By making some goods and services illegal, enforcement agencies divert resources from the protection of person and property toward surveying, fining, or arresting willing consumers, purveyors, or marketers. FULL ARTICLE by Danny G. LeRoy
Source link: http://archive.mises.org/12804/the-underground-economy-in-one-page/
The Underground Economy in One Page
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Not only is this enforcement activity very costly; it is also not very effective. In fact, evidence suggests that prohibiting drugs and prostitution is counterproductive.
I used to live in Massachusetts, where common toy fireworks are completely banned. Every summer was like living in a war zone. Folks had everything from firecrackers to “M80s”, which were something like 1/4 stick of dynamite with a waterproof fuse – I watched someone do a nice depth-charge demonstration with them. And they had plenty of all of this: the racket went on for weeks.
Here in NH, where fireworks are legal, nobody bothers much with them.
There’s probably no easy way to find out, but I also suspect that many persons who use illegal drugs first tried them for the sole reason that they are illegal. This is typical adolescent behavior.
Prohibiting victimless crimes is costly & ineffective, but more important is that it is unconstitutional and immoral.
Nice to see you, Danny!
In the 1990′s most people where I lived survived only because of the underground economy. A litre of diesel fuel was $8 but at least you could buy some on the black market, as opposed to none at the official gas stations.
Thanks Predrag.
Hey,
Great points, but I disagree with point 7. I would bet that the quantity of drugs demanded is higher due to prohibition. I know that part of the reason I demanded pot when I was a teenager and the reason my younger brother demands it now is because it is prohibited by “the man”. If pot was legal it would be just another thing. No doubt teens would still do it, but they are doing it anyway.
Perhaps for some individuals preferences for pot are a function of the risk of getting caught. For these people, that the riskier the activity of pot is and getting caught, the greater the demand. I am not convinced that this set of preferences characterizes many pot consumers. The quantity demanded of pot has risen because the price has fallen in real terms. There is more pot in North America now and it is of a much superior quality than it was back in 1980. Pot and the process of manufacturing it has evolved in the underground economy with the objective of growers to garner as much THC as is scientifically achievable. As an economist, I must acknowledge they way producers and marketers have continued to innovate and develop a better product at consistently cheaper and cheaper cost to the end user!!
You left out various foods being made illegal as well.
I agree. The list of illegal products or processes is almost without end.
I saw some guy from Harvard saying that when you make something contraband, distribution becomes violent. No matter what the good. So even the mainstream can see the cause and effect. I conclude that the people who are for keeping drugs illegal are supporters of drive by shootings and gang violence.
If the individual from Harvard had said that when you make something contraband, distribution *can* become violent, I would agree. For example, I can buy somethings as innocuous as raw milk illegally from a dairy farmer in Canada, and this peaceful exchange will not result in violence so long as it transpires without authorities being alerted to it.
I don’t agree with your conclusion that: “people who are for keeping drugs illegal are supporters of drive by shootings and gang violence”. Most of these individuals would likely be innocently uninformed about economic priniciples.
These piece illustrates the futility of waging war on a supply. The more effective the war is, the scarcer the resource becomes, driving up the cost. At some point it will become so valuable that whatever arbitrary punishment assigned to its consumption will be accepted as a reasonable risk for the reward. And with the cost growing exponentially for the government to reduce ever more consumption it becomes impossible to eliminate it.
This being true there’s hardly a point to criminalizing the population who engages in consumption of these illegal goods. The consequence of the war on drugs in this country, according to the U.S. Bureau of Justice Statistics, has created a prison population of over 2,300,000 by 2008, and it’s only increasing. The state of California has more prisoners than the 2nd, 3rd, and 4th place countries for prison population combined.
The violent sub-culture of gangs is fueled by the profit wrought from the drug trade. As a young underprivileged teenager with slim hopes of acceptance into a reputable college, what are your options? You can choose to labor for a company where the greatest opportunity for advancement is low level manager making 30K a year and working 50+ hrs/week, or you can sell drugs and have the chance at making 6 figures a year. Granted most drug dealers make far less than this, but the point is that the gamble has a potentially enormous payout. Then you throw in the factor that if you make the choice to even dabble in the drug trade and get caught, the unforgiving system makes reform so insurmountably difficult that it becomes almost impossible to make a life for yourself, without of course getting right back into the drug trade. Once the cycle is started it almost never ends. If this underprivileged kid thought his advancement opportunities in society were bad without a college degree, think of how much worse they are with a criminal record attached.
If drugs were not illegal the incentive for a live of crime would drastically diminish and the plague of gang violence that rots this country from the core would evaporate overnight.
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