Pubdate: Thu, 07 Apr 2016
Source: New Mexican, The (Santa Fe, NM)
Copyright: 2016 The Santa Fe New Mexican
Author: Megan McArdle, Bloomberg View


I've long supported drug legalization for many reasons, but like many 
other advocates, I consider the reduction of violent crime to be the 
main benefit. Deprived of the ability to enforce contracts through 
the relatively peaceful legal process used by other markets, black 
markets are accompanied by high levels of violence: Gangs fight for 
territory, enforce business agreements and try to defer defections.

The more profitable the black market is, the more incentive there is 
to use violence to protect your profits, which may be one reason that 
the introduction of crack cocaine was accompanied by such a huge 
increase in violent crime. Legalizing drugs cuts into the profits, 
and gives industry players legal means to settle their disputes, so 
in theory, this should reduce the prevalence, and the brutality, of 
violent gangs.

But while in theory, theory is the same as practice, in practice, it 
often isn't. Will legal marijuana, and the accompanying decline in 
profits, really mean the demise of the gangs - particularly the 
Mexican cartels - that trade in it?

We seem to have a handy test case: Prohibition. Starting around the 
end of World War I- a period that roughly coincides with the Volstead 
Act - homicide started to spike in America. Probably some of that was 
because of the demobilization of large numbers of soldiers at once, 
rather than the black market in alcohol, but a significant portion of 
the homicides were driven by gang wars over bootlegging profits. How 
can we be sure of that? Because right around 1933, when Prohibition 
was repealed, the homicide rate began a rapid collapse.

That's good fodder for today's legalizers. On the other hand, we 
should be modest about how much the end of Prohibition achieved. The 
Mafia did not simply disappear along with the source of its biggest 
profits. Instead, like any business, it sat back, took stock and 
opened up new lines of business. Labor racketeering, gambling, 
extortion - these things might once have been sidelines, but they 
became the main show.

In other words, policy outcomes have a lot of path dependence. The 
Mafia was not created by Prohibition; it seems to have been an 
outgrowth of post-feudal Sicily, and it made its way to America along 
with Sicilian immigrants. But the advent of Prohibition greatly 
increased its profits and power, and by the time Prohibition ended, 
it was far too big and well-organized to simply slip softly and 
silently away into the night.

Had we never passed the 18th Amendment, the Mafia might have remained 
a local problem in Italian neighborhoods, and slowly died along with 
the ethnic enclaves where it had its foothold. But repealing 
Prohibition was not the same thing as never having had it in the 
first place. We created a monster, and the monster outlived its 
initial habitat.

It's too early yet to know what effect marijuana legalization will 
have on the gangs that got rich on marijuana prohibition. But given 
the scale and ferocity of the violence that has convulsed Mexico in 
recent years, it's hard to imagine that the gangs will simply fold up 
if they're deprived of their revenue. Indeed, they are already moving 
into other drugs. They may also try to take over currently legal 
operations, as the Mafia did with many labor unions.

This offers a lesson for policymakers - and not just those who focus 
on drug policy. Often in policymaking, there are no backsies; undoing 
some policy mistake gives you very different outcomes from the ones 
that you would have gotten if you'd never tried it in the first place.

That's not an argument for never experimenting, but it is an argument 
for caution. You break it, you own the outcome.
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MAP posted-by: Jay Bergstrom