Prohibitions do not eliminate the market for
illicit goods. Prohibitions do, however, increase violence and increase the risk of overdose.
The recent history of the United States includes two major periods of prohibition: federal
alcohol prohibition from 1920 to 1933, and the current war on drugs, which began in 1971.
During both of these periods, we witnessed increases in the homicide death rate that
correspond to enforcement of these prohibitions. Why do prohibitions lead to violence? First,
we have to recognize that prohibiting the production or consumption of a substance does
not eliminate its use. Almost half of high school seniors report using an illegal substance
in their life. Prohibition merely drives the market for drugs underground. Producers operate
in a black market, and consumers conceal their behavior.
Economics predicts a variety of adverse effects of black markets. The evidence confirms these
effects. In a black market, when disputes ariseóover sales territory, over product
quality, over correct changeóthe legal system is not available. Drug producers and consumers
must resolve their own disputes and may rely on violence to do so.
The underground nature of black markets has other negative effects. Consumers canít report
their drug dealers to the Better Business Bureau for having sold them low-quality cocaine.
The lack of legal, visible options to impugn the reputation of bad-faith drug dealers typically
leads to lower quality, and importantly, less predictable quality drugs, increasing the
risk of poisoning and of overdose. Further, law enforcement expends resources
to enforce prohibitions. The time that police officers spend chasing drug dealers and users
is time not spent catching murderers, thieves, or rapists. Prison space used to house drug
dealers and users is space not available for other, more serious criminals. One estimate
suggests that homicide rates are 25 to 75 percent higher than they would be in the absence
of drug prohibition. If your goal was to reduce the consumption
of marijuana, of cocaine, meth, or heroin, there are other policy choices available.
A policy regime such as the one we have with tobacco of high tax rates, minimum smoking
ages, and extensive education campaign, could keep the consumption of these drugs relatively
low while avoiding the violence and quality issues associated with a black market.
It might seem counterintuitive that prohibitions are not the most effective way to reduce the
consumption of a good, but economics points out that prohibitions generate black markets,
and black markets lead to other adverse effects.