Markets Trump Prohibition

Tuesday, November 15, 2011

Many advocates of capitalism, myself included, often point to the prohibition of alcohol in the United States nearly a century ago as an example of a futile government program that spawns other problems, such as higher crime. (Effective advocacy doesn't end with touting freedom as practical: Capitalism, as the political system that best protects the pursuit of individual happiness, deserves to be praised from the rooftops on moral grounds, as well.)

Looking at history is fair and good, but doing so passively, in the face of the common notion that drug use leads to crime, and the huge, nationwide drop in violent crime despite such use, can be worse than futile since the crime data seem, prima facie, to contradict what happened in the 1920's.

With our federal government as committed as ever to prohibition, including its lynchpin strategy of making drugs more expensive, what explains the drop in crime? An article in Atlantic Cities is very helpful in answering the fair question of whether lower crime rates nationwide -- a trend that began abruptly in the early 1990s -- can be credited in some way to the war on personal freedom better known as the War on Drugs:

[D]espite drug busts and stricter regulations, cocaine prices kept declining. In fact, prices have been declining since before the War on Drugs even began. An Atlantic story from 2007 noted that the price per gram for cocaine had gone from an average of around $600 in the early 1980s to less than $200 in the mid 1990s, and was down to as little as $20 per gram with ever-increasing purity. In some instances, illegal drug prices spiked in the wake of a large drug bust or the dismantling of a cartel, but the larger trend has been markedly downward. That's due in large part to the ingenuity of drug importers, who only got more sophisticated in their ability to bypass border security and avoid arrest following a significant bust, ultimately bringing in more product with time. That growing supply resulted in more competition between dealers who started supplying a higher purity product, at a lower cost, to win over consumers.

But it's not only a growing supply of product that led to the collapse of the cocaine market. Newfound competition in the form of locally-produced methamphetamines and prescription narcotics would continue to drive business away from cocaine and the inner city to the suburbs and exurbs.[bold added]
Crime fell precisely because the Feds have been laughably unable to make drugs too expensive for users. The crime drop, far from being an example of a partial success of this program, occurred in spite of it.

This fascinating article shows how simple market forces have conspired to all but eliminate the incentive to deal drugs, as a primary (or even significant) source of income. Dealing drugs has thus become far less attractive to individuals, and made turf wars between drug gangs far less common.

The rapid evolution of this black market has outpaced the ability of our misguided government to keep up, resulting in a de facto repeal of prohibition. Examined more closely, what might look, without deeper analysis, as a fatal counterexample to the argument that prohibition is futile is, in fact, even stronger evidence that the War on Drugs is wasteful and futile at best, and actively inimical to public safety when it "works" at all.

That last is on top of the following: The War on Drugs is wrong because it is wrong for the government to prohibit behavior that, in and of itself, harms no one but the individual who performs it, if it harms anyone at all.

-- CAV


Jim May said...

There's also the basic fact that any form of prohibition takes a powerful economic engine out of the hands of law-abiders, and puts it specifically into the criminal realm.

The profits made in that market serve to make the criminals far more dangerous, by *funding* their numbers and their capacities in those other crimes. Drug czars can afford the best weapons on the market, for example, often being better armed than the cops (and even the military in some countries). Such criminals are now sufficiently wealthy to be able to organize and build empires on a huge scale. Organizations that can even wage war -- in particular, terrorism.

Compare that to the meager "profits" that can be made in straight-up crime, like robbery or burglary. In a society that permits self-defense, particularly firearms ownership and carry, those proceeds are meager indeed.

So when some prohibitionist says that using drugs is feeding these evil empires, tell them that it's true -- and that it's their fault for handing such a profitable market to the criminals.

Gus Van Horn said...

That is an excellent point, and further illustrates how the "War on Drugs" is an example of the government doing exactly the opposite of what it should be doing.