The policy “cures” for a variety of putative social ills—drug use, gambling, sex work, gun ownership, etc.—are worse than the “diseases” they purport to treat.
Miron: Today’s lecture is about one large category of government intervention in the economy, interventions that target vice. By vice, I don’t necessarily mean to judge any of the goods or activities I’m going to mention. But they are widely regarded by many societies as being undesirable and therefore labeled as vice – things like drugs, alcohol, prostitution, gambling, guns, tobacco, under-saving, bad diets, and so on and so forth. Most societies employ a large range of policies, multiple policies, in an attempt to reduce at least some of these vices, if not all of these vices, and much more. These policies include outright bans, prohibitions of the goods, where they can’t be legally bought and sold. In some cases, milder policies, such as regulation, minimum purchase ages, taxes, or restrictions on time and place of use, as occurs with alcohol in many instances. Sin taxes, i.e. excessively high taxes on particular commodities, is another common approach to dealing with vice. In other cases, media campaigns, age restrictions, and so on.
Libertarians are opposed to all these policies that attempt to target, to reduce so-called vice. We oppose them to varying degrees because they don’t all do the same degree of harm. But broadly speaking, we believe that individuals should be choosing how much they want to consume or not consume something that other people might happen to label as vice. The key theme is going to be that the evils of the vice, wherever they might be, whatever your view, are typically less than the evils of the policies that try to reduce those vices. So the best thing to do is to let people and society make their own decisions.
The structure of today’s lecture will be the following: I’m going to focus mainly on drug prohibition because that’s a very important example of such a policy, it’s one of the most dramatic, it occurs around the world, and it does very, very large amounts of harm. I’m going to start by talking about that in some detail.
Then I’ll take that general framework and talk about prohibitions of other vices, which are fairly common, although not as common. Alcohol has been banned at times, for example, but it’s not currently banned in that many countries.
Then we’ll talk about other policies, milder policies such as age restrictions and sin taxes and so on, and think about whether even though those might be less bad than prohibition, they aren’t desirable in themselves either.
And then I want to bring this analysis and discussion of guns because many people would make a sharp distinction between much of what I have to say about vice prohibitions, vis-à-vis drugs or alcohol or prostitution or gambling and prohibitions of guns. And I want to argue that exactly the same considerations come into play. So a logically consistent view is to oppose all prohibitions including those against guns.
Focusing first on drug prohibition, what’s the argument for drug prohibition? The standard claim is that drug use is bad for individuals. It’s also bad for society in some ways, not always well specified, because drug use can harm your health, drug use could harm your productivity. More broadly, drug use can change your psyche, your personhood, or because drug use violates religious norms or other social norms or things like that. That’s one argument. Broad-brush, drug use is bad.
In addition, the people arguing for prohibition should be saying very explicitly that they believe prohibition reduces drug use. Both steps are necessary to even think about banning something. Even if you think something is bad, if the policy doesn’t do anything to reduce the amount of that activity, then it’s hard to see how it makes sense.
So there are two main arguments: Drug use is bad and prohibition reduces drug use. The consequentialist libertarian approach has two categories of responses. First, the evidence suggests that prohibition is not great at reducing drug use. It certainly seems to reduce it to some degree, in some instances, although in many other cases, there’s not much evidence that it reduces it at all. This evidence consists of comparisons across states that have decriminalized marijuana, comparisons across countries that might’ve decriminalized or legalized some or all drugs. None of that evidence is a slam dunk. We don’t have nice, clean, controlled experiments in economics to test the propositions we’re interested in. But based on what we know, it doesn’t seem that there’s a major effect. Maybe there’s a 10 or 20 percent effect. But there’s not a dramatic effect from prohibition in reducing use in the first place. Still, there’s probably some. So it’s interesting and important to ask, “Well, is that reduction something society should want or not? Or is it something that we should in fact oppose because we’re making people worse off by reducing their drug use.
There are three different perspectives on policy and use that are useful to think about. One view says that people are rational. They know what they’re doing. They know what they want. They understand the consequences. They understand that drugs might be unhealthy, might affect their productivity, might be addictive, and so on and so forth. But they understand all that and decide to assume the risks. The rational economic man, under that scenario, of course, any government-induced reduction in drug use is a mistake, is bad, not good because it’s preventing people from doing something they get benefit or satisfaction from – just as a ban on apples would be harming people who happen to like apples. Now very few people think that everyone’s behavior all the time conforms with the standard, rational perspective. But not too many people think that no one’s behavior ever conforms to the rational perspective. So we should admit at least the possibility that some drug users are making themselves better off in the same way that people having a glass of wine, people engaged in bungee jumping, people who are eating Ben & Jerry’s ice cream, people who are engaged in all sorts of risky activities, which sometimes do cause harm, nevertheless have made perfectly rational, reasoned decisions and are taking risks in a reasonable way.
An alternative view is that there are at least substantial numbers of people who sometimes or typically make irrational decisions about drug use, and that allegedly justifies policies to try to reduce drug use. That’s a very unpersuasive perspective. First, once you start down the slippery slope that says, “Government knows better than individuals about what’s irrational and what’s in the interest of particular people,” you’ve opened the door for all manner of government interventions to mandate how much people save or the kind of healthcare they get, how much they eat, what education they can receive, what books they can read, and so on and so forth. It’s a Pandora’s box of undesirable government interventions. And many of those undesired things have occurred in lots of societies throughout history, all in the name of helping the people who are allegedly making bad decisions. So the irrational use perspective is not persuasive at all. It raises many more questions than it answers.
A different perspective is that drug use can sometimes generate negative effects on innocent third parties, someone who is quite rationally making decision to use drugs on his or her own might also drive under the influence and harm others. They might operate heavy machinery in a business and cause accidents and things like that. The economist word for that is externalities, affects on innocent third parties. And that’s also offered as a reason to try to reduce drug use. I’ll come back to that in a moment. I first want to say whatever negatives there might be, from irrational use to individuals, from externalities to innocent third parties, those have to be weighed against whatever negatives prohibition might have. So we need to think about that side, the second response to the prohibitionist argument, before we can give an overall sort of evaluation.
The simple point is that prohibition has huge cost. Prohibition generates lots of violence. Why? Because it drives the market underground. In underground markets, people can’t resolve their disputes with lawyers, with arbitration, with courts, and so on. So they so they typically have resorted to violence, shooting each other’s knee caps and so on. And much of that violence spills over to innocent third parties. Much of that makes inner cities more dangerous. Much of that is harmful way beyond just the people who are involved in the drug trade. That’s a very serious cost. And empirically, prohibition seems to explain a lot of the differences in violence across countries and within countries over time.
Prohibition generates other types of crime because police are focused on enforcing drug laws, not on enforcing more standard laws against murder, theft, arson, so on and so forth.
Prohibition generates corruption. In legal settings, when people disagree with government policy, they lobby their legislatures, they make campaign contributions. They take out public information campaigns or ads in the Wall Street Journal and so on. You can’t do that with the cop who has arrested you or judges, you have to attempt corruption. Prohibition creates a huge incentive for corruption in the criminal justice system.
Prohibition almost certainly harms the health of anybody who continues to use drugs despite the fact that it’s prohibited, which seems to be a substantial fraction of users because in a legal market, you know what dosage you’re getting, you know that it’s pure and not adulterated with all sorts of other chemicals. But you don’t know that in an illegal market. And typically, there is high uncertainty about product quality, about product purity, and so on. And many people have accidental overdoses and poisonings because they’re buying these impure versions of the drugs that would be safer if they were sold in a legal market.
One very specific example along those lines is the spread of HIV in many countries owes a lot to drug prohibition, not just to sexual activity, because prohibition makes drugs expensive. People have incentive to want to inject them because that gives you a big bang for the buck. It makes it effectively cheaper to then share dirty needles, exacerbated by the fact that prohibition encourages societies to ban the sale of clean syringes and pharmacies and things like that. So people share dirty needles, spread HIV. That’s a direct result of prohibition. It would happen much less often, if at all, in a legal market where manufacturers, even for those people who did want to inject, would be selling amounts of heroin packaged with clean, disposable syringes. There would never be any particular incentive for people to share needles and therefore risk HIV, hepatitis, and so on.
Prohibition restricts medical uses. Doctors are worried they’re going to get slammed by the D.A. if they prescribe appropriate amounts of pain medication for their patients. So they hold back, people suffer. Other uses such as marijuana can’t be investigated properly by scientific trials because current policy makes that impossible to do.
Civil rights, race relations, are a huge issue. All sorts of standard procedures that we think of as being valuable and enshrined in the Constitution have been abridged mildly or enormously in the name of enforcing the drug wars. Drug laws are hard to enforce. You have willing participants to all the trades. You don’t have a natural complainant the way you have theft or murder or something like that. The people who bought and sold the drugs aren’t going to go down to the police station and say, “Hey, that guy sold me drugs.” Of course, they’re not going to do that. So you can only attempt to punish drug crime, to catch it with undercover bust buys, with knock warrants, and things like that. That infringes civil liberties. Imposing the frisk and stop and frisk and things like that differentially on people of particular races or ethnicities is going to inflame racial tension. It’s certainly a big part of the violence we see police use in certain kinds of stops. So those are also costs, negatives of prohibition.
So the overall evaluation says some people may well be making mistakes in using drugs. And that’s too bad, and there’s no reason that private individuals, their friends, their family, their doctors, their coaches can’t attempt to nudge them into changing their behavior when it’s appropriate. And certainly, some people accidentally harm others by misusing drugs, just as some people do that with alcohol. But it’s very hard to imagine that since the reduction in use we get is pretty modest and since there are much milder policies that could try to target these undesirable uses such as driving under the influence, like driving under the influence laws, the treatment of prohibition as a way to reduce drug use is way, way worse than the disease. If anything, it should be employed to reduce use. It should be something much milder. Prohibition generates tons and tons of serious cost compared to any plausible benefit.
Let’s now talk about other vices. The analysis is going to be essentially the same. We’ve seen lots of examples that confirm exactly this analysis. The U.S. and a few other countries had serious alcohol prohibitions in their histories. All those types of negatives from prohibition I’ve mentioned were there quite obviously in dramatic fashion during alcohol prohibition: the violence, the crime, the corruption, and so on. The poisonings was quite common. One way that people got alcohol during prohibition was to take industrial alcohol and try to renature it so it was consumable, but it didn’t always happen correctly, so people consumed the version of alcohol that is poisonous and could kill you, and lots of people were damaged by that.
When we look at markets for prostitution, where those are legal, they are less violent. They don’t lead to as much transmission of HIV and other things like that. When they are illegal, all the standard negatives of a prohibition that I discussed occur.
Same for gambling; 80 years ago, gambling had all this violence. It was underground. It was in Las Vegas where it was controlled by the Mob. Now the gambling is run by lots of private entities and also by lots of state governments. There’s no incentive to do it illegally, and gambling is not associated with any of those negatives that we’ve seen before.
Therefore, all vice prohibitions are basically impossible to justify from the consequentialist perspective, in addition to from many other perspectives. The set of harms they do is far worse than any benefits they could be providing.
Now let’s think about other policies that might be employed toward vice: subsidized treatment, harm reduction policies, sin taxes, public health campaigns, medicalization of marijuana, decriminalization, legalizing some drugs only such as marijuana only, age restrictions, and so on.
So there are two simple things to say about all those other policies. First, if we did those and only those instead of prohibition, we would almost certainly have a much better situation. We would have a legal market. Most of the standard protections that come from illegal market would be in place. So if you could substitute current prohibition for some combination of these other, much milder policies, that’s almost certainly a step, a very useful step, big step in the right direction. But each of those things should have its own analysis. Just because it’s less bad than prohibition doesn’t mean that any one of those is a good policy.
Take sin taxation as an example. Sin taxation, by raising the price of drugs or alcohol, does disincentivize people to consume them, but it’s going to do that to two groups. It’s going to do that to some people who might be misusing drugs or alcohol. So that’s potentially desirable for society that prevents people from consuming alcohol and driving under the influence and harming others. But of course it’s also going to harm everybody who consumes alcohol and doesn’t do any harm to others. So to know that you’re on net getting a benefit, you’d have to know exactly how many people are in each group and so on and so forth. It’s very hard to know that you’re actually having any net benefit, even with something as relatively neutral as a sin tax that’s relatively non-distorting. And of course sin taxes don’t always stay small. Sometimes they become very big because politicians want more revenue. Then they recreate black markets, and then you’re back into the same soup you were in before.
So is it reasonable to consider these milder things, such as a minimum legal drinking age, mild sin taxation, and so on, as a deviation from pure laissez-faire? It’s perfectly reasonable to consider them, but they should get careful analysis and should have to pass their own consequentialist test.
Now let’s talk briefly about guns. I had an experience about 20 years ago now where I had already been writing about drug prohibition and advocating for legalization pretty wildly. And a friend told me he saw my article about this, and he liked it, and he agreed with me. But then he gave me this slightly nervous look and said, “Now you’re not one of those nuts who actually think that gun should be legal, are you?” At that point, I actually hadn’t thought much about it. I was becoming more and more libertarian at that point or thinking more about libertarian issues at that point. But I thought for a second and said, “Well, I guess I am one of those nuts because every argument you can make against drug prohibition, you can make against gun prohibition. If we outlaw guns, you will have violent black markets with people shooting each other to control the illegal gun trade. If you have a black market for guns, you’re going to divert the police from going after other issues. You’re going to have quality-control problems where the guns don’t work properly and blow up in people’s faces because they malfunctioned and things like that. So all the arguments for opposing drug prohibition apply with similar or the same force for gun prohibition, and that shows something crucial – which is the evil of prohibition is not the substance that it’s prohibiting; it’s those incentives created by the policy. So whether you outlaw blue jeans, ice cream, coffee, cocaine, whatever, you’re going to get this huge range of negative effects.
Now I’m not going to take a stand here – we get to it later in the course – about mild gun control, about a minimum purchase age of 18 or a three-day waiting period or so on. What we’ve said here doesn’t automatically say that such mild policies are necessarily undesirable. They will take their own analysis, which we’ll get to.
To sum up today, governments expand huge effort attempting to reduce vice, all sorts of things that have gotten labeled as being bad, that we shouldn’t do and that the society or the government needs to prevent us from doing. Prohibition is the most extreme version of those policies. These efforts are not necessarily even well-motivated. They don’t take account of the fact that some people get benefits from these things, that taking a view as to which of these things are good or bad leads government into incredibly uncomfortable and excessive positions. And it doesn’t recognize that regardless of your view on whether using drugs is a good thing or bad thing to do or violates your religious norms or whatever, the treatment is almost certainly worse than the disease. So we should keep drugs legal. We should keep all these vices legal, perhaps with mild other policies directed toward them because the evils come from the policy, not from the vice per se. Thank you very much.