Prohibition Spawns Drug Violence

April 27, 2009 — -- Visiting Mexico last week, President Obama said he will fight drug violence: "I will not pretend that this is Mexico's responsibility alone. The demand for these drugs inside the United States is keeping these cartels in business."

I don't expect politicians to be sticklers for logic, but this is ridiculous. Americans also have a hefty demand for Mexican beer, but there are no "Mexican beer cartels." When Obama visits France, he doesn't consult with politicians about "wine violence." What's happening on the Mexican border is prohibition-caused violence.

A legal product is produced and traded openly, and is therefore subject to competition and civilizing custom. If two beer distributors have a disagreement or if a liquor retailer fails to pay his wholesaler, the wronged parties can go to court. There's no need to take matters violently into their own hands. As a result, in legal industries the ability to commit mayhem is not a valued skill.

On the other hand, dealers in a prohibited product operate in the black market. Upstanding businesspeople stay away, relinquishing the trade to those without moral scruples. Black-market operators can't resolve disputes in court, so being good at using force provides a competitive advantage.

Politicians gave us prohibition and created the conditions in which violence pays. This doesn't excuse those who commit it, but the fact remains that a legal drug market would be as peaceful as the beer, wine and whiskey markets. When alcohol prohibition, which spawned large-scale organized crime, ended in 1933, there was a brief upsurge in drinking, but America became a more peaceful and less corrupt place.

We should learn from that, but we haven't. American politicians are largely responsible for the atrocities now taking place.

That's not what they want to hear, of course, so they blame others. Their "solution" to increasing violence is to crack down even more on production and distribution of some drugs. This has never worked before, and it won't work now. Black-market profits are abnormally high because of the risk premiums and limited competition, so plenty of people will want to enter the business. Wipe out one cartel, and another is waiting to take its place. The high profit margins leave plenty of cash to bribe judges, cops and border guards. Even in America.