Title: The Economics of Prohibition | Mises Institute
Headings: The Economics of Prohibition
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The Economics of Prohibition
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Content: Prohibitions on drugs cause potency to increase. Therefore, the assumption that higher prices achieve the goals of prohibition is unfounded. Given all such considerations, the case for prohibition remains unfounded even if the indirect connection between the consumption of certain products and social ills does exist. The attempt to understand all human action (as opposed to just commercial activity) as rational represents a revolution in thought. Applied to policy decisions, this revolution is called public-choice economics, and from this perspective it is unacceptable to present prohibition as an ignorant, irrational, or impossible social policy. Economists now suspect that any net losses to society produced by government policies are the result of rent seeking rather than ignorance or irrationality on the part of policymakers. Rent seeking is a search for privilege and personal gain through the political process. Rent seeking is distinguished from corruption in that rent seeking is legal and corruption is not. History reveals that prohibitions are indeed classic examples of the co-opting of public-spirited intentions by rent seekers within the political process, thereby explaining the existence of what at first appears to be irrational policies. This rationality-based method for the study of human action was labeled praxeology by the Austrian economist Ludwig von Mises.