Thursday 23 October 2014

How adding up the 'economics of sin' could take the edge off austerity cutbacks

Published 18/06/2014 | 02:30

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?

David McWilliams

Irish Independent

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