Saturday, August 18, 2012

Failure of Alcohol Bans in the Muslim World

I have been saying here that prohibition statutes are noble sounding “feel good” political actions that fails to accomplish their goals (in fact they make them worst). Said differently, politics will never eviscerate the natural laws of economics.

The Economist has a terse commentary on the status of alcohol ban on Muslim countries which seem to validate such premises (bold added)

NOBODY knows exactly when Islamic scholars decided that booze was sinful. In the 1970s political Islam led some countries such as Iran and Pakistan to ban alcohol, although many do not and exceptions are made for non-Muslims. In some countries the punishment for Muslims caught quaffing are severe: 80 lashes in the case of Iran. Things may get more arid yet as Islamist parties from Indonesia to Tunisia moot restrictions on alcohol. The number of drinkers varies by country, but some put the total at 5% of those identifying themselves as Muslim. Drinking may even be on the rise. Between 2001 and 2011 sales of alcohol in the Middle East, where Muslims dominate, grew by 72%, against a global average of 30%. That rise is unlikely to be accounted for by non-Muslims and foreigners alone. The black market for spirits flourishes in Libya, while Iranians are adept at producing home brew. Could Islam become more tolerant of drinking? A handful of scholars permit alcohol as long as it is not made from grapes and dates, because these are specifically mentioned in the Koran.

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Black markets (and bootleggers) naturally emerge where prohibition laws occur. Yet the article has been reticent about the criminality and corruption related aspects which usually account for as the other forms of unintended consequences inherent to such bans.

I may add that the above data may have severely underestimated the state of alcohol production and usage given that these “illegal” acts are done underground or in the shadow economy.

The more interesting part is that given the apparent failure of the alcohol ban, political authorities appear to be rationalizing (e.g. not made from grapes and dates) the prospective easing of such bans as expressed through opinion of experts.

Prohibition laws fail because, as Professor Mark Thornton argues, (bold mine)

History also supports the finding that prohibition is impossible to achieve in the economic sense. Legislatures do enact prohibitions and establish penalties and enforcement bureaus. The actions of these bureaus to enforce prohibition decrees have an effect, and when a prohibition survives long enough to be enforced it is successful in a political sense. I argue, however, that prohibitions have no socially desirable effect.

Of course prohibition should not be evaluated against a higher standard than other laws. Murder is against the law, but not all murderers are apprehended, convicted, and punished. Likewise, to expect complete or perfect prohibition is unrealistic. Rather, prohibition will be measured against its public-spirited intentions, that is, to reduce consumption of a good in order indirectly to reduce social ills (such as crime, destruction of free will, drug-related deaths) and to promote social goals (family life, democracy, health, and economic development).

To the extent that prohibitions result in increased prices, they produce increased crime and political corruption. Higher prices for a prohibited product also result in the substitution of related products and the innovation of more dangerous substitutes. Prohibited products tend to be more dangerous than legal substitutes in many respects, the result of prohibition, not the product itself.

Therefore, to assume that more severe penalties or increased enforcement will result in the substitution of legal for prohibited products is to make an invalid conclusion.

People dream about a moral society, yet the best way to do this is through free markets.

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