Why the Fed is Increasingly Worried About the Alarming Epidemic of Opiates

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Recently, the The Fed has made statements expressing its deep concern about the terrible epidemic of opiate consumption that has been sweeping across the country for many years. The fact that this socioeconomic scourge is wreaking havoc among the population is beginning to make its effects felt at the macroeconomic level. It can not be overlooked that this epidemic has a special impact on the hardest hit areas after the crisis with subprime mortgages, which affects the white middle-class man, or, unfortunately, ex-middle class.

The double aspect that we are bringing attention to today is because one of the main triggers of this health crisis has been the economic factor, to which is added also that its macroeconomic effects are embedded in fabric of the main economic institutions of the nation.

We will not tire of repeating that the economy is the basis of everything, although it is also true that we also insist that socioeconomics plays a critical role as well.


The economic problem has been ignored, has become social, and has come back as an economic problem of a much larger dimension

The development of events seems in part to come inherited from the “cheerful” prescription of opiate medications, which too many doctors have been prescribing even as commonly used painkillers. In fact, it has already legislated in this respect, and the barriers to access these drugs are increasing.

These prescriptions, coupled with the terrible recession that has devastated whole counties, have resulted in artificial happiness for citizens cornered by a pressing economic crisis, and who could not see the light at the end of the tunnel.

We have already introduced to you how the economic factor has been the main trigger of the socioeconomic crisis that has affected many of the counties that today are the hot spots for heroin and opiate addiction, as well as the unfortunate loss of human lives due to overdose. The last crisis has been the crux of a long process that has led to the overwhelming loss of more than a third of the manufacturing jobs, which translates into more than six million jobs.

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An important part of this loss of manufacturing employment was in the Midwest and in the states known as the “Rust Belt,” a manufacturing hub that encompasses ) in addition to the Midwest also to Midatlantic. As the easternmost end of this vast region, the Midatlantic ends in the city of Baltimore, a coastal city that in its recent days of glory was one of the most important ports of the east coast. Until the 1980s, Baltimore was a thriving city boasting a large, well-to-do middle class, where average incomes per household exceeded the national average by 7%. The number of middle-class families was above one-fifth in the rest of the country, and the number of people living in poverty was also less than one fifth of the US average.

At the height of its economic boom, three quarters of Baltimore workers were working in the manufacturing or port sector. Its port not only benefited from the booming local industry, but was the natural outlet to the sea of ​​goods produced in the important industrial belt of the Rust Belt, which extended eastward into the American Midwest.

But the economic decline came, with the lethal thrust of the latest crisis – drugs. One of the most alarming data, per ABC News, on the size of Baltimore’s narcotic drama reveals how, in a city of little more than 600,000 souls, there is a staggering 60,000 heroin addicts: 10% of the population consumes this potent, addictive , and dangerous narcotic.

And another indicator representative of the size and scope of the problem comes from the health, well-being and quality of life: as you can read in this news and the chart of The Atlantic, mortality is skyrocketing in the segment of the population of the white man of (former) middle class, who is the one who most faithfully represents the profile of popular discontent in the United States. In the face of desperation and pressing economic problems, it is not surprising that a significant part of this population has been able to believe that opiate is an ephemeral way of seeing life in a color other than black(no pun intended).

The evolution of addiction to opiate drugs to become heroin addicts

As we said before, part of the cause of the problem has been the generalization of the use of opioid drugs as commonly used painkillers, which has introduced large segments of the population into the world of “artificial” feelings of well-being without being many times aware of it and the dangerous terrain in which they were entering.


An undeniable part of this population group has gone further, and, once they’ve developed an addiction to these drugs, given the difficulty of continuing to get a doctor’s prescription and the high price of opioid drugs, end up resorting to heroin to maintain that sense of happiness, which has allowed them momentarily to put aside the economic calamities that surround them.

Heroin initially is much cheaper compared to the expensive opiate drugs, but this narcotic substance, besides being extremely addictive, results in a rapid evolution in the need to inject higher doses to maintain the level of its pleasurable effects and artificial paradise. And in the specific context of drug consumption, we must also point out that 18 out of every 100,000 people died in 2017 for overdoses, when in 2014 they were 14.7 people, and in 1999 they were only 6 out of 100,000. This seems to be a real national emergency.

The result is that today, it is sadly frequent to find in some counties plagued by unemployment and socioeconomic problems, couples of heroin-loving parents in rural settings or cities such as Baltimore. The socio-economic shock they have suffered in these population belts is doubly serious, since they were counties that, only a few years ago,  enjoyed an excellent standard of living, significantly higher than the national average.

opiod epidemic

The right approach is not to focus exclusively the economy, but rather the socioeconomics need to be addressed

The effects that this terrible and widespread epidemic is having on the American population has ended up impacting the US labor market. It should be remembered that the Fed has a mandate,  to keep inflation under control. But the mandate is twofold, and it must also monitor employment. It is precisely for this second part of the Federal Reserve’s mandate that the Fed has shown its caution regarding the opiate epidemic we are talking about today. As you can read in this Bloomberg news piece, it is surprising how, despite the drama of unemployment that exists after every crisis, there are companies that are not able to fill their vacancies today.

Today, one out of seven men in the age group between 25 and 54 years of age have inexplicably disappeared from the labor market, despite the fact that the unemployment rate is currently well below 5%. The FED believes that the opiate epidemic is behind this inexplicable labor gap. In fact, the various Regional Federal Reserves claim that companies in their respective areas recurrently cite the opiate epidemic as an impediment to successfully completing their selection processes.

Has there been any error of focus on how this problem has been addressed?

Some say that it is sad that the Fed only worries about an epidemic as terrible as the opiate addiction because it affects the availability of labor. I will totally agree on the assessment. What is no longer understood is that leaders at other levels, and more specifically health care, have not taken enough action.

The risk was known and potentially very relevant both in proportion and impact, while the profitability of having undertaken the appropriate policies in the initial stages of the epidemic would have been overwhelming. And make no mistake, I speak of “profitability” in economic terms but also in terms of morality – there is nothing more valuable than life. Now it seems that Wall Street has begun to worry about what happens on Main Street now that the damage is already done, and its effects are so persistent that it will cost much more to correct them now than when the problem was at its beginning stages.

A socio-economic approach in the administrations and governments of the world, in which there is greater intercommunication between officials and bureaucrats in different ministries, is very much needed, both professionally and professionally, in order to establish early warning systems for potential and extremely serious problems such as opiate epidemic although its responsibilities and consequences are spread across different ministries. Giving a socio-economic dimension to certain issues would allow an interministerial approach to issues that transcend the merely economic.

In fact, with this socio-economic focus, the Fed would probably have started talking to the Food and Drugs Administration (FDA) to warn that the incipient rise in overdose deaths could also have important socioeconomic consequences if not corrected in time. Remember what I always tell you that the future lies in the mixed disciplines, and socioeconomics is an excellent example of this.

I say goodbye today allowing me the license to personally address the representatives of the Fed. The fact is that the economy continues to be the basis of everything. But we must examine and correct the underlying socioeconomic issues as well if we are ever going to heal this nation.

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