to deal with this scourge of drug addiction is to treat it as a disease and not to waste the nation’s scarce financial resources incarcerating drug users but giving them the medical care that similarly ill people receive from our medical system.

These are the views of Professor Roman Grynberg and not necessarily those of UNAM where he is employed.  

Namibia’s ‘Receiver Led’ Economic Recovery

                                      Namibia’s ‘Receiver Led’ Economic Recovery

There is not a day goes by when the torrent of bad news about Namibia’s economy does not depress even the most pessimistic of economic analysts. With Jet closing down a number of its stores, government guarantees ballooning by N$12.5 billion, and with layoffs in most sectors there is little cheer. In February, Fitch revised Namibia’s rating outlook to “negative”, primarily off the back of weaker than expected growth, resulting in “adverse implications for the government's ability to stabilize the public debt trajectory”. 2019 is an election year and already we see signs of increased spending, coupled with public sector efforts to increase revenue through further tax on a shrinking economy and the fact that SACU receipts appear set to fall this year. The  New Era has recently said ‘This month alone, employees at the Roads Authority, Air Namibia and Namibia Institute of Mining and Technology (Nimt) have told their employees to expect delays in salaries. Some of the companies have told their employees that the delay was due to ‘technical glitches’, while others were frank in stating that they simply had no cash to fulfil their salary obligations.’  

Passenger vehicle sales which are usually a good early indicator of the state of the economy and they are now at their lowest levels for a decade with monthly sales down to a little over 300 in January 2019  from a high of over 900 per month in 2014.

Namibia is in the midst of a depression, not an extended recession. The Minister of Finance and the rest of the cabinet along the President and the Governor of the Bank of Namibia are still trying to put a brave face on a dreadful situation and are talking about ‘green shoots’ and modest economic recovery in 2019. One can only pray that this is the case but right now prayer seems all that is left as an economic policy initiative. If you speak to the lawyers, bankers and accountants  they will tell you clearly that Namibia, is in the middle of what they call, with their deadpan humor, a ‘receiver and default’ lead economic recovery. Meaning that business is booming for those repossessing houses, cars and dealing with commercial bankruptcies.

It would indeed be funny if there were not thousands of people losing their jobs, their homes and the education of their children. The depression has its roots in our over-spending but if you listen to the Ministry of Finance the roots of the current depression are to be found everywhere but in Namibia and especially not the government. There is some truth in this argument as the decline has in part resulted in South African imports flat-lining since 2013 which in turn has resulted in a relative decline in SACU revenues, one of namibia's main source of revenue. This has badly affected the four BLNS states (Botswana, Lesothoto, Namibia and Swaziland).

This external situation has been compounded by what has been done internally. The government tried to deal with poverty by creating ever more ministries and building ever more infrastructure projects ( NATIS, police, home affairs, the Walvis bay port expansion and longer freeways) and then it was soon realized that, like everyone else on planet earth, those governing Namibia have unlimited wants and limited means to achieve them. Once all that investment slowed down the economy went into a long technical depression.

Namibia faces a situation that resembles in many ways the on-going crisis that has confronted Greece for the last decade. Greece too has been in a depression largely because it has refused to decouple from the Euro and reintroduce a devalued Greek drachma. Greece has also has introduced very slowly the painful reforms demanded of it by its ‘European partners’ ie Germany. Many economists believe that Greece’s depression would  have eneded much earlier if the country had decoupled from the Euro early on and devalued by returning to the local currency.  The IMF has demanded painful changes to policy and the endless bail-outs of the country’s state owned enterprises. Few believe that this will happen in an election ear and that a major crisis awaits Namibia next year.

According to normally well informed sources there have been on-going discussions between the Bank and Namibia  and the Ministry of Finance for over a year on the question of the currency peg of the Namibian dollar to the rand. Those who plainly oppose decoupling look at the situation in Zimbabwe where the new for the local currency has been given the new ‘sexy’ name of RTGS or realtime gross settlement dollar. This new currency is widely expected to rapidly lose much of its market value against the US dollar which was the nation’s currency from 2009 until a few days ago. For a decade the Zimbabwean economy was disciplined by the fact the currency was the US dollar like Greece with the Euro and Namibia with the rand. But it is precisely that fiscal and monetary discipline and the subsequent absence of liquidity for big spending governments that has caused the introduction of the new currency.

Namibia stands on the edge of the precipice. If the government fails to introduce the very politically unpopular reforms required by the IMF which includes discipline on the state owned enterprises whose debts and overspending are strangling the economy then we will fall over the edge next year and we will only be caught by the IMF.  The pain that the IMF will inflict to assure that we repay our loans will be much harder than what if we would have the political courage to do it ourselves. Given the pattern of events 2020 will be considerably worse than what we are currently experiencing. 2020 is set to be an event better year for the receivers.

These are the views of Professor Roman Grynberg and not necessarily those of UNAM where he is employed.