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At the beginning of the last century, the progressive American temperance movement insisted on solving the social ills associated with alcoholism by prohibiting liquor. They succeeded. The effects of organized crime extend to the present day. The Eighteenth Amendment and the Volstead Act, passed in 1919, prohibited the manufacture and sale of intoxicating liquor for recreational use.
Prohibitionists hoped it would reduce domestic violence and petty crime on the streets as well as increase labor productivity. And it would cause a drop in violent crime. They got just the opposite. Crime in U.S. cities increased by an average of 24% between 1920 and 1921. Homicides rose 13% in both years. Moreover, serious assessments indicated that the number of alcoholics had doubled, or was close to doubling and large-scale organized crime emerged from the black market in liquor.
It is basic economics, you cannot succeed by prohibiting a product whose demand hardly decreases with the increase in price. This is the case with liquor and any recreational drug. Thus, prohibition was an opportunity for criminals to get rich quick by selling something for which demand would hardly decrease no matter how much the price would increase.
Yes, the risks are illegality reduced supply and increased prices. But demand did not fall and the criminals got rich. And of course corruption among authorities in charge of imposing the impossible – and unpopular – would spread quickly and inevitably. Every sincere repressive effort raised prices and as demand did not fall, the unintended effect was greater illegal profits and more corruption.
That prohibition was the beginning of large-scale organized crime in northern Mexico. In fact, the eventual cartels began as illegal liquor cartels. The Gulf Cartel had its origins in Juan Guerra’s liquor smuggling operation to the United States in 1929. Guerra soon violently controlled most of the liquor smuggling from northern Mexico to south Texas. He bribed politicians and law enforcement agents on both sides of the border. He also financed churches and schools, gaining popularity and influence beyond the ordinary mobster.
The only devastating blow to rising organized crime was the end of prohibition. And the interests of organized crime and the agencies in charge of prosecuting it were paradoxically aligned. The end of prohibition was followed by administrative bans on other drugs.
Intense press campaigns against heroin and marijuana – with the same arguments that led to the failed prohibition of liquor – would soon succeed in banning those drugs. In 1937, Congress closed a tax cap on marijuana that functioned as prohibition in disguise. And that new black market saved the Matamoros capo’s business. Guerra went into the marijuana business in 1933. With prohibition prices went up but demand not only did not fall, but grew rapidly.
Guerra was succeeded by his nephew Juan Garcia Abrego in 1970. And he became head of the cartel with the intensification of the war on drugs decreed by Nixon. Business improved. Cocaine displaced marijuana in importance, in part because the DEA’s strategy of concentrating repressive efforts against hard drugs made them increasingly profitable. And by the 1980s, the Gulf Cartel was getting half of the cocaine it smuggled into the U.S. from the Cali Cartel.
And so we come to the other devastating effect of the failed prohibition: Cartel capos like the notorious Pablo Escobar paid and armed irregular forces to confront the guerrillas – and if necessary the Colombian state – because the cartels first fought and then negotiated with guerrillas who tried to extort them.
But they quickly went straight into the drug business, much more profitable than kidnapping and extortion. And the FARC emerged triumphant in the late 1980s from the war between cartels, self-defense groups, guerrillas and the state as the most powerful criminal alliance in control – directly or indirectly – of the bulk of the drug export market from Colombia.
The war on drugs created the funding for the current axis between global terrorist networks, totalitarian ideology and organized crime. Terrorists and unscrupulous ideologues could not let it pass. Neither could those who, pretending not to know it, finance themselves from it, in exchange for their propagandistic or logistic support (intellectuals and politicians included). And of course, each fallen warlord is quickly replaced by another, in fact, from each dismantled organization another one emerges, both in terrorism and in the illegal drug mafias. It is logical, they have converged in the same business.
Prohibition is a very dangerous failure -drug prohibition is failing today just as liquor prohibition failed yesterday- and repressive efforts drive up the price, but demand does not fall. Profits rise and with them the capacity to overcome the repressive efforts -of some criminals or others- through violence and corruption.
No prohibition prevented the evils of consumption (which exist and are important) and every prohibition added to those evils. And finally, we have arrived at the worst of those evils: stupidly funding terrorism and anti-Western revolutionary agitation globally. It is time to change strategy and strike a truly devastating blow to the networks of organized crime, terrorism and violent revolutionary socialist agitation.
It is also time to address the ills of consumption by means that work because prohibition remains the primary source of funding for global organized crime. Which today includes terrorists with political agendas. Indeed, the only viable tool for states against those who finance themselves from prohibition is decriminalization. Recreational drugs may be a problem. But prohibition does not solve it and creates much bigger problems.
Guillermo Rodríguez is a professor of Political Economy in the extension area of the Faculty of Economic and Administrative Sciences at Universidad Monteávila, in Caracas. A researcher at the Juan de Mariana Center and author of several books // Guillermo es profesor de Economía Política en el área de extensión de la Facultad de Ciencias Económicas y Administrativas de la Universidad Monteávila, en Caracas, investigador en el Centro Juan de Mariana y autor de varios libros