Chapter II - DRUGS: Lessons from the Prohibition Era

Nobody likes drug pushers. Getting others, especially teenagers, hooked on narcotics is a very mean way of making a living. People in the illegal drug business are obvious bad guys. There's not much favorable that can be said about their activities, which is unusual in a controversial issue.

For drugs, the controversy is not on the goal of less use, but on how to bring it about. Having a well-accepted goal makes fighting drugs a more straightforward issue than many others. It also helps that everyone agrees on who the bad guys are. It would seem that the solution is merely one of enforcing the existing laws against illegal drugs.

Unfortunately, the forceful efforts of drug enforcement officials have not conquered America's narcotics problem. Our prisons are overflowing with convicted drug sellers. Still the amount of illegal drugs consumed in all parts of the country remains high. Why does it continue?

The answer is simply that illegal drugs are a highly profitable business. Drug pushers are entrepreneurs who are strongly motivated by the huge amounts of money that can be made in that business. The amounts are so much bigger than what they might make in most other Jobs that they are willing to take the risk of being sent to jail.

In many ways, selling drugs is like any profitable business. It responds to all the forces of the free market. Its work force understands the added risks in the drug trade and gets paid a premium wage (Just as underground miners are paid extra for their hazardous work). The street price of a drug is determined by classic supply and demand factors in the market. In fact, drug enforcement officials look to drug prices for evidence of the effectiveness of a police crackdown. Higher prices reflect a reduced drug supply in an area, showing that drug enforcement activities have been effective.

Unfortunately, drug prices on the street have never stayed high. A high price actually increases the incentive for drug sellers to find new ways to bring a supply to market, and they have always done so. No matter how many arrests officials make, the pushers eventually get enough drugs to market to satisfy their customers.

Similar market incentives encouraged the illegal alcohol trade during Prohibition years (1920-1933). As today with drugs, gangs stepped in to meet the market's demand for booze. Al Capone's men would purchase alcohol legally in Canada, then smuggle it to Chicago. The street price for whiskey was higher than before Prohibition, offsetting the risk of Jail sentences for the gangsters. Even with the higher prices and difficulties in buying a drink, observers estimate that fully half as much alcohol was consumed as before Prohibition. The demand for booze remained strong, and the free market provided plenty of gangsters to supply it. Free markets will always provide what people are willing to pay for.

Strong enforcement seems incapable of stopping natural market forces, either for alcohol in the 1920's or for narcotics in the 1990's. In both cases, the lure of profits in the illegal trade has been stronger than the fear of punishment. Some leaders are caught, but others always seem ready to step into the dangerous but profitable business. The possibility of a long jail sentence is not awful enough to stop them. The US Bill of Rights doesn't allow "cruel and unusual punishments," but perhaps sentences stronger than prison time should be considered.

Instead of focusing on drug dealers, some leaders have recommended efforts to reduce consumer demand for illegal substances. First Lady Nancy Reagan's campaign to "Just Say No" to drugs is one example. Other school and community programs on drug education promote similar aims of reducing demand. These programs have had some positive effect, but they have had to fight the very powerful market incentive of drug pushers to develop profitable new customers.

Some have suggested that the most effective way to act against strong market forces is to introduce equally strong dollar incentives. Cash rewards for turning in criminals work this way. If a reward is high enough, even a person's best friend will turn him in. Sometimes large cash penalties will have an effect in reducing crime. If drug buyers knew that they could lose their car or face a fine of one hundred times the value of their purchase, their enthusiasm for drugs would cool. Some would argue that such penalties are out of line with their drug purchase. But if such a program resulted in less drug activity, a community might think the penalties worth it. They would bring in big revenue, rather than be a big cost like typical drug enforcement. And they would actually reduce demand for drugs, cutting the profits of drug dealers.

One radical idea that has been proposed is to legalize drugs. Only a few people argue for such a step. They point out that the re-legalization of alcohol in 1933 did sharply reduce gangster activities. People faced less danger of getting ill on homemade booze. The government taxed alcohol to collect some of the profits that gangsters had made. The tax has kept up the price of liquor, discouraging some drinking. Similar arguments are made for legalizing drugs. But many people fear that the use of drugs would increase if they were made legal. They worry that readily available narcotics could lead more people to become addicted, hurting their effectiveness at home and at work.

In summary, three main approaches have been recommended for

fighting the problems caused by illegal drugs:

1. Increased enforcement of drug laws (reduce supply)

2. Increased programs to discourage the use of drugs (reduce demand)

3. Legalize drugs (make the market freer)

What approach(es) do you feel will work best?



Chapter III CRIME: Reducing its frequency and cost

Crime doesn't pay. Or does it? Many types of crime, like selling drugs, are really a kind of business. Unfortunately those illegal enterprises do pay, often handsomely.

The word crime covers a wide variety of activities. For analysis, it is helpful to split crime into two groups: activities related to an illegal way of making money (including related violence) and secondly, crimes of passion.

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