In August, Attorney General Eric Holder signaled a striking change in federal narcotics policy. For the first time in decades, the Department of Justice took concrete steps to reduce the use of long-term prison sentences in the fight against illegal drugs. Holder seems to really believe in the cause, too; in an Aug. 12 speech to the American Bar Association, he asserted that “widespread incarceration at the federal, state, and local levels is both ineffective and unsustainable.”

The bare fact that the attorney general of the United States is taking such a strong position would be more remarkable but for the fact that several states have already acted to reduce the long-term incarceration of nonviolent narcotics defendants. Even Rick Perry’s Texas has already done the hard work of thinning the ranks of low-level drug offenders in Lone Star State prisons.

Holder (and Texas) are right, of course. It is now well-established that mass incarceration is at best an inefficient way to fight illegal narcotics. Stepping back from a wasteful program that provides little social benefit is a wise thing. A pressing question remains, though: If not mass incarceration, what tactic will we use to address drug trafficking?

In relation to marijuana, the answer is fairly clear. Like it or not, marijuana legalization for nonmedicinal purposes is a reality in two states, and support for marijuana prohibition is collapsing. As in the case of same-sex marriage, our society has shifted significantly on this issue, moving toward liberty as people conclude that the social costs involved are relatively small.

The same can’t be said, though, of heroin, cocaine, methamphetamine, PCP, or a host of other strong narcotics. Americans don’t, and probably won’t, support the legalization of these drugs, and they are right to resist the idea. The social costs of these drugs are just too high.

So, if not incarceration or legalization, what are we to do about narcotics? The answer flows from a review of what went wrong so far in the “war on drugs.” At the core of the failure of mass incarceration to stem narcotics trafficking is a simple economic truth: You can’t shut down a business in a labor-rich economy by restricting low-wage labor. There is an inexhaustible supply of people to take those “jobs” as others are arrested. The barriers to entry in the field of drug dealing are very low; all that is required is a willingness to break the law, and a large number of people possess that quality.

To shut down any business, what you need to do is cut off cash flow and credit. Because illegal businesses have very limited access to credit, cash flow is everything. To shut them down, we need to use existing forfeiture law to intercept wire transfers or bundles of cash as they return to the source of the drugs. To date, that simply has not been a primary focus of our antidrug efforts. Instead of sweeping up the cash flowing back to suppliers, we have swept up the low-wage labor and the product itself. It hasn’t worked because labor and product can be replaced — so long as there is cash flow.

Some may be confused at this point, remembering photos of the houses and cars seized from drug dealers. The problem is that those things are assets — stuff bought with the profits of drug businesses — not the cash flow to suppliers that sustains such a business. Fortunately, we now have a cadre of people who are very good at interdicting cash flow: the FBI agents who have become skilled at intercepting money intended to support terrorism. We need to retask some of them and train others to focus on the money stream going back to big-time narcotics suppliers. An added bonus is that such efforts are revenue-positive, since the government gets to keep the money. Quite a change from the financial sinkhole of mass incarceration!

The mistake that led us to this moment was made in the 1980s. At that time, the United States was faced with two public health disasters: AIDS and crack cocaine. Both could have been addressed through moral crusades, but with AIDS we took a different tack. It was a biological problem, so we hired people skilled in biology to solve it, and they did. With crack, we did not hire businesspeople to similarly address a problem of business. Instead, we treated it as a problem of morality requiring broad punishment. As a result, we labeled millions of people as immoral, but failed to solve the problem.

As we step away from mass incarceration, this is the time to step toward a business-focused solution to narcotics. The moral crusade may be over, but our concern about illegal narcotics should not be. We can, and should, do something about hard drugs by grabbing cash instead of people.


Mark Osler is a law professor at the University of St. Thomas and a former federal prosecutor.