Fentanyl is the number one cause of death for those aged 18 to 49, with annual economic losses reaching $1.5 trillion.
Blocking raw materials is even on the agenda of the U.S.-China summit. Fentanyl is one of the major problems in the United States. According to the Drug Enforcement Administration of the U.S. Department of Justice, the number of deaths in the United States due to addictive drugs will reach 107,000 in 2021. 70% of it is due to fentanyl.
Fentanyl poisoning is the number one cause of death among Americans aged 18 to 49, which is driving the United States to its peak. This trend is worsening. The number of deaths due to drug use was less than 20,000 in 2001 but has increased fivefold in 20 years.
In particular, the new growth rate in the two years from 2019 to 2021 is 94%, or double. If criminal cases become widespread to this extent, they become an economic problem.
Currently, the U.S. Congress estimates that economic losses due to drug overdose will amount to $1.5 trillion by 2020. Last year, the U.S. trade deficit in goods and services was $948.1 billion, so the economic loss due to the drug problem is greater than the U.S. annual trade deficit.
In the United States, interest in the relationship between addiction to drugs such as fentanyl and the labour market is growing. In a report released this year, the Brookings Institution analysed that substance abuse problems account for 43% of the decline in male labour force participation. Another survey found that one in five drug overdose deaths were people working in the construction or restaurant industries. These are the industries that have had the most difficulty recruiting workers after the COVID-19 pandemic abated.
One of the main causes of current inflation in the United States is the lack of people to work. This is because salaries must be raised for recruitment, and the resulting increase in labour costs is reflected in the sales price.
As the number of people working with fentanyl decreases, the drug problem is not unrelated to the rise in U.S. prices.
The U.S. government is introducing various policies in response to fentanyl, such as distributing antidotes and expanding the rehabilitation budget. Accordingly, the United States is now targeting the manufacturing and distribution route of fentanyl from China (raw materials) through Mexico (manufacturing) to the United States (sales). The fentanyl issue has expanded into the diplomatic realm.
The fentanyl issue became a key agenda item at the U.S.-China summit held at the Asia-Pacific Economic Cooperation (APEC) summit that concluded last week. Although the United States did not make major concessions on the Taiwan issue or the semiconductor issue, it reached an agreement to cooperate on fentanyl policy.
The New York Times evaluated, “The fentanyl issue was one of the biggest achievements the United States could receive from this summit.” If something similar to the spread of the fentanyl problem in the United States were to happen in Korea, what would be the result?
There is scepticism about whether the economic loss can be sustained even if it increases beyond the size of the trade deficit. It is unclear whether we will be able to get what we want without making any concessions to the foreign countries involved.
Even if the United States’ economic strength weakens due to drug addiction, it can offset this with its unique financial system as a key country. Supported by global demand for dollars and U.S. government bonds, there is great room to cover socioeconomic weaknesses by increasing fiscal investment.
Even if fentanyl promotes price rises, it is possible to lower import prices to some extent with a strong dollar. We are not. We do not have the tools to automatically offset the trade deficit, labour loss, and economic loss caused by the drug problem. Although it is not as high as in the United States, the spread of drugs in Korea is also worrisome.
Some are criticizing that the golden time to eradicate drugs has already passed, citing the fact that it is cheaper and easier to obtain than expected. Despite this situation, the drug investigation budget is becoming a subject of political dispute. There may be areas in which budget allocation is more urgent than drug investigation, but if the budget for the drug sector becomes more urgent, then it may be too late to do anything about it.