Prohibition was perhaps one of the biggest failures of the 20th century. It illustrated everything that can happen when the government gets in the way of something people are going to do anyway. When alcohol was banned, people didn’t stop drinking at all. They just hid it. An entire economy developed. We can thank prohibition for creating NASCAR, mixed drinks, and light beer (and also this). Not much to celebrate there.

The only thing we can really thank prohibition for is providing interesting observations on how strong government is (or isn’t). Banning the production or sale of alcohol didn’t do much to stop people from enjoying a drink. What it did do was give criminals a new revenue source. Look at Al Capone. Capone was perhaps the most notorious gangster of his time, and he would have likely been a butcher or simply a pawn in someone else’s operation if it weren’t for alcohol.

When a substance like alcohol is banned production and sale is sent underground. This means that the production can’t be regulated. We can’t make sure the alcohol people drink is safe. Though I’ve had moonshine and trust it wasn’t made in an old victorian tub in the woods of Appalachia, it probably was. But moonshine represents 0.00001% of all the alcohol I’ve ever consumed. Thanks to the end of prohibition, most of the alcohol I drink is made in safe and sterile production facilities.

When production and sale are underground, the government also misses out on tax revenue. Right now our governments make a pretty good living off of the sale of alcohol, the same applies for tobacco. These are substances we are going to consume for a long time to come. So you might as well be able to tax and regulate it.

The final problem with alcohol was the cost to enforce the law. Governments spent millions tracking down speakeasies and the people that produced alcohol. They also had to run down those bootleggers that ran the stuff in their cars (that’s where NASCAR came from) which required expensive cars. There were costs of lives too. The Saint Valentine’s Day Massacre is but the tip of the iceberg.

All of that and you know what finally did in Capone? Taxes. They couldn’t even catch the most well known criminal in the world for doing the awful things he did. Alcohol was legalized in 1933, in the middle of the Great Depression. I’m not going to say it was its savior, but the economy bottomed out about the same time.

What does all this have to do with anything today? Some might say there are parallels to marijuana. This is true. But this is really just about knowing what’s really worth regulating, in any situation.

Image: Joelk75

categories: business, government