Guest Post: The Economics Of Breaking Bad

Tyler Durden's picture

Submitted by John Aziz of Azizonomics

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.

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caimen garou's picture

protected by the choom gang


redpill's picture

In other news, Paul Krugman is set to marry Ben Bernanke's sister....

smithcreek's picture

As soon as everyone is free to pay for their own consequences of drug use I'm all for making it all legal.

Precious's picture

You didn't make that my responsibility ...

Manthong's picture

“Does $30 billion a year for a 90% failure rate seem like a good investment? “

Effectiveness, the cost of the program and eliminating the drug problem is not even in their realm of thought, John.

All that matters is expanding the government program and payroll, the armed presence and control.

Metalredneck's picture

**DINGDINGDING**  We have a winner.

The job of law enforcement is to promote law enforcement.




Clampit's picture

“The object of terrorism is terrorism. The object of oppression is oppression. The object of torture is torture. The object of murder is murder. The object of power is power. Now do you begin to understand me?” - George Orwell

Pegasus Muse's picture

9/11: Explosive Evidence - Experts Speak Out - Trailer -

This is the trailer for the much-anticipated Final Edition of the expert-packed 90-minute documentary by Architects & Engineers for 9/11 Truth. The powerful documentary takes its cross-country World Premiere Tour of 30 cities with AE911Truth founder and the film's director, Richard Gage, AIA, from May to July 2012. 


rew2's picture

As Will Rogers said, "Be grateful you're not getting all the government you're paying for."

smithcreek's picture

Seeing that this site is full of a bunch of supposed "libertarians" I'll assume any junks were because my comment was taken as sarcastic, but it wasn't.  People should be free to do drugs and I should be free to choose to help them or not if and when they need it.

AnAnonymous's picture

It is true. Drugs' addictive properties enhance freedom.

Signed: an American.

TheFourthStooge-ing's picture

It is true. Opium's addictive properties enhance obedience to authority.

Signed: an AnAnonymous Chinese citizenism citizen

AnAnonymous's picture

That Chinese fantasy guy is an 'American'...

TheFourthStooge-ing's picture

Hah! You're just high, Chim Chim.

wagthetails's picture

very good point!  and really why socialism can not work w/o the goverenment making every decision for you, with communism being the final result.  how can you legalize drugs (which i am for), when health care is moving more socialist?  I don't want to pay for ODs.  We have to let people live (or die) from thier decisions.  

Since healthcare is moving more socialist, the gov will have to further regulate human behavior to reduce medical costs.  If we think the war on drugs is very costly, what is the costs of hiring millions of government regulators to watch every aspect of our life....i'm guessing they will qualify zerohedge as bad for your heath.  

Gully Foyle's picture

Portugal’s Drug Experience: New Study Confirms Decriminalization Was a Success

But new research on Portugal’s drug policy suggests that this isn’t necessarily so. Portugal decriminalized possession of all drugs in 2001. The outcome, after nearly a decade, according to a study published in the November issue of the British Journal of Criminology: less teen drug use, fewer HIV infections, fewer AIDS cases and more drugs seized by law enforcement. Adult drug use rates did slightly increase — but this increase was not greater than that seen in nearby countries that did not change their drug policies. The use of drugs by injection declined.

Of course, there’s no way of knowing which, if any, of these changes were caused by the change in policy — without a control group, this kind of research cannot determine cause and and effect. But Portugal started with one of the lowest rates of drug use in Europe — far lower than American rates — and remains below the EU average. For example, 19% of 15-to-16-year-olds in Europe in general have tried marijuana at least once, compared with 13% of Portuguese people that age. The figure for U.S. high school sophomores is 32%. (Related Links: Why Drinking Like a Guy is Worse for Women)

“The most important direct effect was a reduction in the use of criminal justice resources targeted at vulnerable drug users,” says Alex Stevens, professor of criminal justice at the U.K.’s University of Kent, who co-authored the study. “Before, a large number of people were being arrested and punished for drug use alone. They saved themselves a lot of money and stopped inflicting so much harm on people through the criminal justice system. There were other trends since drugs were decriminalized in 2001, but they are less easy to attribute directly to decriminalization.”

Under Portugal’s decriminalization policy, users are not arrested but referred by the police to a “dissuasion” commission. The commission is made up of three people, typically an attorney, a social worker and a medical professional. It determines whether the person is addicted — if so, they can be referred to treatment or given specific penalties like being banned from a particular neighborhood or losing a driver’s license. Treatment is not forced, however, and those who are not addicted are often not sanctioned in any way. Only about 5% to 6% of users are brought before such commissions a second time in the same year. (More on Addiction Files: Recovering From Drug Addiction, Without Abstinence)

Stevens says the positive changes in HIV/AIDS rates and a decline in opioid-related deaths are probably more linked with an expansion of treatment than with decriminalization alone. The number of users in treatment increased by 41% — going from 23,654 to 38,532 between 1998 and 2008. “Releasing funds from [enforcement] allows you to spend more on treatment,” says Stevens.

The changes in teen drug use were complex: throughout Europe, teen drug use rose sharply during the period in which Portugal decriminalized and then fell — the same trend was seen in Portugal but the fall was steeper.

lasvegaspersona's picture

stop with the facts....'we don't need no stinkin facts'....your local political and law enforcement agencies. Thank you, go about your business while we find other reasons to stop and seach you.

slaughterer's picture

In other news, Lisa Falcone, wife of famous hedge fund manager Phil Falcone, caught DUI... Can ZH post some pictures?

slewie the pi-rat's picture

anyone named falcone is newsworthy for anything, s_laugh_r!

<i didn't junk you>

this series is fuking great, btw:  they guy gets the bad nooz (cancer4X4) and sees himself, his life, his family and his formative (and handicapped) son and "society" all-at-once and just goes jesse james, bonnie & clyde, and butch and sundance at the same time

the great american hero!

his son is a very interesting character imo, b/c he isn't totally "normal" socially (crippled) and also has to sweat everything and focus b/c some things are hard for him;  so he "tries" to be normal so hard!  a young man w/ peach fuzz and dad goes "over to the dark side" too!  anything to help!

this meek little go-nowhere h.s chem teacher can cook!  but he needs partners and marketing and muscle;  he provides his own muscle;  very efficiently, too

he is crazier than the most evil criminal b/c he is not a criminal!  he is just crazier/more REAL than the whole rest of the cast put together and that's sayin something given that tonyaHarding would be cast as theVirgin here;  these fukers are amazing!

plus, the guy can "make soap" and fearlessly tosses nitro while diving somewhere he figures he will only end up hairless;  he's right, too!

the desert scenes are gonzo-evocative

there is an episode of a RE agent showing his young marketing partner's house with people chained in the basement and a bathroom full of blood or something;  i was laughing so hard i couldn't follow it...

it is like post-modern economics in that the nicest people, simply petty "going-along" or "normal" types get pushed so far outa their picture frames by "events" that they just fall out

eveyone is i_love_lucy

just likeReality

but the 'episodes' resolve by becoming exponentially more episodic

the guy doesn't "become a paychopath" imo jAz;  he just decided to switch "games" from h.s. teacher to "drug kingpin" b/c he cared about his family's financial future and was given a death sentence.  get it?

he is extremely intelligent and very good at what he does, exactly the same as when he is teaching  chemistry

he wants to leave them something for when he is gone, and this is just the best damned idea the 2-paycheck suburban stress-mill head-of-household can come up with

these are fantastic stories about the meth world; or rather stories from the fantastic meth world

but the guy is not a psychopath;  he is a businessman-chemist-gangster;  he knows the difference between right and wrong and doesn't hurt "innocent people"

of which there are few, maybe none, it seems, btw...

he is into the meth business but he is not "normal" there, b/c he can think clearly and do chemical engineering and general problem-solving in his sleep;  once he gives himself permission to step beyond the "limits", he is fuking awsome

this shows that if a wo/man wants to live where there are "no rules but property and the lawful defense of same and a person is entitled to the fruits of his/her genius and labor"...

...s/he can!

the "hero" is a shaodowy figure, kinda like batman;  he is physically ill-to-dead and this is for those he loves

batman works out of a "cave" attached to a "mansion in gotham" and has "superior weopons" and "cover"; rich, too!  old money;  his "goodness" is the "dark side" of "legitimate boilerplated wealth";  and...he is totally "undercover"!  L0L!!!

this guy just walks out his fuking front door and commutes to the same underworld as nickCage & eddieMurphy , but not as big-city;  more suburban/small city and middle class

as things get curiouser and curiouser, he 'reveals' himself to one/?/? whom he is trying to help(?) and "firewalls" people...with canoe accidents [m/l]

Gully Foyle's picture

Marshall Islands Legalize Cocaine

The newly inducted president of the Republic of the Marshall Islands has announced the tiny Pacific nation had legalized the use of cocaine by executive order.

President Jurelang Zedkaia, a traditional chief and politician, said the Marshall Islands would also be introducing a no-visa unrestricted entry program for foreign nationals of any country.


Speaking on camera, the visibly emotional Marshallese leader said that the Marshall Islands have a proud history of thousands of years. "Then the Westerners came, first it was the atomic bombs, and then now their irresponsible emissions are drowning our islands. We are tired of being raped and victimized. As a sovereign nation, I declare the right of this country to legalize any substance it wishes."

The revenue from cocaine sales would help the country build sea defenses, or buy up more elevated islands in other parts of the Pacific, the president explained.

When asked where the cocaine would be sourced from, President Zedkaia refused to comment, but assured the assembled reporters that it was "the real thing, uncut and pure, the best you can get."

otto skorzeny's picture

in other news-Pres Obama will be visiting Marshall Islands tomorrow for an extended good-will tour -the first lady will not be accompanying him. although he will be bringing back a "gift" to sniff off of her big ass.

Things that go bump's picture

I think you have mistaken him for George Bush 43, a man famous for his substance abuse.

NumNutt's picture

Time to sell my house, put the kids in boarding schools, and tell the wife to get the boat ready....WE ARE GOING TO THE MARSHALL ISLANDS...WOOOOOHOOOOO!!!!!!!!!!!!!!

Are they excepting new citizens?

midtowng's picture

The drug war is all about control. Control of the public. It doesn't even have anything to do with drugs.

AGuy's picture

"The drug war is all about control. Control of the public. "

I disagree. Its largely about money for law enforcement (ie hiring more gov't workers). With the exception of creating 100's of thousands of law enforcement jobs is been an absolute failure. The street prices for illegal drugs as fall since the 1970's despite inflation. Money spent on law enforcement would have been better utilitzed on education and treatment

While I absolutely hate the people throw away their lives using drugs, I think the whole deal with drug law enforcement is a complete waste and complete failure. As a Taxpayer, I must pay for drug enforcement, and the costs to imprison people involved. I see innocent people getting killed for drug law enforcment, and the violence cause by the drug war gets worse every year. I doubt anything will change any time soon. There is simply too much money to be made in the drug war so it will go on for the forseeable future.

I also think about the 2+ million prisoners in the US that get three meals a day, cable TV and lots of free time. Compare that to the Millions of people living on the street, living in squalor, and have commited no crime. So we reward those who commit crimes, and punish the honest and poor. Perhaps Spock would have said "This is illogical".



caimen garou's picture

protected by the choom gang


realtick's picture

I am the one who knocks.

FRBNYrCROOKS's picture

Knock means "no warrant". Go away!!!! We are not opening the door least we see your warrant through the peephole.

Cops with warrants don't knock.

Anyone who opens the door for a knocking cop is stupid.

If cop even comes past My NO TRESPASSING sign I will take issue.

We don't need cops. That's why we have guns!

vast-dom's picture

i love this teevee show! it's the only one i watch really. But Aziz i suspect you never partook in Meth. It's not that recreational actually. It's super addictive. It's similar to Adderall actually. And yet I say legalize it ALL. 


BTW i know firsthand froM CIA agent that the gov traffics drugs above and beyond IRan Contra like dealings. CIA agent also said if you took drug money out of Wall St you'd have an instantanious collapse. Make what you will of that in light of recent HSBC laundering (non-)scandal. 

AnAnonymous's picture

Turning people addicted might be recreational from an 'American' point of view...

vast-dom's picture

yes well Aziz's posts have been a bit lacking in research and logic of late...but he tries and that's worth quite a bit today.

Precious's picture

The only reason these drugs are illegal is because the pharmaceutical industry cannot compete with ordinary people who use simple technology.

Pot (California top crop), opium (Afghanistan top crop), crack (made in Mexico), and other compounds people can easily produce, cannot be monopolized except through government prohibition.

AnAnonymous's picture

'Americans' are not silly people. 'Americans' have designed dozens and dozens of drugs. Drugs is a essential component to 'Americanism'

Pot? 'Americans' have used technology to beat the natural plant.

In the netherlands, where pot is legal, the legality attracted money to research business so to develop a stronger, more loaded pot.

Natural plant contains up to 8pc of the wished substance.

Thanks to 'American' engineering, the pc is now up to 35pc.

What customers are looking for first? The natural quality plant? Or the 'American' engineered plant?

The 'American' pharmaceutical industry wipes the floor with the little producer, the small guy, the small business any time...

Precious's picture

There's only one reason pot is illegal.  It's because there is no business model for the pharmaceutical or healthcare industry.  End of story.

If there was a way for pharma or healthcorp to make money from pot, it would surely be legalized nationally by now.  

Not for it personally, but that's a fact.

AnAnonymous's picture

Really? But doping substances are also illegal and there is a pharmaceutical model to make bucks out of it.

Metalredneck's picture

Are you really Lance Armstrong?

moondog's picture

William Randolph Hearst and Dupont pushed the criminalization of Hemp in the 1930's. Hemp was used to make multiple products in industry that were direct competition to Dupont.

pods's picture

Yep, Nylon patent 1936, marijuana tax act 1937.  Hearst was also a big proponent of the criminality of it.


Disenchanted's picture




The automobile starts to become a big thing in America early 1900s. Henry Ford's cars designed for multi-fuel usage, including alcohol produced from the many stills that American farmers and others were already using.


John D. "Standard Oil" Rockefeller becomes a proponent of Prohibition because of 'religious[cough**monopoly**cough]reasons'.


Imagine that...(by the time Prohibition ended, America's fuel of 'choice' for their automobiles was gasoline - mission accomplished)

New World Chaos's picture

Hearst developed his deep concern for public safety after the discovery of a process for refining industrial hemp into high-quality fiber.  He didn't want to admit he'd made a bad investment by purchasing vast tracts of forest.  Never mind that you would die of carbon monoxide poisoning long before you could smoke enough industrial hemp to get high.  The public and Congress are terminally stupid, venal and corrupt.  So Hearst teamed up with a racist pig named Aslinger who wanted yet another excuse to throw black people in jail, and the Demon Weed was born.  Now we "protect the children" by sending them off to be raped by black guys.  The government makes the Demon Weed rapes come true!

These says it's really about protecting the establishment.  Weed (and psychedelics in general) tend to inspire unpatriotic ideas about peace, love, and the absurdity of the hamster wheel.

Precious's picture

Exactly.  The government (wherever) prohibits the substance and then facilitates a protected substitute offered through large businesses.

Valium, Vicoden and chemical similars are FDA (legally monopolized) competitors to naturally occurring TCP in pot.

New World Chaos's picture

Plus the meds help people to forget that their life sucks, while slowly dumbing them down.  THC helps people think about the underlying reasons why their life sucks.  Can't have that.

margaris's picture

I heard that often, but I dont agree.

THC can only take and transform what is already there. It doesn't change you fundamentally... its more like an enhancer.

If you are depressed THC can make you more depressed, if you are happy it can make you more happy.

If you are a simpleton who doesn't like science or philosophy... THC will not suddenly make you the big thinker.


I see it this way: THC is like a girl that is being mistreated by daddy government, and her ugly stepsisters (alcohol and nicotine) are clearly in favor of this asshole-government.

Thats why you see people hyping the effects of THC a little too often... Its like being on the side of the underdog, and trying to help. I understand that.

But lets stay honest.

It's a drug. Drugs can ruin your life, even THC...

It IS good medicine. But the moment you think you need medicine everyday, is the moment you are a sick poor guy who is drifting into neglect.


Eating right, exercising often and finding complete freedom (instead of being a debt slave) is the key to a healthy life, and not a drug.


Legalize everything of course..., but not because the drug is good for you.... no... its about reducing the power the government has over our lifes.

forexskin's picture

hi again one note idiot troll

TheFourthStooge-ing's picture

AnAnonymous, stumbling and slurring, said:

What customers are looking for first? The natural quality plant? Or the 'American' engineered plant?

The 'American' pharmaceutical industry wipes the floor with the little producer, the small guy, the small business any time...

Are you stoned or just stupid?

AnAnonymous's picture

That is why a question is answered by a question... Sound.

TheFourthStooge-ing's picture


That is why a question is answered by a question... Sound.

Ah, I see, you're stoned and stupid.

FRBNYrCROOKS's picture

What a coincidence in the early 1980s, about the time the CIA started supplying shouder firing stinger missles to Osama bin Laden to take out Soviet helicopters in Afghanistan, that an abundance to Afghani buds started circulating around my highschool. I suppose those CIA planes never come back empty?

 A big surprise the (CIA) Pentagon extended the war in Afghanistan one more  (opium harvest season) year.