The failure of supply-side social policy

The US is in the midst of two social crises. The first is an opioid epidemic that is decimating parts of rural and now urban America and the second is a surge in the number of migrants crossing the southern US border primarily from Central America. In any system that involves flow, either physical (e.g. electricity) or social (e.g. money), the amount of flow (i.e. flux) is dependent on the amount of supply (e.g. power station/federal reserve) and the amount of demand (e.g. air conditioner/disposable income). So if you want to reduce opioid consumption or illegal immigration you can either shut down the supply or reduce the demand.

During the twentieth century there was a debate over the causes of booms and busts in the economy. I am greatly simplifying the debate but on one side were the demand-side Keynesians who believed that the business cycle is mostly a result of fluctuating demand. If people suddenly decide to stop spending then businesses would lose customers, which would lead them to lay off workers, who would then have less money to spend in other businesses and thus reduce demand further and so forth, leading to a recession. On the other side there were the supply-siders who believed that the problem of economic downturns was inadequate supply, which would be solved by cutting taxes and reducing business regulations. The Great Recession of 2008 provided a partial test of both theories as the US applied a demand-side fix in the form of a stimulus while Europe went for “expansionary austerity” and cut government spending, which slashes demand. The US has now experienced over a decade of steady growth while Europe went into a double dip recession before climbing out after the policy changed. That is not to say that demand-side policies always work. The 1970’s were plagued by stagflation with high unemployment and high inflation for which the Keynesians had no fix. Former Fed Chairman Paul Volcker famously raised interest rates in 1979 to reduce the money supply. It triggered a short recession, which was followed by nearly three decades of low inflation economic growth.

In terms of social policy, the US has really only tried supply-side solutions. The drug war put a lot of petty dealers and drug users in jail but did little to halt the use of drugs. It seems to me that if we really want to solve or at least alleviate the opioid and drug crisis, we need to slash demand. Opioids are pain killers and are physically addictive. Addicted users who try to stop will experience withdrawal, which is extremely painful. If you do succeed you will no longer be physically addicted. However, you can always relapse if you use again. The current US opioid epidemic started with a change in the philosophy of pain management by the medical establishment with a concurrent development of new supposedly less addictive opioid pills. So doctors, encouraged by the pharmaceutical industry, began prescribing opioids for all manners of ailments. Most doctors were well intentioned but a handful participated in outright criminal activity and became de facto drug dealers. In any case, this led to the initial phase of the opioid epidemic. When awareness of over prescription started to enter public consciousness there was pressure to reduce the supply. Addicts then turned to illicit opioids like heroin, which started phase 2 of the epidemic. However, as this supply was targeted by drug enforcement, a new highly potent and cheaper synthetic opioid, fentanyl, emerged. This was something that was easy to produce in makeshift labs anywhere and also provided a safer business model for drug dealers. However, fentanyl is so potent that this is has led to a surge in overdose deaths. Instead of targeting supply we need to reduce demand. First we need to understand why people take them in the first place. While some drugs are taken for the experience or entertainment, opioids are mostly being used to alleviate pain and suffering. It is probably no coincidence that the places most ravaged by opioids are also those that are struggling most economically. If we want to get a handle on the opioid crisis we need to improve these areas economically. People probably also take drugs for some form of escape. This is where I think video games and virtual reality may be helpful. We can debate the merits of playing Fortnite 16 hours a day but it is surely better than taking cocaine. I think we should take using video games as a treatment for drug addiction seriously. We could and should also develop games for this purpose.

Extra border security has not stemmed illegal immigration. What does slow immigration is a downturn in the US economy, which quenches demand for low-skilled labour, or an improvement in the conditions of the originating countries, which reduces the desire to leave in the first place. The current US migrant crisis is mostly due to the abhorrent and dangerous conditions in Guatemala and Honduras. For Europe, it is problems in Africa and the Middle East. In both cases, putting up more barriers or treating the migrants inhospitably is not really doing much. It just makes the journey more perilous, which is bad for the migrant and a moral and public relations nightmare for host countries. Perhaps, we could try to stem demand by at least making it safer in the originating countries. The US could provide more aid to Latin America including stationing American troops if necessary to curb gang activity and restore civil order. This would at least help diminish those seeking asylum. Reducing economic migration is much harder since we really don’t know how to do economic development very well but more investment in source countries could help. While globalization and free trade may have hurt the US worker and contributed to the opioid epidemic by decimating manufacturing in the US, it has also brought a lot of people out of abject poverty. The growth miracles in China and the rest of Asia would not be possible without international trade and investment. Thus the two crises are not independent. More free trade could help to reduce illegal immigration but it could also lead to worsening economic conditions for some regions spurring more opioid use. There are no magic bullets but we at least need to change the strategy.

2 thoughts on “The failure of supply-side social policy

  1. I have a fairly long CV or intimate connection with both current opiate epidemic and long lasting other ones (from alcohol and cigarettes all the way through a long list such as cannabis, meth, PCP, K2…–all of these are available within a walk block from here or less. MY CV is about as formally legit as those are. Unlike some people i’ve known and know, my CV involves very little involvement with ‘criminal justice’ —which may be an oxymoron —not everyone who ‘breaks a law’ becomes a ‘criminal’.

    Just as universities and jobs often have various (formal and informal) ‘affirmative action’ programs to determine who has merit to get in or get a job, criminals often also pass certain extra requirements partly depending on who you know and where you are and how you act. )

    I’ve applied for at least 4 seperate ‘grants’ (3 Templeton sponsored) , and one from to deal with the ‘demand side’ issue in my area. They basically only fund people in their network and who are affiliated with universities. Academics who work in this field (one in mathematical biology in NY) all told me ‘good luck, try elsewhere, and keep trying’. They basically dont deal with the ‘street’ –they write books and articles for other academics about street life. .

    What is rarely discussed is that to deal with the demand side you have to ask why people demand opiates, etc. Mostly its for self-medication because thats easier to do than get what they want. (Lots of immigrants might like to travel and see the world, but would be happy living mostly at home, but its impossible,.)

    Most people who self-medicate would rather do something else, but the options they are given are also untenable. They rather be on the street than working at McDonald’s or going to AA or NA 7 days a week, talking about their personal failings, and relationship to god. . (The few of those meetings i’ve attended, one can never mention social conditions—like who makes money off of all this, and why there is no money for paying people to do arts, education, research, etc in formats appropriate for ‘specially abled’ or disabled people. (My proposals had todo with setting up a sort of informal ‘think tank/education/arts.ecology center’ for people without alot of background or who dont fit into current think tanks like that. I’m told places like that are for the elite, competent, well behaved, etc. —other people need to go to some sort of ‘scared straight, tough love’ environment or boot camp where they learn to demand what they are given. Its ‘do it our way, or hit the highway’.

    My exprience has been alot of psychological professionals who work in the field basically took alot of fairly shallow psychology courses not much above the level of a pop self-help book. They didn’t try to take , say, science and math courses—because those can drive you crazy–nor did they try to do arts/music –which take siimilar discipline. They will treat people whio went that route and either didn’t succeed or else ended up ‘self-medicating’ due to the stress.

    Liked by 1 person

  2. “The current US opioid epidemic started with a change in the philosophy of pain management by the medical establishment with a concurrent development of new supposedly less addictive opioid pills. ”

    You might wish to review the history of the government mandate on medical providers in documenting “Pain as the 5th vital sign” and documenting the steps used (including narcotics) to reduce the pain score. There is nothing like a governmental regulatory agency reviewing charts looking to see that the ‘pain’ was ‘properly addressed’ to bring about the observed ‘…change in the philosophy of pain management by the medical establishment.’

    Click to access Pain_Std_History_Web_Version_05122017.pdf


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