George L Cassiday was Capitol Hill's top bootlegger during
the days of Prohibition. Cassiday walked up and down the
hills of Congress, making up to twenty-five booze deliveries a
day. Illegal booze deliveries. Deliveries that were made
illegal by his very own customers. He was known as the
man in the green hat. Fast forward to 2021. Prohibition
has ended, sure. But regulations on the sale and consumption of
alcohol are still reminiscent of that era. On top of that, we
still have an ongoing pandemic. So alcohol consumption in the
US has been on the rise. To be more precise, sales of
alcoholic beverages in the United States have grown by 55%
overall and online sales in particular have risen by 243%,
just in the last week of March of 2020. It is only
understandable that more people are turning towards casual
drinking, right? The world is going through a major crisis
and in the face of this crisis, the CDC is looking to continue
Prohibition Era policies that pose an even greater threat than
individual over-consumption. Prohibition was established
with the stated intent of reducing crime and corruption,
solving social problems and improving health and hygiene in
America, all of which the government blamed on the over
consumption of alcohol. In retrospect, we know
definitively that Prohibition failed. Not only did it not
reduce the consumption of alcohol, but it actually
increased crime and yet still today many laws in America are
reminiscing of the Prohibition era. We have a bunch of bars
closing down, which some would think would actually reduce
alcohol consumption, but because beer is predominantly
drink at bars, when people go to the liquor store, instead they
end up buying liquor because it's just a much more cost
effective way to get alcohol into your system. So by
removing part of the market, we've actually increased
alcohol consumption just because of the price dynamics
of various substances. So in general alcohol consumption has
actually gone up during COVID, even though bars tended to be
closed. Prohibition was not a public health decision. It was
a completely political decision. When President Herbert Hoover
called Prohibition "noble in motive and far-reaching in purpose", he was well
aware of the problematic nature of these restrictions. The laws
imposed were extremely strict and politicians, the ones who
had made these laws did not adhere to those laws. Cassiday
recounted that he helped 80% of Congress violate Prohibition
laws. 80%! He enabled this for more than 5 years. Cassiday was
even given an office in the House office building provided
by his loyal customers. So there is no case to grandstand
on this issue. Alcohol laws are completely outdated and
ineffective, but the CDC still clings to Prohibition type
tendencies. Their top strategies for preventing
excessive drinking are: increasing alcohol; excise
taxes regulating alcohol outlet density; and maintaining
existing government controls over alcohol sales, avoiding
privatization. When the government started cracking
down on opioid prescribing back in around 2012, 2013,
prescription opioid use disorder and general
consumption of prescription opioids did go down. But
what the United States did not anticipate is that use of
illegal opioids would go up. Heroin use went up, fentanyl use
went up and that's why we now have in general less people
using opioids in the United States, but unprecedented
amounts of people dying. The number of people dying from
opioids is about double what it was in 2012 since they put the
interventions in place to actually reduce opioid deaths.
And in general, that's really what we see all over the place.
When the government makes some sort of intervention to reduce
the use of one substance, people who have substance use
disorders tend to substitute to something else. And there's
almost nothing the government can do to affect the general
addiction rates to all substances in the United
States. Let's carefully examine those points. One by one. #1
raising taxes does not have a significant effect on the
quantity of demand. In economic terms, there is an explanation
for this: elasticity. But if you're someone who has an
addiction disorder, which we would call probably perfectly
inelastic, they don't have much flexibility to be using
something else. The use of drugs among this group of people does
not really change much. Also raising excise taxes for
alcohol raises the cost to bars and restaurants significantly.
Selling alcohol is beneficial for consumers, business owners
and states altogether. In times like 2021, when millions of
people in the service industry have lost their job, raising
taxes to cut alcohol consumption seems cruel as well
as unnecessary. We actually have more people dying of
illegal drug use than ever before. And in general, if you
look at the illicit drug use rates, it's down. Less people
are using illicit drugs. And as governments make alcohol use
harder to do as they increase prices, reduce the amount of
liquor stores that might be in a certain area. The
substitution to other substances goes up. #2. For
regulating alcohol outlet density, the CDC has something
called the Guide For Measuring Alcohol Outlet Density. They
suggest high alcohol outlet density is a public health
problem. The CDC is attempting to create barriers for
individuals to consume alcohol. They declare that excessive
drinking causes 88 thousand deaths per year in the US. So
their concern is about public health seems legitimate until
you compare it to 300 thousand deaths per year caused by
obesity, which ranks number two on the list of preventable
deaths in the US. Yet we see a Dunkin' Donuts around every
corner. Alcohol is one of the easiest drugs to use with
temperance and that's why it's legal. There's people who can
have a glass of wine with their dinner and not get into any
sort of trouble. Versus if they were trying to consume
heroin, it's it's really hard to consume heroin in a
responsible type of way. Well, I probably shouldn't say that.
#3. State monopolies on liquor stores. It is no
surprise that the CDC, a government agency, is against
privatization. However, doing it for the sake of public
health seems like quite a stretch. If this is the only
reason for the CDC to implement these state monopolies on
liquor, we can readily disapprove the effectiveness of
that methodology. Seven out of the nineteen controlled states
ranked amongst the top twenty states with the highest alcohol
consumption rates. So substance use disorder from 2015 to now
has been completely stable, but the way that they define it is
actually incredibly similar as they did in 1999. So I make the
argument that substance use disorder has actually been
stable from 1999 to now. So we have about a little over two
decades of data of consistent stable substance use disorder
to all drugs in the last 20 years, amid a plethora of
interventions trying to reduce that rate. No matter what the
government does, it can't reduce that rate. The interventions the
United States has used in the last 20 years have been
disproportionately more authoritarian than anything
they've done in the past. That relationship is with all these
substances. So when you increase the taxes and expect
people to reduce their use when they have inelastic demand,
you don't really reduce their use. They have inelastic
demand! A lot of these people have substance use disorders.
They're addicted. This clearly highlights the unintended
consequences of government actions. This reveals the real
concern here. ABC stores create an artificial scarcity in
control states. This keeps the alcohol prices high, which
benefits the controlled state's government. You actually
have various types of tax rates among the states, so you might
have a super high tax rate in New York. But if you drive
right outside of New York to New Hampshire, you'll find tax
rates that are even half the prices of what you New Yorkers
are paying. So if the New York government is actually going to
put forward a tax that is more expensive than the travel cost
to pick up the substance in another state, people are going
to do so. I mean one thing that just happened in Massachusetts
is that they actually banned the sale of all
flavored tobacco products. But what they did not anticipate
was that Massachusetts citizens would just completely leave the
state, go to New Hampshire, where the taxes are incredibly
low and where the substances are still available for
purchase. They all went to New Hampshire. They purchased their
substances and they all came back. So basically Massachusetts,
in putting this flavor ban in place, has basically forfeited
all this tax revenue to New Hampshire. On the bright side,
we can use this crisis to normalize alcohol distribution.
33 states have changed their on- demand alcohol laws to keep
businesses up and running during the COVID-19 pandemic.
That allowed apps like Drizzly, referred to by some as the
Amazon for liquor, to take off in 2020. By approving cocktails
to-go, the legislature is throwing a much needed economic
lifeline to restaurants and bars, said David Wojnar, vice
president of DC based Distilled Spirits Council of the United
States. And he's right. More than 8 million people lost
their jobs in the restaurant industry. This is a significant
help for those restaurants struggling to keep their doors
open. Many states are getting ready to make these changes
permanent. Alcohol sales have historically been a heavily
regulated industry. It hurts consumers more than anyone.
Consumers hope to see the new trend of loosening
restrictions continue. Unintended consequences of the
alcohol laws are actually very interesting. If they reduce one
drink, the proclivity of a person to consume one drink. They see
that as a win in the population health mechanism, but it's
actually not a very efficient way to do so because the people
who end up drinking less when they make the consumption and
purchase of alcohol greater is actually the people who are the
most responsible users. The people with substance use
disorder, the people who are binge drinking, they are the
ones who have the most public health concerns. Any sort of
combustible tobacco products we've seen massive decreases
over the last few decades among youth. And a lot of tobacco
controllers will say 'that's because they've increased the
age to consume because they've they've reduced the amount of
stores selling because they've increased taxes'. There might be
some marginal effects with that. But really, when you look
at the data, what decreases the use of tobacco products among
children is children thinking that the tobacco products are
dangerous. Convincing them not to do the substances in the
first place is honestly the most effective way to do this.
One thing that the government actually tried to do was poison
some of the mechanisms, some of the inputs to create alcohol.
They actually started putting poison in many of the grain
alcohol cleaning products that were actually able to be
consumed for consumption purposes. If you really wanted
to. And then they ended up killing tens of thousands of
people after they did that. So the unintended consequences of
government intervention in drug policy since prohibition is
basically to cause more harm than good. Nation's Restaurant
News, Ron Ruggless, went so far as to call these rapidly rewritten
rules the most widespread changes in state alcohol
beverage laws since Prohibition was repealed in 1933. It is
time for us to learn from the past experiences of
Prohibition. People don't abandon their vices just
because they're told to. Bans and regulations make risky
habits even riskier.