- Publisher: Ludwig von Mises Institute (2007)
- ASIN: B000XGAFQ0
- Package Dimensions: 9 x 6 x 0.5 inches
- Shipping Weight: 10.4 ounces
- Average Customer Review: 5.0 out of 5 stars See all reviews (5 customer reviews)
- Amazon Best Sellers Rank: #3,645,446 in Books (See Top 100 in Books)
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The Economics of Prohibition Paperback – 2007
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It is conventional wisdom that alchohol prohibition failed, but the economic reasons for this failure have never been as extensively detailed or analyzed as they are in this study by Mark Thornton. The lessons he draws apply not only to the period of alcohol prohibition but also to drug prohibition and any other government attempt to control consumption habits. The same pattern is repeated again and again. Thornton's treatment of the topic is methodical. He first examines the history of prohibition laws, primarily focusing on American implementation of prohibitionist policies. He examines the prime movers in the alchohol, narcotics, and marijuana prohibition movements. He then examines the theoretical premises upon which prohibition advocates depend, and thoroughly exposes them as fallacious. After examining the history and theory of prohibition, Thornton reveals the effects of such policies on the potency of illegal drugs. He explains how prohibition inevitably creates incentives for producers to increase the potency of drugs and alcohol products distributed via the black market. Also investigated in this book are the effects of prohibition policies on crime rates and government corruption rates. Finally, Thornton discusses the repeal of prohibition, offering both public policy alternatives and truly free-market solutions. According to Murray N. Rothbard, "Thornton's book... arrives to fill an enormous gap, and it does so splendidly... The drug prohibition question is... the hottest political topic today, and for the foreseeable future... This is an excellent work making an important contribution to scholarship as well as to the public policy debate."
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The books covers alcohol and narcotics prohibition and all of the unintended consequences. It is very well cited and presents both sides of the arguments. Its focus is mostly economic but covers other social sciences as well.
Mark Thornton's book is the most well researched of the ones I've read, I'd attribute this to his presence in academia and/or hard work.
Quote from Wikipedia: "Thornton received his B.S. from St. Bonaventure University (1982), and his Ph.D. from Auburn University (1989). Thornton taught economics at Auburn University for a number of years, additionally serving as founding faculty advisor for the Auburn University Libertarians. He also served on the faculty of Columbus State University, and is now a senior fellow and resident faculty member at the Ludwig von Mises Institute."
Mark tries to hit home on public policy, emphasizing the free-market approach as the best solution. The book touches on a huge variety of studies in various fields: political economy, sociology, criminology, psychology etc.
There's an entire chapter dedicated to economic theory, hence the title, a variety of supply and demand charts and some indifference curves to illustrate basic concepts. The book is also full of statistics, graphs/ed. Mark briefly talks about the Austrian approach, by introducing praxeology as well.
A thorough history of the prohibitionist and temperance movements are covered starting with colonial times and proceeding through the progressive era (1900-1920).
Right off the bat, Mark makes the distinction between "rent seeking" behavior and "corruption" as this plays a big part in analyzing the incentives of the rampant crime coming from governmental institutions.
Mark touches on different schools of economic thought (German Historical School, Chicago School, Austrian, Classical) and the role of influential economists on public policy, the most notable proponent of prohibition being Irving Fischer and opponents being, Milton Friedman and Gary S. Becker.
Fischer was "champion of Prohibition within the profession. He organized round table discussion of the topic at the American Economic Association meetings in 1927.".."Fischer was clearly an advocate of government intervention in the economy".
"A key insight into his viewpoint....his speech at the Yale Socialist Club....in November 1941.."I believe [William Graham Sumner] was one of the greatest professors we ever had at Yale, but I have drawn far away from his point of view, that of the old laissez faire doctrine".
Thornton breaks the development of prohibition into three periods: the birth - from colonial times to Civil War, the politicization - from Civil War to around 1900, and the national prohibition adoptions - in the Progressive era (1900-1920).
Origins, Colonial Times:
"First, while alcohol was an accepted part of society, the Puritan ethic did discourage excessive use of alcohol. Puritans established sumptuary legislation designed to limit alcohol consumption and to prohibit tobacco consumption. This type of legislation was found to be in-effective and self-defeating and was later abolished"
"Second, legislation was passed to prevent the sale of alcohol to Indians, slaves, servants, and apprentices"
"Third, the colony of Georgia was organized as an experimental society by George Oglethorpe to promote temperance. In 1735, restrictions were placed on spirits, and subsidies were provided for beer"
Temperance to Prohibition:
"The temperance movement had grown to over a million members by 1833, consisting largely of northern evangelicals from the Baptist, Congregationalist, Methodist, and Presbyterian churches. Born in the revival movements of the 1920s and the 1930s, evangelical Protestantism is best described as post millennial pietism because its adherents believed that there would be a thousand-year kingdom of God on earth and that it was their job to prepare the world for Jesus' return. It is not surprising that as this group matured it turned increasingly to the power of the state to bolster the battle against alcohol."
Mark covers many groups and parties that developed, along with the role of women in prohibition:
Anti-Saloon League (evangelical group), Women's Christian Temperance Union (protestant women), Prohibition Party, American Temperance Society, National Women's Suffrage Association, American Woman Suffrage Association, United States Brewer's Association, National Retail Liquor Dealers etc.
Mark touches on the involvement of the American Medical Association and the American Pharmaceutical Association in prohibition movements.
He then delves into the history of the Harrison Narcotic Act of 1914 and continues to marijuana prohibition, cocaine, and heroine.
Fun fact: Excise taxes led to more nicotine content in each cigarette.
Fun fact: The alcohol industry were one of the biggest supporters of narcotics legislation
Mark becomes a heavy hitter on negative externalities/the unintended consequences of prohibition e.g. alcohol prohibition led to an increase of hard liquor consumption, "the alcohol prohibition movement unwittingly played a significant role in the spread of opium addiction".
Different theories of crime and economics are touched on:
Two hypothesis for the discussion of the origins of marijuana prohibition:
"Anslinger hypothesis" - Harry Anslinger, prohibitionist commissioner of the Federal Narcotics Bureau, played an entrepreneurial role in bringing marijuana attention to the public... and the "Mexican hypothesis" - discrimination and racism of others who are known to be users of the drug.
Mark argues that they are both right and one needs to put them together for a more mature understanding.
In the chapter on crime, he discusses different views of crime: economic theory (standard of living), sociological (environmental factors), and the Marxist theory (social class)
There is so much information in this book, I wish I could share more of it with you.
In sum: prohibition leads to more crime, dangerous drug substitutes/alternatives, an increase in potency, higher costs of drugs, increase in poverty, more death/homicides, political corruption, more individuals in prison, more tax payer dollars, rise of organized crime etc.
It is a slippery slope, the demand for drugs is inelastic, cutting out the suppliers only draws more into this extremely lucrative business.
Thornton's book takes my empirical, and common, claim and proves it and expands upon it showing the effect that drug legislation has on a drugs price, availability, demand, and potency.
The potency aspect was initially the most difficult concept in the book for me to grasp but Mark Thornton shows himself to be a great writer and a brilliant economist, and everything seemed to come together. On top of the economic theoretical insights regarding drug laws, Thornton gives a comprehensive historical lesson on prohibition.
This is a work that is steeped in economic examination which will scare off run-of-the-mill hippies, but should provide a good challenging read for a layman with a concern for individual freedom, like myself.