The Economics of Prohibition

by Mark Thornton

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  Index

  ABC News poll, 76n

  Abel, C. T, 107

  Abel, Ernest L., 65

  abolitionist movement, 43, 46, 48

  absenteeism of employees, impact of alcohol consumption on, 25–27, 26 (table), 28–29, 29 (table)

  abstinence pledges, 44–45

  addiction: and criminal risk-taking with price changes, 117, 119 (fig.), 119–20; and deterrent effect of punishment, 31; discovery of, 4, 58–59; and elasticity of demand with price changes, 117, 118 (figs.); extent of, 60n; and individual rationality, 10, 31, 35–38; infeasibility of prohibition as deterrent to, 144; and maintenance programs, 33, 34n, 64, 147–48; to patent medicines, 61, 141; and potency, 91; rehabilitation of, 31n, 33; as side-effect of war, 5, 57, 62, 64–65; solutions to, 152; utility of, 35–36, 37, 38

&
nbsp; ad valorem tax: effect on product attributes, 93–95; prohibition as, 97, 98–99

  advertising, and market information, 78, 151

  Afghanistan, 136n

  Alchian, Armen A., 93, 94 (table)

  alcohol: association of use with criminal behavior, 111, 115, 124–25; consumption patterns, 13–14, 20–21, 28, 29, 101–3, 103 (table), 104 (table), 124–25, 126, 145n; definition as poison, 52n; economic losses, 23–29; “grip,” 17–18; health risks, 73n, 104–5; home production, 21; increased potency under prohibition, 89, 90, 103–5; medicinal use, 52n; “normal use,” 18; potency absent prohibition, 91; regulation of markets, 40, 41–43, 51, 54–55, 69, 121–22, 140, 149; substitutes, 20–21, 28, 57–58, 60, 61n, 67; substitution for other drugs, 144n.3; utility of consumption, 36

  alcohol, prohibition of, 86; association with crime and corruption, 112, 122–24, 126, 127, 133–35; changes in relative prices, 101–2, 102 (table); contemporary efforts to reintroduce, 39; costs, 23, 25, 27, 29, 100 (table), 100–101; creation of profit opportunities, 117, 123; demand relative to price differences, 102–3, 103 (table); discussion in economics texts, 10; dismissal of honest agents, 81–82; economists as defenders, 9, 11–23; effect on marijuana market, 67; enactment, 50, 55, 65; enforcement, 19, 20, 21; and evolutionary competition, 13–15; failure, 4–5, 9–10, 21n, 23; growth and consolidation of movement, 50–56; intensification of criminal organization, 125–26; motivations, 111; origins, 43–47, 68–69; politicization of movement, 47–50; precursor of other prohibition movements, 39; private vs. public, 19–20, 25; repeal, 21n, 23, 66–67, 91, 112, 124, 139, 149; scientific arguments, 53–54; social/economic benefits, 16, 20, 21, 24, 26–27; spread of opium addiction, 57–58, 61n; statutory definitions, 96

  Alcoholics Anonymous, 44, 149

  alcohol industry: corruption of political process by, 55, 111, 126–27; organization of, for self-protection, 55, 126–27; rent seeking by competitors of, 52, 56

  “alcohol price index,” 101, 102 (table), 103

  Allen, William R., 93, 94 (table)

  AMA. See American Medical Association (AMA)

  American Association of Pharmaceutical Chemists, 63

  American Economic Association, 11–12, 13, 15, 17n.8

  American Medical Association (AMA): antialcohol resolution, 52n, 53n, 59; establishment of monopoly by, 69; and narcotics control, 59, 61, 63

  American Pharmaceutical Association (APhA), 59, 61, 62, 63

  American Revolution, 43n, 69

  American Temperance Society, 43

  American Woman Suffrage Association, 48

  amphetamines, health risks of, 73n

  anarchism vs. socialism, 17

  Anderson, Gary M., 55

  Anderson, Harry, 135

  Anslinger, Harry, 65, 66–67

  “Anslinger hypothesis” of marijuana prohibition, 65–66, 67, 68

  Anthony, Susan B., 48

  Anti-Saloon League, 4, 47, 48, 49, 50–52

  APhA. See American Pharmaceutical Association (APhA)

  Arthur D. Little Inc., 109n.10

  Ashley,—, 136

  Asia, narcotics use in, 57

  Asia, southeast, political corruption of, 136n

  aspirin, 57

  Association against the Prohibition Amendment, 27

  Association of Retail Druggists, 59

  Astor, Gerald, 133

  attributes of goods: consumer evaluation of, 92–93; effects of taxation on, 93–96; enhancement of utility by, 78; potency as, 92, 93; produced by bureaucrats, 97–98

  Australian ballot, 53, 55

  Austrian economics, 6, 10, 38, 77–78

  automobiles: import quotas and tariffs on, 95; operation of, after alcohol consumption, 20; theft of, 124, 125

  Baden, John, 129, 130, 132

  Bahamas, the, 136n

  Banfield, Edward, 128

  barbiturates: health risks of, 73n; as marijuana substitute, 108

  Barnett, Randy, 143

  Barthold, Thomas A., 36, 37nn.30, 32

  Barzel, Yoram, 93–95

  Bassett, John Spenser, 42

  Beccaria-Bonesana, Cesare, 113

  Becker, Gary S., 6, 133; attack on prohibition, 10; theory of crime, 115–16, 130; theory of rational addict, 10, 35–36, 37–38

  Becker, Howard, 65–66

  Beecher, Lyman, 43

  beer: commerce in, 43; consumption patterns of, 102, 103 & table, 104 (table); disassociation of hard liquor from, 55; prices of, relative to those of spirits, 101–2, 102 (table); subsidies to, 41; view of temperance movement toward, 44, 45

  Behr, Roy L., 48

  Bennett, William, 9

  Benson, Bruce L., 40, 84, 120, 128–29, 130, 132

  Bentham, Jeremy, 113–14

  Bidinotto, Robert James, 125

  bingeing, 35, 37

  blackmail, of enforcement agents, 131

  black markets: under alcohol prohibition, 29; corruption of officials by, 130–32, 137–38; creation of, by prohibition, 82–83, 89, 141–42; criminal violence in, 112, 120; and decriminalized drug markets, 149; industry standards in, 89; organization of, 125–26; product adulteration in, 105; variation of drug potency in, 91

  blacks: bigotry of prohibitionists against, 51, 66, 140; fear of cocaine use by, 60

  Blake, John B., 69

  Blaug, Mark, 9

  Blocker, Jack S., 50, 51

  blue laws, 54

  Bolivia, 136n

  Bonger, W. A., 114

  Bonnie, Richard J., 66

  Boorstin, Daniel J., 41

  Borcherding, T. E., 93n

  Bork, Robert, 116

  Boston, Massachusetts, 25n, 42

  Bracey, Dorothy H., 137

  Brandstatter, A. F., 133

  brandy: medicinal use of, 52n; relative prices of, 102 (table)

  Brazil, 136n

  Brecher, Edward M., 144

  bribery: as consequence of drug producers’ capital investments, 132; as consequence of prohibition-created profit opportunities, 83, 131–32, 135–36; as method of public finance, 137; reduction of, by prohibition, 127; by saloonkeepers, 54

  Brooks, J. E., 40

  Brown, George F., 120

  Bryan, William Jennings, 50

  Bryce, James, 53

  Buchanan, James M., 30, 84, 85, 87–88, 137

  Buckley, William F., Jr., 10

  bureaucracies: attributes of goods produced by, 97–98; entrepreneurial role of, 65–66, 67, 69; growth of, 84–85; inaccessibility of discovery process to, 80–82, 83, 141; profit opportunities of, 83, 130–32, 135–36; suppression of discovery process by, 80, 82, 83, 141

  Bureau of Internal Revenue, 64

  Bureau of Justice Statistics, 106n, 108–9

  Bureau of Prohibition, 26–27; corruption of, 112; enforcement budget of, 100 (table), 101

  burglary: rates absent prohibition, 124; rates under prohibition, 120, 125

  Burns, Arthur, 27n.14

  business: and narcotics control, 56–57, 59–60, 61–62, 63–64; organization of, against alcohol industry, 52; Progressive view of, 53; support by, for marijuana prohibition, 68. See also entrepreneurs

  business-cycle theory of crime, 123, 124

  Byrne, Frank L., 46, 47

  caffeine: control of use in medicinal compounds, 63; potency absent prohibition, 91

  Calkins, Dr.—, 58

  Cameron, Samuel, 116

  Canada, policy toward alcohol, 20

  cannabis. See marijuana (cannabis)

  capitalism, 120–21. See also black markets; business; development, economic; markets

  Capone, Al, 117

  Carter, Jimmy, 139n

  Catholics, bigotry of prohibitionists against, 51

  Cave, Jonathan A. K., 82–83, 90

  chemical industry, support for marijuana prohibition, 68

  Chicago, Illinois, 133

  Chile, 136

  China: opium trade with, 62; U.S. relations with, 57, 62, 65

  Chinese, the: di
scrimination against, 62; use of opium by, 60

  chloral hydrate, 57, 62, 64

  choice, subjectivity of, 77

  Christian Science Monitor, 24

  cirrhosis of the liver, 105n

  Civilian Conservation Corps (CCC), 124

  civil liberties: and corruption control, 137; and quarantine of heroin addicts, 147n.6

  Civil Service, reorganization of prohibition enforcement under, 134

  Civil War, 4, 40, 43, 48, 57, 58, 69

  Clague, Christopher, 34n, 147 “The Clandestine Distribution of Heroin: Its Discovery and Suppression” (Rottenberg), 90

  Clark, John Bates, 12, 14

  Coast Guard, U.S., 100 (table), 101, 106

  Coats, A. W., 12–13

  Coca-Cola, 60, 89–90

  Coca-Cola Company, 52

  cocaine, 105; association of use with criminal behavior, 60, 111; in combination drugs, 90; commercial use, 60, 89–90; consumption patterns, 145, 146n; control of use in medicinal compounds, 62, 64; “cutting” of, 96n; discovery, 57; health risks, 73n, 91, 110n; increased potency under prohibition, 89–90; as marijuana substitute, 108–9

  cocaine, prohibition of, 3, 149; enactment of, 60; motivations for, 111

  coca leaves, use of, 57

  Coffey, Thomas, 81–82

  Colombia, 112, 136n

  competition: evolutionary, 13–15; multidimensional view of, 77–78. See also monopoly; rent seeking

  compulsive behavior, and addiction, 36

  conservatives, and legalization, 10

  conspicuous consumption, 15n

  Cook, Philip J., 124

  corruption: acceleration by growth in government, 130, 132; activities, 129–30; association with prohibition, 111–12, 127, 133–36, 142, 143; association with saloons, 54–55; benefits, 137; causes, 129; consequence of illegal markets, 30; consequence of prohibition-created profit opportunities, 83, 130–32, 135–36; consequence of social controls, 133; costs, 136–38; decriminalized drug market, 149; definitions, 128–29; distinguished from rent seeking, 6, 128; elimination, 129, 133, 151; federal convictions/indictments, 127, 128 (fig.), 136; functionality, 127–28, 129; function of risk of capture, 131; incentives, 130; marginal cost of acts, 132; prohibition as remedy, 111, 112, 113, 126–27; similarity to rent seeking, 132

  Corrupt Practices Act, 51, 55

  cotton, as hemp substitute, 68

  Council on National Defense, 18