The Economics of Breaking Bad

Breaking Bad is the story of Walter White, a cash-strapped, suburban 50-year old high school chemistry teacher, who following a life-changing cancer diagnosis hooks up with his drug-dealing former student, Jesse Pinkman, to cook and sell crystal methamphetamine. Immediately thrown in at the deep end, White undergoes a vast personality change; from mild-mannered Father into the lying, murderous gangland drug lord Heisenberg;  first cooking methamphetamine wearing an apron in a winnebago, then working in a high-tech underground laboratory for the Chilean gangland kingpin Gustavo Fring — who White eventually kills — and finally amassing a multi-hundred-million-dollar pile of cash.

A key dynamic in the show is White’s relationship with his brother-in-law, DEA agent Hank Schrader. It is Schrader who first introduces White to the idea that selling methamphetamine can pay — boasting of multi-hundred-thousand-dollar drug hauls, and even taking White out on a DEA raid of meth lab, where White first encounters his former student Pinkman. As White’s famously pure blue methamphetamine grows in popularity, Schrader becomes increasingly obsessed with its influx, yet spends the course of almost the entire series unaware that its source is his own brother-in-law.

There is another layer of irony, though. For it is not just that Schrader drew White into the drug trade through informing him of its lucrativeness, and then taking him out on a drug raid. In economic terms, Walter White’s illicit drug empire — and all the killing and carnage that spews from it — is utterly dependent upon the protection of Federal agents like Schrader. Breaking Bad is very much a parable of the failed drug war.

As Milton Friedman famously noted:

If you look at the drug war from a purely economic point of view, the role of the government is to protect the drug cartel. That’s literally true.

There is no logical basis for the prohibition of marijuana. Our failure to successfully enforce these laws is responsible for the deaths of thousands of people in Colombia. I haven’t even included the harm to young people. It’s absolutely disgraceful to think of picking up a 22-year-old for smoking pot. More disgraceful is the denial of marijuana for medical purposes.

Why are drugs so lucrative? Why are users forced to pay such a premium over the cost of production? Because of drug prohibition. The more Federal money spent on drug prohibition, the more drugs seized, the higher the markup. Could criminal elements charging a one-thousand percent markup compete with a legal and free market? Of course not; nobody would buy drugs from a wild-eyed gun-wielding dealer when a pure product is available openly for a fraction of the cost.

So it is the Federal drug prohibitionists enforcing drug prohibition — both in the universe of Breaking Bad, as well as the real world — who are empowering the drug cartels, and criminal elements like Walter White who simply get around the law. Supply and demand rule this world. If society demands narcotics, they will be supplied; the only question is how.

As Abraham Lincoln noted:

Prohibition goes beyond the bounds of reason in that it attempts to control a man’s appetite by legislation and make crime out of things that are not crimes.

The economic costs have been massive:

According to DEA estimates we capture less than 10 percent of all illicit drugs. Does $30 billion a year for a 90% failure rate seem like a good investment? And how much would it cost to stop the other 90%? $100 billion? $500 billion?$1 trillion?

And the resultant swollen prison population is not only a huge cost to the taxpayer, it also takes people out of the economy who could instead be working and producing. 59% of federal prisoners are incarcerated for drug chargers, compared to only 2.5% incarcerated for violent crimes.

The war on drugs also stretches scant police resources. 717, 720 Americans were arrested in 1997 for murder, rape, robbery, and aggravated assault (combined), while 695, 200 were arrested for marijuana offences alone. The time and resources spent on investigating, prosecuting and incarcerating nonviolent drug users is time and resources that has not been spent investigating, prosecuting and incarcerating violent criminals.

Walter White exemplifies the failure of the drug war. Without the folly of prohibitionism White could have profited legally from his obvious talent for supplying a popular recreational pharmaceutical product without having to become part of a vicious and brutal criminal underworld. Under prohibitionism, White was again-and-again forced to either kill or be killed, unleashing his previously-dormant psychopathic potential. The real story of Walter White is that only something as absurd as prohibitionism — and the lucrative criminal underworld that prohibitionism breeds — could provide the catalyst for a mild-mannered chemist to become a wild, murderous psychopath.

18 comments on “The Economics of Breaking Bad
  1. Becky Currin says:

    Absolutely love this show! Excellent writers – always leaves me thinking.

  2. dslarsen says:

    The other half of this parable is the health care system. Walt is driven to provide for his family, or at least that is how he gets started, because of his cancer diagnosis and the likelihood that the cost of that would crush his family. If you look, there are a lot of dramas where a health crisis sparks the action. The movie John Q comes to mind.

  3. stacyherbert says:

    @dslarsen – the war on drugs is also a codeword for racism, it’s a way to attract the racist vote without either party having to admit to racism; while it started under Nixon, it was Reagan who really combined the war on drugs with his Southern policy to expand aggressively and you can see that in incarceration rates overall but especially for blacks and Latinos; hate always destroys those doing the hating and the racist targets of the ‘Southern strategy’ may have felt better in the short term when they see blacks paraded off to prison for 30 years for possessing and/or selling a small quantity of drugs, but in winning that small inner racist battle, they lost the war

  4. Aziz says:

    Yes — war on drugs is a big dog whistle and a boondoggle to racists. The fact Obama hasn’t even tried to end it even though he himself was a proud and overt drug user, as well as a black man is vile.

  5. Jack says:

    The entire progressive movement is driven by racism.

  6. febo says:

    Ron Paul courageously stood up and pointed out how the drug war supports racism
    http://www.youtube.com/watch?v=-VR9YbBquRY

    .. for those of you, like Stacy, who swallowed the Ron Paul is racist meme

  7. Wepollak says:

    Racism – looks like what you guys are having for breakfast.

    I just rubbed a bit of Silver between the fingers and knew that drugs and weapons are the two biggest businesses in the world and to even say I know a thing about em is as stoopid as pointing to racism as the reason for these two business to be the biggest.

    Did someone just shout dumb f’in naggin slaves over there?

    No interest on money creation
    I am who

  8. Wepollak says:

    I heard em correct themselves. They hollered:

    dumb f’in naggin slaves to money

    Sounds about right.

  9. YoLithos says:

    Coca-Cola. Addictive junk-food additives. Drugs, addiction – the bad kind – take away your power of choice. Your will. A little. A lot. And your capacity to discern. You don’t need (external) drugs to be addicted. Addiction to sex, food, attention … come to mind. Drugs just help the process of addiction, depersonalization. Fast-track. Old Man On The Mountain – track.

    Ignore them, and you ignore the catalysts for addiction and human debasement, as mentioned above.

    As for prohibition in the US. It seems to have gained more support the more it migrated from rural areas – where booze and drugs served as seasonal pacifiers between crops and harvest – to cities and factories, that needed year-round human machines. In the latter, booze and drugs had to be limited to a level where they served as moderate painkillers. And, they had to be limited in the clerical classes and “elites”.

    As for the burocratic-squeeze – corruption dichotomy, kidnapping the apparatus of state for private profit. Well. That’s as generalized as it is ancient.

  10. Jim Oaksmith says:

    Great article as well as analogy. The unspoken truth is that our intelligence services are the top importers and therefor salesmen of illegal drugs with the money flowing right to the top. Those in law enforcement don’t seem to be aware they are disposable pawns in this for profit industry.

  11. evolutis says:

    @Max/Stacy / Aziz … great info thanks so much!

  12. YoLithos says:

    Oh, and gambling. Las Vegas. The stock market. All that stuff. The kid’s college-money and savings and pensions drain. With a lot of show, merry distractions, flypaper bells and whistles. I already mentioned sex, right?

    Why even try to protect anyone against that? Who would, er, could that hurt? Who uses all that money and power? Where does it eventually go? How, even?

    I’m sure PMs tie in to that somehow. Pro or con? Both? Information is

  13. Kevin Eshbach says:

    I have always believed the war on drugs was a waste of time and money, because if people want something they will find a way of obtaining it and look how successfully prohibition was in stopping people from drinking alcohol.

  14. JEFF MCKINLEY says:

    The D E A IZZZZZ the drug cartel. That is their mission, to eliminate the competition.
    Who do you think the biggest drug kingpins are… not walter white. He is the illusion
    presented to you to make you think entreprenuers are the biggies. Where do you think
    the bankster police (CIA) get their black ops money? Why are we in Afghanistan?
    etc,etc? You bet.

  15. Barry Soetero says:

    Nothing like US and NATO troops protecting poppy fields in Afganistan to” keep it out of the Taliban hands.” Real twisted thinking on the war on drugs. Keeping the stuff illegal maintains the high margins of the product on the street.
    Brits have been in the drug rackets ever since 18th century, and opium wars in China. Now Afgan drug money is being laundered in very discreet Dubai Banks. Banking laundromats exist because there is such huge amounts of cash to wash, so if caught, pay a little fine, some campaign contributions, bada-boom. . .bada-bing, and sweep it under the carpet.

  16. john austin byrne says:

    Very creative and thoughtful piece. Well done.

  17. giles says:

    I love when people say two things aren’t connected because they can’t connect them in their own mind. It gives me a laugh like when you see a dog trying to bite it’s own tail. I pity these people that work on such a basic level. It also makes me believe that there truly is no hope for humanity. Joy :) – and that isn’t sarcasm you detect

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