A Cautionary Tale

The modern day Prohibitionists, and even tobacco control advocates more generally, used to frequently laud the example of Bhutan back in 2004 and for many years after.  And yet now?  Almost nobody talks about them anymore.  So why is that?

Bhutan, the only country in the 21st century that had completely banned tobacco across the board, has failed so miserably in doing so (thanks to the black market and international smuggling, and despite very stiff penalties too) that they ended up reversing their ban in 2021, largely out of fear that rampant cross-border smuggling would.... increase the spread of Covid.  Seriously, you cannot make this stuff up!  This should really be a cautionary tale for anyone contemplating any new (old) forms of Prohibition, whether for tobacco or otherwise. 

And it's not like Bhutan is a historical anomaly either, as outright bans on tobacco products have been tried (and failed) before repeatedly for centuries in various countries, including right here in the USA at the state and local level from the late 19th century to 1927.

So much for the illusion of control. 

Twenty-One Debunked has repeatedly discussed in depth the quasi-special case of tobacco/nicotine and how highly nuanced it is.  And yes, it is far more nuanced than either side of the debate likes to admit.  Tobacco/nicotine straddles the fine line between soft and hard drugs, is both subtle and dangerous at the same time, and thus ultimately defies and transcends any simplistic solutions like "just ban it already!"

If alcohol, tobacco, and cannabis were all legal, and you had to pick ONE of those to ban, tobacco would logically have to be it, hands down.  It is, by far, the least useful and most harmful (and deadly) overall of the three.  It is the ONLY currently legal product that, when used as directed, will kill half of those who buy it.  It's thus not even a contest.  Additionally, it is NOT a truly recreational drug, and its inherent addictiveness actually tends to subtract from one's overall freedom and autonomy rather than enhance it.  And the majority of those who use it ultimately regret doing so.  That said, it still doesn't follow that a complete ban is a wise idea, in theory OR in practice. 

It is worth noting that even those who were serious about phasing out tobacco in the West have been, until very recently, gradual and gingerly about it.

Not only is this a cautionary tale regarding tobacco, but also by extension other substances and vices as well.  It is a historical truism that punishing the many for the excesses of the few has NEVER ended well at all, and ultimately does far more harm than good.  Those folks advocating new (old) forms of Prohibition need to be VERY careful what they wish for! 

It bears repeating:  vices are NOT crimes.  Any confusion of the two invites trouble. The late, great Lysander Spooner was a wise man indeed, and we ignore his timeless advice at our peril.

As President Ronald Reagan famously said, "Freedom is never more than one generation away from extinction".  And in light of the past few years alone, that quote doesn't really seem to be an exaggeration. 

UPDATE:  Apparently according to Wikipedia, Turkmenistan (since 2016) and Taliban-ruled Afghanistan (since 2022) have also banned tobacco.  Though the former has not fully gone into effect yet, and the latter is not exactly a good role model.

How to Quash a Black Market in Five Easy Steps

A black market (or underground economy) typically occurs when the legitimate market for a particular good or service is either nonexistent, out of reach, or otherwise far too insufficient to meet the demand for that good or service.  Black markets are by definition illegal to one degree or another, while informal markets that are technically legal or quasi-legal are known as gray markets.   While the usual proximal cause for a black market is prohibition of a good or service (and thus no legitimate market existing), a black market can also occur (albeit to a much lesser extent) when the taxes and/or other government fees on or surrounding the product or activity are excessively high relative to what consumers are willing to pay (and relative to the informal economy).  Sometimes taxes can be so high so as to be considered "prohibition by price", though the relative price difference is typically far more important than the absolute price.

Twenty-One Debunked believes in raising alcohol taxes significantly in conjunction with lowering the drinking age to 18.  The level we suggest ($24/proof-gallon, equalized for all alcoholic beverages), though significantly higher than now, would still be too low to encourage a significant amount of moonshining and bootlegging.  But what about cannabis, which is currently being legalized in more and more states, many of which started out with fairly high taxes and/or licensing fees?  Though a positive development overall, in some of such places, the black market still exists to one degree or another, albeit much less so than when cannabis was illegal.  And of course we all know that places like NYC with extremely high cigarette taxes have their share of black markets in untaxed, out of state, counterfeit, and/or stolen cigarettes as well.  So how does one solve such a problem?

Enter Rear Admiral Luther E. Gregory.  In the 1930s, Prohibition was repealed, and Washington State along with other states were now faced with the task of shutting down the well-established bootleggers and speakeasies that persisted even after Repeal.   Admiral Gregory was asked to head the state's Liquor Control Board, and given carte blanche to come up with a solution, one which worked surprisingly well in fact:

1. End Prohibition, first of all.
2. Give amnesty and issue licenses to anyone willing to play by the state's rules, whether former bootleggers or otherwise.
3. Set the alcohol taxes as low as possible at first, the lowest in the country in fact.
4. Punish sellers who don't play by the rules, with an iron fist--i.e. blacklisting scofflaws from ever selling liquor in the state again.
5. After holding down alcohol taxes for three years, abruptly raise taxes to the point where they're now the highest in the nation.

Problem solved.  The legal market proved to be competitive with what was left of the black market, and drinkers preferred the former over the latter, driving the latter out of business.  And the black market never came back even after raising taxes dramatically.  Looking back, it should have been so obvious indeed.

Substitute "cannabis" for "alcohol", and there is no reason why this strategy would not work in this day and age.  And instead of holding down taxes for three years, merely one year should be sufficient to get the same results, even if the hike is automatically scheduled.  Doing so would minimize the greatest risk of the strategy, namely, that the fledgling legal cannabis industry would then become so powerful that they would resist and successfully quash any attempt to raise taxes in the future.  They would not become that powerful in just one year, and probably not for several years, but the black market could be easily quashed in that timeframe all the same.

As for cigarette taxes, both NYC and NYS should implement this strategy as well.  And of course, the low-tax states such as Virginia should also raise their cigarette taxes (within reason) so as to not be such a source state for cigarette smuggling to other states.  And of course, lower NYC's age limit back to 18 as well.  Same for cannabis in legalized states as well.

In fact, this strategy would work for just about any type of black market.  That's because it is based on the hard facts of economics, not half-baked wishful thinking.  Unlike prohibition or unrealistically high age limits, taxes are not a "blunt" policy instrument, but rather a razor-sharp, double-edged sword.

So what are we waiting for?