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The Crime of Prohibition

The prohibition of alcohol during the 1920s facilitated the rapid growth of criminal organizations in the United States, giving birth to infamous names as Al Capone. It is largely for this reason that alcohol prohibition was universally deemed a spectacular failure. Nearly a century later, however, the mobs fueled by alcohol now seem like a joke compared to the militant terror cells, drug cartels, and street gangs that dominate large portions of the world. It’s been so long since the days of prohibition, that few people recognize the connection between these things.

probibition caannabis crimeWhile the global alcohol industry is quite massive, the US market alone worth about $198 billion annually according to a report by the US Beverage Alcohol Forum, the global narcotics trade is the 2nd largest industry in the world, smaller only than the global trade in arms and munitions. In the US, slightly over 50% of the entire narcotics market is marijuana. In a 2006 study on marijuana production in the United States by Jon Gettman, it was determined that marijuana is the largest cash crop in the nation, exceeding the combined value of corn and wheat (though not the combined value of corn and soy). Governments cannot eliminate markets, and the moment that the narcotics trade was made illegal, the entire industry was pushing into the hands of criminals. Demand for these goods did not disappear, and so long as people are willing to spend money for them there will always be someone to supply it, leaving the industry’s total value completely untouched, and free to grow as does any other legal market. By pushing the industry to the black market, the only thing that changed was that the industry was no longer provided the protections of legal and social obligations to adhere to ethical behavior, and so the massive profits generated by this huge industry have been used to fund violence and regional destabilization. The implications for crime have been immense, and it’s time that we, as a nation, recognize it.

By legalizing and taxing the marijuana trade, alone, total crime in the US will be severely reduced over the course of just a few years. There would be an immediate 60% average reduction in the total profits for US street gangs, and for drug cartels in Mexico and Colombia, which have production and distribution operations in the US – the largest consumer market for narcotics in the world. The difference in this reduction in profits, and the total narcotics market composed of marijuana, comes from the fact that domestic producers tend to focus on marijuana as a growth industry, while US cocaine consumption has decreased in recent years. Heroin consumption, though steady, is supplied almost exclusively from Middle Eastern nations such as Afghanistan, where terrorist organizations such as Al Qaeda and the Taliban tax farmers to fund their violence. Without these marijuana profits, criminal organizations across the Americas will largely lose their ability to fund operations, not only cutting their total size to less than half the current levels thereby cutting a large amount of violent crime in the US nearly instantaneously, but this also devastates the ability of these organizations to defend the operations which will remain from the relentless onslaught by law enforcement as they regain control over regions currently under control of the cartels and gangs. The grotesque amount of violence along the US-Mexico border as officials in both nations try to stop the movement of narcotics into the US, infamous for bold statements such as beheadings, will be mostly eliminated. That’s just the beginning, though.

By By Michael Taillard, professional economist and board member of NORML Nebraska
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