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.