Starting in the mid-1990s, major American cities began a radical transformation. Years of high violent crime rates, thefts, robberies, and inner-city decay suddenly started to turn around. Crime rates didn't just hold steady, they began falling faster than they went up. This trend appeared in practically every post-industrial American city, simultaneously. (...)Cocaine, crack and crime (Adam Smith Institute):
And there's the missing piece in the DEA's theory. Once the margin of profit for dealing small amounts of crack cocaine disappeared, being part of the drug trade was no longer worth the persistent threat of violence or the stiff criminal penalties. A 70 percent drop in cocaine prices like the one that occurred in the mid 1990s combined with competition from decentralized sources for methamphetamines and prescription narcotics would completely eliminate the minimum wage drug dealer as a viable profession.
The same goes for turf wars, which Venkatesh saw as the source of the majority of inner-city violence. He saw the life of a drug dealer as relatively violence-free up until territory conflicts with other gangs ensued. Without the high value of cocaine as a commodity, the incentive for protracted gang wars would dwindle as well as eliminate the economy for the illegal weapons, drive-by shootings, and mercenary “warriors” needed to help defend prime dealing locations. Without profit to fight over, Vankatesh thought that “gang violence would likely return to pre-crack levels.”
This also explains why there’s never been a large upswing in crime related to methamphetamine use. As long as production costs stay below that of cocaine's already cut-rate asking price, the demand to be on the business end is low. If the financial incentive is low, the trade-off for entering a life of crime is low. At a certain point the decision matrix for entering a life of drug-related crime collapses for all but those with no other alternate financial sources or for those with a personal interest in the craft.
There's a fascinating post on The Atlantic Cities blog today, which argues that the spectacular drop in crime the US enjoyed during the 1990s was down to a fall in the price of cocaine (and, therefore, the highly-addictive crack cocaine). (...)
The other side of all this, which I'm surprised the article doesn't mention, is that lower costs mean that addicts find it easier to pay for their habit. They're less likely to resort to theft and mugging, and so on. It's also noteworthy that crack probably only emerged as a way to get more "bang for the buck" out of cocaine while trafficking was harder.
The upshot of all this is that reducing the price of drugs like cocaine in Britain would probably help with crime rates as well. Drug legalization would be ideal, but a more achievable work-around might be to instruct customs workers to turn a blind eye or take a coffee break when flights from Colombia are coming in to Heathrow. They do it for European countries already, where there are seldom-enforced limits on how much alcohol or tobacco can be brought in. Extending the practice to one more country could make a surprisingly positive difference to the UK's crime rates.