The Economics of Prohibition
Prohibition has an ever-increasing impact on our daily life. In the United States, prohibition against certain drugs, involving "wars" on them, has been one of our most visible and hotly debated national problems. History, however, supports the finding that prohibition is impossible to achieve in the economic sense. Prohibitions have no socially desirable effect. Prohibitions are classic examples of the co-opting of public-spirited intentions by rent seekers. The results are counterproductive in every way. [FULL ARTICLE]





Comments (26)
banker
Unfortunately, no one will ever be able to convince a government bureaucrat or politician to fire him/herself.
The next amendment should be Congressional term limits (1 term) and they work for free. I like this idea already; this way politicians will already be on their way out.
Published: September 15, 2006 8:50 AM
Allen Weingarten
I completely favor the legalization of drugs, and of all 'victimless crimes'. My sole addition is that currently the Arab-Muslims obtain funds (as in Afghanistan) which are used for terrorism. Consequently, the costs for prohibition are not only high, but growing.
Published: September 15, 2006 8:55 AM
Roger M
The myth that Prohibition faile in the 1930's is popular. For those who want the truth, visit this article: http://shadow.libertymagazine.org/article/articleprint/581/-1/91/
Alcohol faces no prohibitions today, yet its abuse has been far more destructive than drugs. It's a major cause of wife and child abuse, rape, murder, car and boating accidents, and poverty. Those who work in the state welfare office have told me that they don't worry about drug abuse; alcohol causes their nightmares.
The problems with the war on drugs is a classic economic case of supply and demand. The state has attacked the supply, without trying to reduce the demand. If they would ignore the supply and reduce the demand, we would have none of the problems the author of this piece describes.
Published: September 15, 2006 9:10 AM
Dr. Mark Thornton
You cannot access the article that proports to show that alcohol prohibition was a success. There have been many such attempts, but there is no denying that prohibition did not solve or even reduce the problems of alcohol and its substitutes and it ushered in several new problems like increased crime (murder), much more corruption, much more organized crime, and a big increase in violent street gangs. For an overview do an internet search for my "Alcohol Prohibition was a Failure".
Published: September 15, 2006 9:41 AM
banker
Maybe a secret database of all Americans should be created with all of their health information? Or police should be able to randomly conduct drug tests to any one on the street? Maybe government agents should be staffed in Home Depot to prevent people from getting high off the glue? The sale of any chemical, plant, food, inanimate object should be tracked by the DEA to make sure Americans aren't polluting their bodies, I think.
We, as a society, should use the death penalty for drug users who are killing themselves anyways. I guess this is a time preference problem, no?
Published: September 15, 2006 9:43 AM
Dr. Mark Thornton
Roger M has a better argument with respect to the war on drugs. If we ignored supply and worked on demand, which essentially is the Dutch approach, we would have far fewer of the problems of prohibition, but problems would remain as they do in the Netherlands.
Published: September 15, 2006 9:45 AM
andy
The article linked by Roger is here.
Roger, I think that it misses one thing:
it says that the government itself was often part of the smuggling gangs, that the prohibition was not 'real'. If the governments were perfect, prohibition might work. The governments can be perfect only if people are perfect - and if people were perfect you wouldn't need prohibition in the first place.
Anyway, I think I have a right to get drunk and not support 'economic growth'. I think that a lot of people have a right not to support 'economic growth'. I believe the government has no right to limit my freedom just because they want nice statistics.
Published: September 15, 2006 9:56 AM
Roger M
Sorry about the link above. Try this one:http://www.libertymagazine.org/article/articleview/581/1/91/
Published: September 15, 2006 9:59 AM
David Spellman
But where does it end?
Roger is right about attacking demand. As long as people want something, they will find a way to get it. If it is destructive and immoral, I think the best approach is to kindly persuade not to indulge. It is the proverbial slippery slope to take it upon ourselves to force people to be good.
Drugs and alcohol are involved in lots and lots of crimes, neglects, and destructions. "Let's ban them and solve the problem!" some people say. By the same logic we could justify a few other things, too.
For example, it is well documented that most child abusers are the parents of the children being abused. If we banned parenthood, we would eliminate almost all child abuse. Okay, that sounds rhetorically extreme, but there is a movement to license parents.
Religion has been used to justify many wars and other atrocities in history. Everyone seems to think God is on their side (although God never makes any announcements to this effect). If we banned religion, it would set these people back in their efforts to build public support. And, yes, this is an agenda for some people too.
And, gosh darn it, there is a laundry list of almost everything that someone, somewhere would like to ban for various reasons--moral, financial, punative, perverse. The problem is that once we give the government power to ban what we don't like, it has the power to ban what we do like.
I am more afraid of government than I am of drug fiends, gamblers, and prostitutes. I don't agree with the lifestyle, but I would rather put up with and avoid it than live in an oppressive state that banned them--even if they could ban them effectively. And that is because I know that the oppressive state would be harnessed to persecute my lifestyle, too.
Published: September 15, 2006 10:22 AM
Dr. Mark Thornton
In order to reduce demand in a really effective manner we would have to go beyond legalization and eliminate various parts of the so-called social safety net like welfare, unemployment insurance, and free access to medical care so that there would be real penalties for abuse. Private charities and organizations actually do a much better job of not only helping people, but also of addressing the underlying problems.
Published: September 15, 2006 10:51 AM
Roger M
It's estimated that 30% of traffic fatalities are due to alcohol abuse. About 50,000 people die each year in traffic accidents. That's 15,000 people dead every year from alcohol abuse related to auto accidents. And alcohol is legal.
Published: September 15, 2006 10:53 AM
banker
Banning alcohol = 20% traffic fatalities due to alcohol + 1,000 die from alcohol poisoning (moonshine) + couple 1,000 injured in turf wars between gangs peddling alcohol + overflowing jails filled with people with a blood alcohol level of .01 + corruption due to bribing by gangs.
I am sure there are real statistics out there from the 1920's, but my point is made.
Published: September 15, 2006 11:14 AM
freemarket
Why are drugs illegal, but cigarettes legal? I think both products should be legal for adults to use. According to the CDC, there are 440,000 annual deaths from smoking. If our society is willing to tolerate smoking, why not drugs?
Published: September 15, 2006 11:42 AM
user
I must be missing something here, but why all this talk of the need to reduce demand? I find it rather odd that any discussion on the LvMI blog would be concerned with controlling demand in one way or another. Let the actions of free individuals determine demand in the marketplace, the way it should be.
I've noticed whenever the issue of drugs comes up, the moralists on here always come out of the closet to condemn users. I've been able to obtain my B.A. degree, two graduate degrees, hold a steady job, and maintain a long-term relationship while being an almost daily user of illicit drugs, mostly marijuana. That is my choice and my choice alone, although I do take into consideration the effect my usage has on friends and family. I don't see the need to reduce the frequency of an activity I voluntarily engage in in the privacy of my own home.
Dr. Thorton, could you elaborate on the problems the Netherlands has a result of their policy? A frequently cited statistic among the pro-marijuana advocates is that per-capita drug abuse rates in the Netherlands is one-third that of the UK, two nations with similar socio-economic characteristics. Thanks, and I look forward to reading your book (right after I get through everything else currently on my list!).
Published: September 15, 2006 2:53 PM
Lisa Casanova
User,
If you can do that, more power to you. When drugs are discussed, the subject of controlling demand always comes up because people believe 1) drug use nearly always leads to addiction and 2) drug addiction always has horrible and destructive effects. In my experience, people who advocate the legalization of drugs are placed in the position of explaining why they want what is supposedly a horrific, destructive behavior legalized, and end up having to say something like "well... it should be legal, but there should be as little of it as possible." I think there's a lot of fear, misinformation, and hysteria surrounding drugs, and if they were legal their effects would not be nearly as bad as people think.
I think it's important to note that I have alcohol addiction in my own family. I know what it looks like. But it's not going to destroy society as we know it anytime soon, and I don't believe prohibition would prevent it. People whose lives are ruled by addiction are not that way simply because a particular substance is available. It's a lot more complex than that, and laws aren't going to change that.
Published: September 15, 2006 3:09 PM
Roger M
User: "...while being an almost daily user of illicit drugs, mostly marijuana."
That's why I don't promote making alcohol illegal, event though I recognize the problems with it. The problem isn't with alcohol, but with individual abuse of it. Most people can drink without becoming alcoholics. Eliminting alcohol would punish the majority of responsible drinkers. But irresponsible drinkers create of lot of externalities that damage others. Take drunk driving for example. I've had quite a few friends and acquaintances killed by drunk drivers.
If a way existed to isolate the abusers of drugs, such as heroine or cocaine, who create those damaging externalities, I would be all for legalizing them. But our experience with abusers of alcohol proves to me that abusers of drugs will never suffer for the damage, in property and person, that they cause others. In other words, they'll never pay the costs of the externalities that they create. Reason tells me that abuse will increase when it's virtually costless, as it is today. The current war on drugs if far from perfect, but I think it's still better than the alternative.
Published: September 15, 2006 3:41 PM
Lisa Casanova
Roger M,
I think maybe you don't realize just how bad the war on drugs is. Current U.S. drug policy makes it difficult for people in pain to obtain narcotic medications to increase their quality of life and allow them to live without pain. Doctors are afraid to prescribe narcotics and afraid of "creating addicts". This is supposedly justified to keep painkillers out of the hands of a few people who abuse them. In a way, abusers are creating an externality that they don't pay for when they make it more difficult for people like you and me to get actual medical treatment for pain. Why is this acceptable? The hysterical attitude about narcotic painkillers is a carryover from our hysterical attitude about narcotics in general. Yes, addicts will always cause damage. But the war on drugs does not prevent that damage, and it is actually far, far, worse than the alternative.
Published: September 15, 2006 4:06 PM
Black Bloke
It's the drug war that's brought about the consistent violations of the 2nd Amendment, 4th Amendment, 6th Amendment, 7th Amendment, 9th Amendment, 10th Amendment, and the 14th Amendment. I'd throw in 1st, 5th, and 8th but that might be stretching it.
Having the state violate its highest law simply breeds disrespect for the state in the mind of the faithful citizen of the republic. That's dangerous when the peace is to be kept.
Published: September 15, 2006 8:23 PM
Dr. Mark Thornton
In the Netherlands we are talking about the typical problems associated with drug abuse, or is it the "typical problems" that lead to drug overuse?
In the Netherlands these problems are considered to be less significant than in other similar nations because of the way policy is handled. Take a look at my recent working paper on Mises.org with Simon Bowmaker.
Published: September 16, 2006 1:59 PM
Dr. Mark Thornton
You might recall the paper that showed that marijuana decriminalization in 11 states had the statistical effect of reducing the amount of drinking and driving and a lower number of automobile accidents. Obviously marijuana was substituted for alcohol at the margin, but why this resulted in fewer accidents is a mystery. A little bit of freedom seems to have a little bit of a positive effect here.
Published: September 16, 2006 2:04 PM
Dean Becker
Mr. Thornton,
The chapter posted online is wonderful.
So nice to see the Truth presented so well.
Thank you,
Dean Becker
Published: September 17, 2006 1:26 AM
Dr. Mark Thornton
Alcohol is good for you.
Thank you Dean. I appreicate your comment.
I did want to mention that despite the "negative externalities" associated with alcohol, there is a tremendous amount of benefits associated with alcohol including cultural, health, and economic.
For example:
WASHINGTON (AFP) - People who consume alcohol earn significantly more
at their jobs than non-drinkers, according to a US study that
highlighted "social capital" gained from drinking.
The study published in the Journal of Labor Research Thursday
concluded that drinkers earn 10 to 14 percent more than teetotalers,
and that men who drink socially bring home an additional seven
percent in pay.
"Social drinking builds social capital," said Edward Stringham, an
economics professor at San Jose State University and co-author of the
study with fellow researcher Bethany Peters.
"Social drinkers are out networking, building relationships, and
adding contacts to their BlackBerries that result in bigger
paychecks."
Published: September 17, 2006 7:51 AM
Sione Vatu
Enough already!
Who owns your body? Who is responsible for what is put inside it? YOU. There is no justification whatsoever for govt and its agencies to determine that. They do not own you and you are not a slave.
If a person wants to consume compounds, chemicals, various molecules of one sort or another, that is his business. If it turns out that some of those are deleterious for him, that's something for him to deal with. Should he decide that he is prepared to go on damaging himself, the consequences are his. Let him enjoy the dividends of his investment. Perhaps he'll learn.
Now there are those who argue that an intoxicated person may injure others and this justifies a prohibition. That is not a good enough reason to prohibit all people from purchasing and consuming the products they want to. One may as well argue that because some people make bad decisions there should be no freedom to choose; everything should be prescribed ahead of time (what you eat, how you travel, what you are allowed to do with your spare time, who you are allowed to associate with, what you are allowed to discuss, what time you go to bed, what you do for work etc.). If a person causes injury to another then he is responsible and can be sanctioned against. If he dies well that's an end in it.
I note the complaints against drunk drivers "causing" car crashes which result in the deaths of other people. Such situations also occur when drivers are not drunk. Why not banish drivers altogether? No drivers, no crashes, no deaths!
It IS interesting that presently those people who are a known problem are able to continue to access "public roads" as a "right" even after they have demonstrated their values and preferences are dangerous to others. In a private society such behaviour is likely to be far more difficult as an owner of private property can discriminate ruthlessly. Even so, life is not perfect and it is up to YOU as an individual to take what precautions you judge as necessary to protect yourself and your loved ones from potential problems/ threats.
I knew several people who succumbed to the habit of overconsumption of various substances. Also I knew one who gambled a considerable portion of his family's fortune right away. Each was a collectivist who sought escape from his own identity and situation and ideas. Each believed he had the right to impose his troubles on me and my family (fairly standard behaviour for collectivists- stealing from others). Each one expressed outrage and horror when I disabused him of that notion and excised him from MY life. I note that nearly all of them ended up giving up the self-destructive behaviour eventually.
There is the answer; if you do not like what someone is doing, cut them off. You can choose what you value just as they can. A prohibition makes this far more difficult for all parties, especially as an individual is unable to cut off support from the members of the prohibition agences when they transgress against him....
Sione
Published: September 18, 2006 9:33 PM
vincent
Prohibition of Alcohol is good . But it should not bring legally. It is not a problem that if a person drinks alcohol rarely but it will not keep as a daily routine.
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Washington Alcohol Addiction Treatment
Published: August 30, 2008 4:38 AM
newson
and yes, vincent, alcohols can reallys screw with yours syntax. especially dailys.
Published: August 30, 2008 6:03 AM
newson
in australia, heroin used to be a very popular painkiller used by anaethetists, mainly in obstetrics. this was until about sixty years ago, when the us' demonization campaign began in earnest on a global scale (us ban goes back to the 1920's). australia got strong-armed into proscribing heroin in 1954.
"heroin pills" used to be an over-the-counter medication. the dose was miniscule, and they were recommended for all manner of ailments, including diarrhea, coughs, colds and mild pain.
Published: August 30, 2008 7:28 AM