June 19, 2014

Economics of sin

Posted in Global Economy · 24 comments ·
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COMMENT-Cocaine-use

 

Did you know there is an acute cocaine shortage in England at the moment? The scarcity is made all the more acute due to the fact that the World Cup apparently drives up cocaine consumption dramatically. According to dealers, good weather and an evening match has the Brits (who are Europe’s biggest consumers of cocaine, according to the EU) gagging for cheeky lines, first when they are boozing before the game and then afterwards when they want to keep marching.

I was appraised of this cocaine shortage while reading ‘Vice’ – the online news site – which was valued this week at €2bn in a deal with Time Warner. An English dealer explained to Vice.com how the first English match day of the World Cup would pan out for him as follows.

“The England-Italy game is a 11pm Saturday kick-off, so if it’s a sunny day people will start early and I should be getting repeat sales throughout the evening into the morning – and if we win, even more for the celebrating afterwards.”

There’s no reason to believe that Ireland is any different. In terms of drug consumption, Ireland comes just below Britain on the top of the league of European drug-takers.

The EU’s report on drug-taking estimates that around a quarter of Europe’s adult population have taken an illegal drug in their lifetime. Unsurprisingly, cocaine and cannabis are the most popular – the report states that, throughout the continent, around 2,000 tonnes of weed alone is smoked each year. This is a lot of stoned people.

Ireland comes up close to the top of the cocaine-snorting, pill-popping, weed-smoking league and when it comes to painkiller abuse, Ireland comes out on top.

This means that there is an enormous drug economy here. Now, you would have to have been living under a stone not to notice this.

In recent months, beginning with Italy and Spain, the EU has been urging national governments to tot up the “wages of sin” – money spent on drugs, prostitution and pornography – and add this illicit economy to the GDP figures to get a better idea of economic activity in each country.

If we add all this up for Ireland (using estimates based on other countries’ consumption), we would probably push up GDP by quite a bit – thereby, among other things, reducing the absolute figure for austerity cutbacks needed this year!

This is not just me going off on a tangent. Apparently the “wages of sin” are all the rage in Brussels and counting is soon to be mandatory.

The European System of Accounts (ESA) has announced, “All member states declare the percentage of GDP derived from illegal activities such as the sex trade, drug and people trafficking and contraband. Countries have until 2016 to comply.”

So let’s try to do a bit of back-of-the-envelope calculation. According to another website, www.havocscope.com, which estimates black market activity all over the world, drugs are quite expensive in Ireland relative to other countries.

According to this site, cocaine in Ireland sells for €100 per gram. Ecstasy trades at €5 per tablet, or 10 ecstasy tablets for €40. A bag of heroin that is filled with 0.3 grams of heroin sells for €20, while 2 grams of heroin costs addicts on the streets of Dublin €100. Poor-quality cannabis resin is reportedly sold in 7 gram batches which are available for purchase for €25, and weed is sold in 6 gram units, retailing for €100. Also, in terms of prescription drugs, 2mg Xanax tablets are €3.50 each.

This means the illegal drug market in Ireland is enormous.

A good way to assess it is to take the British figure, which is published, and apply a similar methodology to Ireland.

Similarly, in terms of prostitution in Ireland, it’s probably reasonable to assume that Irish men are no more virtuous or degenerate than their British counterparts. Therefore, again applying the British figures and methodology would seem like a fair place to start.

In Britain, the National Accounts this September is to include the import, production and sale of illegal drugs and provision of prostitute services into its official economy. The Office for National Statistics estimated this figure to amount to £9.7bn (€12.1bn), based on 2009 estimates (£5.3bn, or €6.6bn, for prostitution and £4.4bn, or €5.5bn, for illegal drugs respectively), representing 0.7pc of GDP. Amazingly, this means that drugs and prostitution contribute more to the British economy than agriculture!

There’s no good reason to believe that drug consumption has changed much since then. However, given that drugs are more expensive in Ireland than elsewhere, the drug figure in Ireland may be actually a higher proportion of GDP.

Spain has just come out with its own figures, showing that last year Spaniards spent €5.7bn on drugs (0.5pc of GDP) and nearly twice that (€10bn) on prostitutes (1pc of GDP!).

If we add in porn, the figure grows yet more. According to the ‘Mirror’, Ireland’s porn use has increased 77pc since 2010. In 2006, Britain alone received £1.9bn (€2.3bn) in revenue from porn – this would mean that the Irish porn market, in terms of advertising on porn sites, was worth at least €214m in 2006. If porn usage has doubled since then, this figure could be very large too.

If we split the difference between the EU and British drug figures with a nod to the Spanish data and apply these figure to Ireland, we could reasonably say that the ‘economics of sin’ amounts to 1pc of Irish GDP. This is a huge figure of €1.6bn. Just to put that into context, that’s about 80pc of the total budget adjustment which needs to be made for next year!

It’s extraordinary the lengths the EU will go to make their economic targets work, isn’t it? I wonder what those bureaucrats are on over there?

 


  1. CorkPlasticPaddy

    They must definitely be on something because they simply haven’t got a clue about running anything???

  2. Colm MacDonncha

    To what? Drugs? Prostitution?

  3. Inert Atom

    I remember when I was a kid and eager to add value to what I was doing and decided to sell my toys and comics .Cash then was scarce and to realise that I would hand in two comics to a second hand shop and get another comic to read free and that seemed a miracle .I use to also at that time collect beanos, dandys , toppers and dells . The dells were the premiums then . There were also the miniature cars like corgies to sell in my self street corner shop .I graduated later to the gardening with lettuce , onions and radishes and supplied all the neighbours .

    What was important is that I could do what I like with ALL the money I received. This was magic .

    Until my mother decided to cut my allowances because I had enough .Thus my own black economy in childs play that was legal caught the attention of my mother who in affect taxed me by with holding my weekly allowances or reducing same .Thus my own entrepreneurial spirit was added to the family household budget that determined how much I could spend.

    I was happier to work and enrich myself and suffer the reduced hand outs because it was all much more fun.

    It is amazing how today it has only taken until now that the Government should decide to include the black economy in their national budget .What were they taking ?

  4. Change that title to “The Economics of The Hedonic Treadmill” and you have the big picture.

    David Mellor in his Chelski kit isn’t the only one to go for it after a big game, whether in the living room after MOTD if the kids are with grandma or in the various lock-ins. Sometimes the mayhem begins during the match itself, or so I heard on the rumour mill. I try to tell them all that they should have a No Cocaine After 50 because the heart can’t take the pace,but Live Fast,d Die Youngish for a Boomer seems to be the motto/tattoo. So long as your funeral playlist signifies cool, that’s all that matters.

    Last night I saw John Cooper Clarke in a small local village hall. He related his downfall through drugs and how soundtracking The Sopranos sorted his finances out, but I couldn’t repeat the language on a family friendly forum like this.

    It’s The Gay Guyz as always who are constantly innovating and pushing the envelope, but the footie lads are a close second division in the Marines of Hedonism stakes. Wonder where they learned that skill set from? *smirks*

    David McWilliams is into this Behavioural Economics stuff, or was last year at Kilkenomics when he was very funny despite getting lost with his Sat-Nav and missing the start of the jollifications.

    http://www.kilkenomics.com/contributors/dan_ariely

    ps: great comment John ALLEN

    • Rubberbandits “Dad’s Best Friend” totally nails all this for Irish Middle-Class Debt Ridden Ghost Estate escape through hedonist self-destruction culture. Everyone now realises I was spot on that they too have been listening intently to The Knife and also nicking the sexual, hedonistic subtexts for a Limerick landscape. It just works! I’ll link to the video but don’t watch it as NSFW type lyrics:

      “I’m picking out the hooker that I like the best, I’m crying on her toilet coz my life’s a mess. He never had a stag, I’m taking him Amsterdam and making him a man”

      It just gets worse so don’t listen unless there’s a priest there in the house to save and disinfect your soul afterwards..

      A branch of my spiral ancestral tribe comes from Limerick. Rathkeale. Last year’s geneaology edition of The Gathering Of The Tribe was in Galway. Of course, I’ve never been to Limerick in my life and nobody there knows me, so don’t ask if you’re in a bar as it *might* #interesting. Etc.

      On UK t.v you can’t watch a match without a dozen Paddy Power ads if it’s ITV. I hope RTE still interrupt Rio2014 for The Angelus.

      I know ‘lads’ on both the islands, from teens to their Dads going into their 50s and 60s, who think nothing of “cheap holidays in other people;s misery” sun, sand, sea, sangria, sex etc. And hash. Mind you Turkey’s in for Brits, Spain is out- other than all you can eat/drink deals because: EuroHolidayBlues. Only Telegraph/Times eejits put up with that coffee priced as a meal on the Champs Elysees stuff.

      I bet all the Irish lads will be embrace the New Europa Patriotism and holiday in Cyprus, not with the heathen Brits in Turkey, hey? To support Angela and that Portuguese creep whose name I can’t even…Barroso! Irish people should need visas to travel to non-Euro holiday destinations like…..Croatia. And they should pay heavy taxes if they drive across the Eurozone with their family and dog to do so!!!!
      The Rubberbandits “Dad’s Best Friend”

      https://www.youtube.com/watch?v=iYgPznBrjiA

      Ps: I *might* do a DJ set in some Sean Nos Nua dive bar one night after this year’s Kilkenomics, away from the celeb economists stuff. Or my son might. So long as it’s alcohol and drug free and everybody is modestly dressed, of course. And priests are in attendance to assure nobody dances with their devil region hips and just stick to the Irish dance footsie stuff….and everybody stands to attention for “Amhrán na bhFiann” every 30 minutes, because I play that a LOT and even if it’s a cutting edge dance remix, it’s still the National Anthem.

      • Colin

        pulled away from your spiritual home by the power of galway paddywhackery…… slaves to the great lie that galway is great

        rubberbandits need to cover that issue too

        galway, come and get drunk, we’ll empty your wallet for ya, it’s the craic don’t you know

        • #GalwayIsGrand Tuam. Letterfrack. What’s not to like?

          I’m strictly a Midlands boy, actually, like my Dad. He couldn’t stand Cahirciveen when I took him on ye heritage turf fire holiday experience up some desolate mountain overlooking the Atlantic in 1992.

          “There’s not tillage here! Is there any boot sales in this town? Where will we get Mass?”

          Up Laois!& erm, LOL!

  5. cooldude

    The main thing I got from the article is what a total joke this whole GDP nonsense really is. The idea that consumption and spending somehow reflects the state of the economy is just more Keynesian nonsense.

    No mention of the Fed’s downward revision on their growth. Expect a lot more of this and even more price inflation in stuff that really matters like food and gas. New stock market highs of course to keep the speculators happy but the real economy heading south. Baltic shipping index at all time lows and full time jobs still falling.

    http://wwwwakeupamericans-spree.blogspot.ie/2014/06/its-about-to-get-much-much-worse-fed.html#.U6LWgyjApUQ

    • Yo! “Cooldude” Kewl screen-name, pal. Word up: The more people who trash themselves on drink and drugs and get STDs,the more the demand for medical and psychiatric interventions, goods and services. What’s not to like? The GDP goes up every time the Party Cadets arrive in A&E wards in any hospital. More nurses! More doctors! More liver transplants and more drugs to treat the depressive smackdown that comes on a Monday morning when the civilians are back at their desk drone jobs whilst us elite super-troupers focus on the mid-week mayhem diary.

      If everybody just went to Mass and said the Angelus in Ireland, we’d be back to The Emergency! It’s all good, so everyone get off your tits at Pride or at Garth Brooks. Party on Wayne and Eamon! Party for Fine Gael and for Ireland Inc!

      • Oops! Forgot the link to the economics stuff. My bad! Anyone who can afford to get hammered in Dublin bars and clubs at 6 E a pint can pay for the ambulance if they’re a hopeless grunt who can’t handle their liquor. If I was in charge, things would be very, very severe….I party for Jayzus, but “everything in moderation”. However, some folk like Keef, Lemmy and me have #AStrongConstitution It’s pathetic when civvies try to act like Marines in the club, on the dance-floor and in the b……

        best

        Andy, or whatever the hell I’m called these days
        “Names Are For Tombstones, Baby!”

        “Drunk people should pay for the treatment they receive at accident and emergency units, a patients’ group has said.

        The Scotland Patients Association said nurses and doctors were often abused by those who had overindulged in alcohol, particularly at weekends.

        They said the time had now come for such people to pay for services.”

        http://www.bbc.co.uk/news/uk-scotland-12428765

    • Deco

      Correct.

      GRP = Grossly Distorted Picture.

  6. Tax them all I say. Bring them under the umbrella of big daddy and make it all legal.

    Provide government licensed drug stores with guaranteed quality at reasonable prices and then it would be a part of the real economy.

    The only problem is that it will ruin the drug catels and decrease the underground economy to nothing. As that is all that is left that functions we would be thrown into another downdraft depression.

    Nope we have to leave the population to decay and rot without more government help!

  7. Unless you are too busy sniffing and snorting you need to read this toget aligned wit the forces of the anti dollar

    http://blog.milesfranklin.com/why-so-much-politics

  8. If you want to protect yourself frm the hedonistic adjustments of our deranged governments you will read this too and take a note of the contents.

    http://blog.milesfranklin.com/the-most-important-reason-to-own-precious-metals-revisited

  9. michaelcoughlan

    Hi,

    Very important article but a couple of glaring omissions. First of all:

    I would say that most drugs are imported here which would contribute negatively to the current account deficit.

    Secondly: Since the fallout from drug abuse is so destructive to Irish society would it not be the case that the costs for cleaning up the mess are MORE than the sum of money spent on drugs.

    Since drugs and porn are consumerables with little or no value added in the provision of the good or service there is no value added activity taking place in Ireland.

    A more important consideration though is that if the nutcases in Europe are trying to value these activities as sure as shite they are going to try and confiscate the money in the accounts of the dealers to suit their own covert agenda Reagan or Greece like. No? Almost everyone on the board has said deposits will be confiscated and I’ll bet you one half hour in the sack with Claudia the dealers will be the first to get it where the sun don’t shine.

    • McGoo

      >costs for cleaning up the mess are MORE than the sum of money spent on drugs.

      Of course you’re right, but GDP just adds up all the money spent, so the money spent on drugs increases GDP, and the money spent on cleaning up the resultant mess also increases GDP.

      Result – GDP is not a useful indicator of economic health.

  10. Dilly

    Many people have no idea what is going on out there. You can buy Coke for as little as 60 euro a gram. But, people would normally do a deal. You may have a bag of weed some cocaine and a few pills for a certain price. They may also throw in some valium or various other downers for an extra few quid. Total black market economey that is thriving in Ireland. People use it to escape from Irish life. Probably the same reason we have such a drink problem it is an escape. You can buy pure MDMA, Ketamine, 2CB, 2Ci and Oxycontin. You could go to any town in Ireland and buy some this evening. Now you can call all these drug users idiots and wasters, but, that doesnt mean it os not happening. It is, if anything, on the increase. Coming to a street near you this weekend.

  11. StephenKenny

    Economically, it’s quite interesting to look at the ‘vice’ markets:
    Drugs are not so good, as so much of the money goes abroad. The channels are incredibly efficient, in terms of costs & employment. The product degrades some sectors (people’s longevity, I believe), but encourages others (night clubs).
    Prostitution, on the other hand, is simply good for the economy. It’s a pure service, other than some very small clothes, there’s no stock or investment involved at all. It’s also local, so a prostitute in Mumbai is no threat to one in Narvik.

    With prostitution, people work, they get paid (like lawyers – I was going to make some comment about integrity, but perhaps I won’t); with drugs, people buy stock from abroad, and make a turn on the resale (like, well, almost everything).

    So, if you really want to help the economy, ignore the drug dealers.

    Trust the UK to suddenly decide that their ‘vice’ sector is bigger than anyone else’s. Nothing to do with yet more rigging of their debt financial stats, in this case the debt-to-GDP ratios. It’s like listening to a whiney schoolboy making excuses for cheating in class.

  12. Deco

    Cocaine consumption is also an excellent prediction mechanism for problems in the health service for people in their 50s, and an even better prediction device for pensions who will never get to become a liability on the system.

    I have a theory about cocaine consumption. Consumption is correlated to the class obsession, income concentration that happens in a society. Therefore locations like London are going to be massive cocaine markets. The greater the level of superficiality, the higher the cocaine usage. The “antidote” in this circumstance might be greater social equality.

    Britain has a serious Cocaine problem, and Ireland ( a route for cocaine into Britain) also has a serious problem. In fact since the recession, policing along Ireland’s Atlantic seaboard has nosedived – and as you will have noticed, drug seizures off the coast have also nosedived.

    The result is more cocaine in Britain, and it has also goe down in the price being charged. Ireland is as porous as a seive when it comes to enabling cocaine into Britain. One would have assumed that Ireland, having received a bailout from Britain, would have done more to prevent this. In fact Ireland has actually done much less.

    In effect, Ireland’s slackening off of it’s determination ton defend it’s borders from cocaine smugglers trying to supply Britain, has caused Ireland to become a “BAD NEIGHBOUR”.

    Noticeably, NI, with it’s deeply embedded status obsession, also seems to have a lot of people who want to feel as if they are going upwards, on this yuppie drug.

    The more egalitarean societies of The Netherlands and Germany appear to have lower Cocaine consumption. The Netherlands, and Belgium have greater availabilty of marajuana, so this keeps down cocaine consumption. The Netherlands and Germany have higher than average levels of consumption of the services of prostitution, so people have other options for escape if required.

    If Ireland wants to reduce cocaine consumption, should it enable local authorities to have designated pot areas, in their areas, if the wish ?

    The war on drugs is failing. As evidenced by the map. Some fresh thinking is required.

  13. Deco

    David is correct.

    The latest gimick to increase the statistical measurement of GDP, smacks of desperation.

    Almost as bad as trying to increase GDP by driving up real estate prices.

    Western civilization is on an intellectual sub-prime journey here. They are intellectually bankrupt. Drugs consumption drives down the productive capacity of a society. It is a measure of social problems, and the failure of a society to intellectuallly grapple with the challenges that it faces.

  14. Wills

    IOU – a legal cocaine – gives a better buzz!

    An IOU is a fiduciary instrument to discharge a debt – this is the legal explanation. Now when one actually stands back and penetrates the real meaning of this you enter into the function an IOU provides.

    What is it?

    The IOU is in FACT a maneuver to forestall on completing a trade in goods and services with another person. Now the technicians running the system KNOW this fact and through their vital and correct understanding of what an IOU actually means in ALL of its contingencies they can then play around with the IOU concept within the legal system they’ve designed for it. A system that provides the ability to keep making more of IOUs when needed in order to maintain the economic system subverted – to keep it in place; the subversion which has been carried out through the need of for a medium of exchange been overrun with a currency / IOU / three card trick.

  15. Jill Kerby

    Given how at least 2 US states have legalised marijuana production/sales – Colorado and Washington – and another half dozen are considering doing so, ending prohibition here would be a genuine boost to GNP – excise, income and no doubt VAT returns. Colorado alone expects to earn $134m in tax in fiscal year 2014. Legal sales of weed amount to €2.34 bn – doubled in just a couple of years since limited legalisation was introduced – and not just for medical purposes.

    Of course, our crowd would so completely overtax any legal marijuana trade that a black market would quickly emerge and that would push the price down for the home grown stuff and ruin local entrepreneurs…lol

    Anyway, as a few other posters have noted, GDP is a nonsensical measure…including untaxed vice activities just shows how desperate the EU morons are to goose their already discredited stats. Build an Ark. (Sail it somewhere where the EU don’t shine…)

  16. http://www.jsmineset.com/

    Reading this info will drive you to drink if not in to the arms of the nearest drug dealer

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