In the months since the mass shooting at Sandy Hook Elementary School

The History and Economics of Prohibition: A Brief Primer Unintended Consequences In the months since the mass shooting at Sandy Hook Elementary School in Connecticut, proponents of gun-control have redoubled their efforts to pass laws restricting – and in some cases, banning outright – the possession of certain classes of firearms, accessories, and ammunition. Vice-President Joe Biden, designated by the White House as its point man on the issue, has led a coalition including Senator Diane Feinstein (D-CA), Mayor Michael Bloomberg of New York City, and Chicago Mayor Rahm Emanuel. Following Emanuel’s now-famous dictum not to let a crisis go to waste, Biden and his allies have been pressing their advantage hard, trying to ram legislation through before interest cools and the issue drops out of the headlines. In recent weeks, new gun-control legislation has been enacted in Colorado, Connecticut, and California. The measures signed into law by Connecticut Governor Dan Malloy are already being touted by the anti-gun movement as a model at the national level. The White House continues to support Senate approval and domestic implementation of the multi-national Arms Trade Treaty (ATT), passed by the United Nations General Assembly on April 2nd. U.N. Secretary General Ban Ki-Moon called the treaty “a victory for the world’s people.” In their haste to ban guns, have those on the political/cultural left - and their political allies in the United States and abroad - fully considered the possible ramifications of the actions they are proposing ? Have these individuals been sufficiently forthright and transparent regarding their motives and the underlying agenda of their program? Have they informed their constituents and other interested parties of the probable effects a comprehensive ban on firearms would likely have? They have not; public discussions of the issues involved have generated much heat, but little light. In order to more-accurately assess the probable effects of overturning the 2nd Amendment and a ban on the private ownership of firearms, it is necessary to delve more-deeply into such disciplines as history, economics, criminology and psychology. Let us do so… The History and Economics of Prohibition: A Brief Primer Over the years and for a variety of reasons, statists - Democrat and Republican alike - have attempted to change society by using government intervention in the marketplace and in the lives of individual citizens. A number of historical examples of this phenomenon come to mind, but perhaps none are more relevant to the subject at hand than the Prohibition Era and the so-called War on Drugs. After years of concerted effort on the part of prohibitionists, the 18th Amendment to the United States Constitution was ratified by Congress on 16 January, 1919 - thereby banning the manufacture, sale and transportation of alcohol – until the passage of the 21st Amendment in 1933, which nullified the 18th Amendment, thereby ending what came to be known as the Prohibition Era. The years between 1920 and 1933 marked an explosive growth in gangland violence, as typified by infamous mafia/underworld figures such as Al Capone, John Dillinger, “Baby Face” Nelson and others - many of whom were bootleggers and traffickers of alcohol. Nearly forty years after the end of Prohibition, in 1971, President Richard Nixon inaugurated what came to be called the War on Drugs - a federal campaign against the sale, possession and trafficking in recreational drugs of abuse, such as marijuana, cocaine, heroin and many other variants. The Prohibition Era is now a part of the past. The War on Drugs, on the other hand, continues unabated to the present day. Both offer important lessons applicable to the current debate about firearms and the 2nd Amendment. However, before getting to them, let us consider some of the basic economics involved in buying/selling of commodities such as alcohol, tobacco and drugs. It is a basic tenet of economics that if sufficient demand for a good or service exists in a free marketplace, but there are insufficient producers to satisfy that demand, shortages will ensue - driving up prices of the desired commodity. Higher prices will incentivize new/existing manufacturers to ramp up production, distribution and sales of the desired product. As new inventory flows into the marketplace, supply will begin to bring demand – and thereby prices – back into equilibrium. However, if established, legal markets are highly-regulated and restricted and prices artificially-high, this may have the effect of forcing unsatisfied demand into unconventional or unexploited channels. This is particularly true when demand is inelastic or partially inelastic. Elasticity of demand refers to the responsiveness of buyers to changes in price of a given product. In general, when prices of luxury goods increase, demand for them falls because they are not essential to survival. One might want a fancy car or a stylish new piece of jewelry, but these goods cannot be considered truly essential to survival in the way that food, water and shelter are. Demand for them is therefore, in some degree, elastic. Conversely, one would expect demand for food/water to be relatively inelastic, since human beings need these to survive, notwithstanding their cost. Since alcohol is arguably a luxury good, one would expect demand to be elastic, and to rise/fall in direct proportion to movement of prices. This common-sense assumption, however, does not always apply in the case of goods like alcohol, tobacco or recreational drugs, which - despite being non-essential - can display a remarkable degree of inelasticity in the marketplace. In good times and bad, a certain number of people will continue to want to consume alcohol, tobacco and/or drugs; in fact, in tough times, these commodities may be in greater demand than in relatively prosperous times. The fact that such products may be illegal or highly-regulated does not change this outcome; it merely moves transactions involving these products into illegal/extra-legal channels such as the underground economy and black market. The dynamic above was displayed in spades during the Prohibition Era. The federal government of the time believed it could reach into the vast and complex marketplace of the United States, and simply legislate out of existence both the demand and supply of alcohol. At first, this seemed to be the case. Bars, saloons, and taverns were forced to serve non-alcoholic beverages or went out-of-business entirely. Recalcitrant owners and operators were prodded into compliance by visits from the police and later, the Federal Bureau of Investigation (FBI) and the Secret Service. Likewise, domestic producers of wine, spirits and beer were closed-down or otherwise forced out of business. However, this was not the end of the matter, for just as quickly as these establishments were closed, black market alternatives to them were generated. Nearly every city or town of consequence boasted a “speakeasy,” private club or other under-the-table, extra-legal establishment serving banned alcoholic beverages. Domestic producers of alcoholic beverages may not have been able to meet demand, but the market abhors a vacuum and foreign producers and domestic bootleggers stepped in to slake the thirst of customers, even if it meant smuggling their products into the United States through Canada or Mexico, or brewing them in a moonshine still somewhere. People accustomed to consuming whatever beer, wine or other alcoholic drinks they chose resented being told what or what not to drink, and thus were willing to run the risks of purchasing their favorite alcoholic beverage on the sly. Were some smugglers, bootleggers and those who purchased and consumed their products caught and punished? Undoubtedly yes; however a far-greater number of groups and individuals got away with defying Prohibition more or less without undue penalty or risk. Why was this so? Despite the well-publicized exploits of such famed lawmen as F.B.I. agent Elliott Ness and his “Untouchables,” government at all levels proved inadequate to the gargantuan task of policing the entire United States for alcohol violations. Draconian laws against alcohol consumption were not only unpopular and thus widely-flouted - but essentially unenforceable. By the time the 18th Amendment was passed, prohibition was widely-acknowledged privately - if not always publicly - as a costly policy failure. Among the many largely-unforeseen effects of prohibition was its effect on the criminal underworld. Although illegal criminal gangs and mob outfits predated prohibition and were active in racketeering, illegal gambling and numbers, prostitution and other vices, the 18th amendment gave a huge boost to the influence and bottom line of such groups. Infamous mafia heavyweights such as Al Capone, John Dillinger and too many others to list - build immense wealth and power during prohibition, in large part by becoming major players in the vast black market for illegal intoxicants. Because smuggling and trade in bootlegged whiskey and other forms of alcohol was so profitable, rival gangs of mobsters were soon shooting it out on the streets of America’s largest cities for control of the business; when they weren’t turning their submachine guns and pistols on one another, they were trading shots with police and federal agents. So common was the sound of gunfire by the “Chicago typewriter” - aka the Thompson submachine gun - that this weapon is today still indelibly-linked with the heyday of gangland violence. Heretofore found only at the seedy fringes of American life, mafia gangs inaugurated a virtual reign of terror during the 1920s and into the 1930s, directly as a result of the ban on alcohol. The foregoing example illustrates several of the primary effects of prohibition-style bans on popular goods/services. First, the creation and rapid growth of black markets and an underground economy devoted to the banned item(s). Prohibition was supposed to weaken, if not kill off entirely, the domestic manufacture/trade of alcoholic beverages. Instead, the ban created a gigantic black market for alcohol and demand for it remained as strong as before (if not stronger; for some the forbidden fruit tastes sweeter). Second, the ban had the effect of creating and empowering a vast criminal underworld centered upon the illicit trade in intoxicants. Third, since black market products are, by definition, produced and traded outside of normal channels - they are beyond the reach of the authorities and therefore completely unregulated and untaxed. The pattern evident during the Prohibition Era was repeated during the War on Drugs, arguably with even more-deleterious effects, if not always in the United States proper, then in Mexico and Latin America. For nearly half a century, vast amounts of federal/state/local dollars have been spent combating illegal drugs, both in the United States and abroad. Yet, today the flow of drugs continues unabated into the United States. Markets are powerful things; producers (legal or illegal) will find a way of satisfying the unmet demands of their customers, regardless of the efforts of law-enforcement and other government agencies. During its Prohibition-era heyday, the United States suffered under a sustained wave of gangland violence. As bad as this was, the mafia did not destabilize or otherwise threaten the viability of the United States or its government. Unfortunately for nations like Colombia and Mexico, the same cannot be said of the War on Drugs. Since the 1970s, Latin American drug cartels and crime families have grown dramatically in both size and power. Today, Mexico is a hollow state; the cartels have gotten so strong that they amount to a shadow government within Mexico. The narcoterroristas are now powerful-enough to slug it out on even terms with all but the most-heavily armed Mexican army units, and their influence has infiltrated into virtually every aspect of that nation’s daily life. Although it has since eased somewhat, Colombia faced similar circumstances during the 1980s and 1990s. What can the economics and history of prohibition movements teach us about the prospects for gun control or even an outright ban on private ownership of firearms in the United States? At present, pro-2nd Amendment forces are pushing back hard, and thus far successfully, against the gun-control efforts of the Obama White House and its allies. However, the left and its allies have managed to push through significant measures in a number of traditionally left-leaning states. Very quickly, the effects of these measures are already being felt. In Colorado, Magpul Industries - a manufacturer of magazines and other firearms-related products – has decided that it is relocating its operations to a state with a more-friendly business climate. In Connecticut, Italian arms manufacturer Beretta is considering a similar move for its American operations, and Colt is rumored to being so as well. Barrett Arms of Murfreesboro, Tennessee, and a number of other well-regarded firearms manufacturers have joined a boycott of business with states/government entities they view as infringing upon the 2nd Amendment. Since 2009, the firearms industry has seen unprecedented increases in sales. Demand is unprecedented, not only for firearms themselves, but anything connected with them - from ammunition to accessories. The Sandy Hook incident elevated the buying frenzy to even-greater heights; there is now a nationwide ammunition shortage in all common calibers of handgun and rifle ammunition, one which shows no sign of abating. At present, an outright national ban on firearms possession does not seem imminent, but in event such a ban takes place, the history of prohibition movements suggests that it would be very difficult if not impossible to enforce. As the flourishing market in illegal intoxicants between 1920 and 1933 shows us, a federal gun ban would not end firearms-related commerce and ownership, it would simply force it into the underground economy and black market. Indeed, it seems likely that a federal gun ban would probably cause the formation of the largest black market in history… only this time, it would not be in alcoholic beverages or recreational drugs, but in firearms and other weapons. Other weapons? Yes, you read that correctly. Since engaging in the buying/selling of banned arms would already constitute a serious crime, there would little additional marginal risk/cost -and much potential profit for gun-runners and arms merchants – in the sales of military-grade weapons, ranging from fully-automatic, select-fire assault rifles to rocket-propelled grenades (RPGs) to crew-served weapons such as mortars and heavy machine guns. Mexico is already awash in weapons, thanks to the drug war - how difficult would it be for the cartels to simply begin smuggling such arms into the southern U.S. once black-market prices make such trade profitable? Today, the domestic arms industry in the United States is already heavily-regulated and taxed; the vast majority of gun producers and owners willingly submit to these costs in the general interest and for the public good. However, in an arms black market, all bets would be off; no taxes would be collected, no regulations enforced or obeyed, no legal oversight of any kind would apply. Obama and company seem to believe that Americans, if “properly regulated,” will simply agree to being disarmed, much in the same manner as their European brethren. This is a fundamental misreading of the traditional American character and also of our long history as a republic of armed, free citizens. It is no exaggeration to suggest that, in many ways, the history of the United States is, in many ways, the history of its firearms. Do Obama, Biden, Feinstein, Bloomberg, et al. really want to open the Pandora’s Box of overturning the Second Amendment and barring ownership of firearms, as they seem poised to do? Perhaps they should stay their hand - and remember that the law of unintended consequences applies.