In Last Call: The Rise and Fall of Prohibition, a brilliant and exhaustively researched book, David Okrent examines the forces behind the enactment and repeal of Prohibition as well as its consequences, both intended and unintended. From 1920 until 1933 most Americans were forced to choose between abstinence and illegal consumption. But Americans loved to drink: Per capita alcohol consumption in the nineteenth century was three times today’s rate. It’s no surprise that so many chose to continue their consumption illegally.

If the goal of Prohibition was to eliminate, or even reduce, many of the problems associated with alcohol consumption—such as criminal activity, binge drinking, drunk driving, and deaths and injuries via alcohol poisoning—it was an unambiguous failure. As Okrent illustrates, after 13 years of speakeasies, corrupt enforcement, and criminal empires, the repeal movement had little difficulty in convincing a beleaguered public that Prohibition was a mistake.

However, this is not to say that Prohibition was entirely ineffective. If the goal was to reduce overall consumption of alcohol by increasing its price, Prohibition worked largely as intended. Initial consumption declined to 30 percent of its pre-Prohibition level, though this number rose to 70 percent within three years and stayed roughly at that level by the time of repeal. However, even for its advocates this is an odd measure of success for prohibition. Also worth noting is that repeal did not bring about a significant increase in drinking. Per capita consumption rates did not reach their pre-Prohibition levels until 1973.

Enforcer Colonel Ira L. Reeves bitterly stated at the end of his term that the only thing he had accomplished was that he “had raised the price of alcoholic beverages and reduced the quality.” This was a declaration of frustration and defeat, an admission he had been unable to remove alcohol from the American way of life. In line with this assessment, one of the main lessons Okrent derives from Prohibition is that government cannot effectively legislate against people’s tastes.

Okrent primarily focuses on the battle between the “wet” and “dry” political movements dating from the mid-nineteenth century until the 21st Amendment and the repeal of Prohibition in 1933. Both sides had their share of notable and influential characters, perhaps none more so than the dry Wayne Wheeler, leader of the Anti-Saloon League (ASL). In the history of American politics, no interest group has been as influential as the ASL and few individuals have had as much direct impact on public policy as Wheeler. H. L Mencken, a dedicated wet, wrote of Wheeler: “In fifty years, the United States has seen no more adept political manipulator.”

Wheeler and the ASL, supported primarily by rural Protestant voters, had a stranglehold over Congress and most state legislatures during most of Prohibition. Okrent writes that the Wheeler-led ASL “effectively seized control of both the House and the Senate in the 1916 elections” and did not loosen its grip until the early 1930s.

Perhaps the most enlightening, and disturbing, revelation in the book is how the ASL became the most powerful pressure group the nation had ever known and how the dry movement was able to enforce its will on a population that loved to drink. Most people are familiar with Prohibition-era stories involving corrupt police and politicians taking bribes from bootleggers like Al Capone. What most people are unaware of, however, is just how openly most members of Congress manipulated the political process to push Prohibition on a largely unwilling public.

A primary reason Prohibition happened was that the dry rural voters in favor of it were vastly overrepresented in state legislatures and in Congress. To get an idea of just how overwhelming this discrepancy was, consider that by 1929 a staunchly wet congressional district in Detroit had a population of 1.3 million, while ten separate dry districts in the Missouri had fewer than 180,000 people total. This disparity was the work of dry legislators, who blocked reapportionment and thus denied accurate representation to wet districts that were experiencing unprecedented immigration. Okrent summarizes the significance of the situation aptly: “Never in American history, not even during the tumult of Civil War, had Congress disregarded the constitutional mandate, enunciated in Article 1, Section 2, to reapportion itself following completion of the decennial census. . . . Between 1921 and 1928, forty-two separate reapportionment bills were introduced in the House. Not one became law.”

Although political manipulation was vital to the dry movement, Prohibition would not have passed if not for the support of one of the broadest coalitions in American history. The diverse movement behind the Eighteenth Amendment and the Volstead Act included such groups as the Ku Klux Klan, the American Medical Association, the women’s suffrage movement, and the Industrial Workers of the World, to name a few. Although these groups were diametrically opposed on most issues, each saw potential advantages from Prohibition.

Baptists and Bootleggers and Doctors and Coke

Prohibition provides a clear illustration of one of the basic lessons of Public Choice economics: Interest groups use the political process to concentrate benefits on themselves while dispersing costs on others. The AMA, for example, foresaw the potential for a lucrative business providing prescriptions for alcohol under the Volstead Act for roughly $3 (or about $33 in 2010 dollars). Although in 1917 the AMA ruled that the use of alcohol in therapeutics “has no scientific value,” after two years of Prohibition the organization declared alcoholic beverages to be useful in the treatment of 27 separate conditions including diabetes, asthma, and old age. The AMA’s sudden change in medical advocacy was in line with its self-interest.

The AMA was not alone in this regard. Asa Chandler, the founder of the Coca-Cola Company, was an ardent supporter of Prohibition because he saw the potential to eliminate the competition provided by brewers and distillers. Chandler was rewarded for his vision: Coca-Cola saw sales triple. Charles Walgreen expanded his drug store chain from 20 to 525 stores during the 1920s. Although family historians have credited this expansion to the invention of the milkshake, the profitable trade in medicinal alcohol provides a more likely explanation.

Making Matters Worse

As important as it is to understand how Prohibition passed, it is even more important to understand why it made many alcohol-related problems worse. Prohibition failed in this sense because the policymakers behind it failed to predict how consumers, suppliers, and regulators would respond. Many people continued to drink, and a multitude of bootleggers, violent mobsters, and corrupt politicians were willing to provide a continuous supply.

As with most cases of failed social engineering, the people who advocated Prohibition suffered from a conceit that it would work exactly as intended. The economist Irving Fisher, known for his groundbreaking work on interest rates, claimed in 1919 that Prohibition would increase national output 10–20 percent every year. Although alcohol consumption remained high, Fisher continued to attribute the growth of the 1920s to Prohibition.

Per capita alcohol consumption returned to around 70 percent of its pre-Prohibition levels by 1923 because a multitude of entrepreneurs were willing to operate outside of the law to quench the public’s thirst. The infamous Purple Gang controlled the vast alcohol traffic flowing from Canada through Detroit, while New York mobsters like Charles “Lucky” Luciano launched their long criminal careers in the illicit alcohol trade. The notorious Chicago bootlegger and gangster Alphonse Capone said of his profession, “I give the public what the public wants. I never had to send out high pressure salesmen. Why, I could never meet the demand.”

This is not to say that Capone or his contemporaries were unfamiliar with the use of force. Since Prohibition drove the market for alcohol into the illegal sector, men like Capone had to rely on extralegal measures to enforce contracts and resolve disputes. Sometimes these measures included violence. To get an idea of just how much, consider the homicide rate. In the United States it went from less than 12 per hundred thousand people in 1920 to 16 by the end of Prohibition, then subsided to less than 10 by 1940.

Nonviolent Means

Not all bootleggers were violent, however. Men like Samuel Bronfman and William “Bill” McCoy specialized in the importation of alcohol through ports and border towns all over the country. Once these specialists had evaded or bribed Prohibition agents and local politicians to bring their products into the country, they would sell them to gangsters like Luciano who handled the massive distribution to local speakeasies. New York, for example, had roughly 32,000 speakeasies during the height of Prohibition.

Although some Prohibition agents could not be bought, the prevalence of corruption throughout the era was staggering. Okrent illustrates countless examples of rampant opportunism by Prohibition enforcers. Chicago Mayor Bill Thompson, for example, received more than a quarter of a million dollars directly from Capone’s organization for his 1927 campaign. Ranking police captains amassed bank accounts approaching hundreds of thousands of dollars on salaries ranging from $2,500 to $4,000 a year.

The bootleggers controlling the black market in alcohol were actually more likely to support dry politicians in favor of Prohibition than wet politicians favoring repeal. The logic behind this strategy is simple: Bootleggers and gangsters needed Prohibition to stay in business. If alcohol were legal they would quickly be replaced by legitimate companies. The ideal combination from the criminal perspective was dry policy and corrupt enforcement, and they spent whatever was necessary to make this happen.

To understand why criminals were willing to spend so much to ensure political cooperation and endure work-related hazards like gang warfare, it is necessary to know just how much was at stake. Annual sales of bootleg liquor were estimated at $3.6 billion in 1926, which is roughly $43.4 billion in 2010 dollars. This astounding sum was about the same as the federal budget that year.

Why Not More Violence?

Given the stakes, the real puzzle is why more violence did not occur. Events such as the St. Valentine’s Day Massacre, where Capone’s South Side Gang killed seven rival gangsters, garnered a lot of attention in the national press. The extended periods of peace, stability, and even cooperation that occurred both between and within different criminal enterprises, however, have generally gone unnoticed.

Seattle bootleggers convened in 1922 to set prices and, more important, to establish rules to minimize conflict. Similar meetings occurred in Philadelphia, New York, and other major cities throughout the 1920s. Despite the enormous amount of money at stake, most areas of the country where alcohol remained avoided outright gang warfare.

The fact that economic activity of the same magnitude as the U.S. government could be organized outside of the law is surprising for a number of reasons. Those who choose a life of crime tend to be violent, impatient, and untrustworthy by nature. Despite these obstacles, criminals often discover ways to cooperate on a large scale to capture illicit profits.

Besides the use of violence, how did a bunch of violent, impatient criminals manage such organizational stability? They employed reputation, costly signaling, and constitutions as means to enforce agreements and resolve disputes. Criminals worked hard to avoid conflict where possible because conflict is costly. Gangsters like Capone and Luciano were driven to cooperate with other criminals by the same economic forces underlying cooperation between their law-abiding counterparts.

It is important to understand the robustness of criminal organization for a number of reasons. For one, it explains to a large extent why Prohibition was doomed to failure. If there is a strong enough demand, legal prohibitions on certain goods and services will simply shift markets into the waiting arms of the illegal sector of the economy.

That criminals could engage in complex economic interactions outside of the law also illustrates some important lessons for the robustness of self-enforcing exchange in general. If criminals are capable of overcoming major obstacles to organization and exchange, then conventional arguments that the State is necessary for cooperation and exchange to occur must be reconsidered. Even in an environment of mistrust and violence, firms were formed, contracts were honored, and disputes were mostly settled peacefully. A better understanding of these processes can shed considerable light on the ability of individuals to cooperate and trade in the absence of a formal legal framework.

This is not to say that criminal organization is the pinnacle of achievement in a market economy. On the contrary, the experience of black markets brought about by Prohibition illustrates how inefficient they are relative to markets with well-defined and legally enforceable property rights. Overall quality diminished, while fraud, theft, and violence increased. Criminal cooperation also periodically broke down into outright gang warfare, though as noted, this was generally the exception to the rule. The important lesson, however, is that under Prohibition, criminal suppliers found a way to meet the public’s demand despite all the obstacles they faced.

Although Okrent avoids making any explicit comparison between the prohibition of alcohol and the ongoing prohibition of certain recreational drugs, there are a number of obvious similarities. Criminal organizations continue to provide a seemingly limitless supply of illegal drugs; quality is low, potency is high, and corruption and violence are endemic.

Some 28,000 people have died in the border war between drug cartels and United States and Mexican government agents since 2006. Street gangs continue to battle over territorial distribution rights. As Nobel Prize-winning economist Milton Friedman aptly said, “Al Capone epitomizes our earlier attempts at Prohibition; the Crips and Bloods epitomize this one.”

Examples of Legalization

As was the case with the prohibition of alcohol, advocates of the “war on drugs” often claim that decriminalization would result in a massive spike in drug use. Although it is impossible to know in advance exactly how much consumption would increase, the experience of Portugal could provide some clues.

Since the decriminalization of all drugs there in 2001, user rates have not increased and remain near the lowest in Europe. Sexually transmitted diseases and deaths due to drug usage have decreased significantly (see Glenn Greenwald, “Drug Decriminalization in Portugal: Lessons for Creating Fair and Successful Drug Policies,” Cato Institute, April 2, 2009).

Just as Coca-Cola and the AMA lobbied for alcohol prohibition because it was in their economic interest to do so, a number of groups have a vested interest in the war on drugs. One illustrative example is the California Beer and Beverage Distributors, which donated money to oppose last year’s unsuccessful ballot proposition to legalize marijuana in California. History rhymes in interesting but predictable ways. This behavior is consistent with the lessons of Public Choice. The distributors, like Asa Chandler of Coca-Cola 90 years earlier, see prohibition as a means to eliminate competition.

The unfortunate reality is that despite the diagnosis of failure for prohibitions past and present, policy-makers often prescribe a further dose of the same failed policies. In 1926 Wayne Wheeler said the “very fact that the law is difficult to enforce is the clearest proof of the need of its existence.”

Despite ample lip-service for “hope” and “change,” the Obama administration’s cynical response to the escalating drug prohibition-related violence around the Mexican border epitomizes Einstein’s oft-quoted observation.

Since 2008 more than 7,000 people—over 1,000 last January alone, including Mexican civilians, journalists, police, and public officials—have been killed in clashes with warring drug traffickers. Wire-service reports estimate that Mexico’s drug lords employ over 100,000 soldiers—approximately as many as the Mexican army—and that the cartels’ wealth, intimidation, and influence extend to the highest echelons of law enforcement and government. Where do the cartels get their unprecedented wealth and power? By trafficking in illicit drugs—primarily marijuana—over the border into the United States.

The U.S. Office of Drug Control Policy (more commonly known as the drug czar’s office) says more than 60 percent of the profits reaped by Mexican drug lords are derived from the exportation and sale of cannabis to the American market. To anyone who has studied the marijuana issue, this figure should come as no surprise. An estimated 100 million Americans age 12 or older—or about 43 percent of the country—admit to having tried pot, a higher percentage, according to the World Health Organization, than any other country on the planet. Twenty-five million Americans admit (on government surveys, no less) to smoking marijuana during the past year, and 15 million say that they indulge regularly. This high demand, combined with the drug’s artificially inflated black-market value (pot possession has been illegal under federal law since 1937), now makes cannabis America’s top cash crop.

In fact, according to a 2007 analysis by George Mason University professor Jon Gettman, the annual retail value of the U.S. marijuana market is some $113 billion.

How much of this goes directly to Mexican cartels is difficult to quantify, but no doubt the percentage is significant. Government officials estimate that approximately half the marijuana consumed in the United States originates from outside its borders, and they have identified Mexico as far and away America’s largest pot provider. Because Mexican-grown marijuana tends to fetch lower prices on the black market than domestically grown weed (a result attributed largely to lower production costs—the Mexican variety tends to be grown outdoors, while an increasing percentage of American-grown pot is produced hydroponically indoors), it remains consistently popular among U.S. consumers, particularly in a down economy. As a result, U.S. law officials now report that some Mexican cartels are moving to the United States to set up shop permanently. A Congressional Research Service report says low-level cartel members are now establishing clandestine growing operations inside the United States (thus eliminating the need to cross the border), as well as partnering with domestic gangs and other criminal enterprises. A March 23 New York Times story speculated that Mexican drug gangs or their affiliates are now active in some 230 U.S. cities, extending from Tucson, Arizona, to Anchorage, Alaska.

In short, America’s multibillion-dollar demand for pot is fueling the Mexican drug trade and much of the turf battles and carnage associated with it.

Same Old “Solutions”

So what are the administration’s plans to quell the cartels’ growing influence and surging violence? Troublingly, the White House appears intent on recycling the very strategies that gave rise to Mexico’s infamous drug lords in the first place.

In March the administration requested $700 million from Congress to “bolster existing efforts by Washington and Mexican President Felipe Calderón’s administration to fight violent trafficking in drugs . . . into the United States.” These efforts, as described by the Los Angeles Times, include: “vowing to send U.S. money, manpower, and technology to the southwestern border” and “reducing illegal flows (of drugs) in both directions across the border.” The administration also announced that it intends to clamp down on the U.S. demand for illicit drugs by increasing funding for drug treatment and drug courts.

There are three primary problems with this strategy.

First, marijuana production is a lucrative business that attracts criminal entrepreneurs precisely because it is a black-market (and highly sought after) commodity. As long as pot remains federally prohibited its retail price to the consumer will remain artificially high, and its production and distribution will attract criminal enterprises willing to turn to violence (rather than the judicial system) to maintain their slice of the multi-billion-dollar pie.

Second, the United States is already spending more money on illicit-drug law enforcement, drug treatment, and drug courts than at any time in our history. FBI data show that domestic marijuana arrests have increased from under 300,000 annually in 1991 to over 800,000 today. Police seizures of marijuana have also risen dramatically in recent years, as has the amount of taxpayer dollars federal officials have spent on so-called “educational efforts” to discourage the drug’s use. (For example, since the late 1990s Congress has appropriated well over a billion dollars in anti-pot public service announcements alone.) Yet despite these combined efforts to discourage demand, Americans use more pot than anyone else in the world.

Third, law enforcement’s recent attempts to crack down on the cartels’ marijuana distribution rings, particularly new efforts launched by the Calderón administration in Mexico, are driving the unprecedented wave in Mexican violence—not abating it. The New York Times states: “A crackdown begun more than two years ago by President Felipe Calderón, coupled with feuds over turf and control of the organizations, has set off an unprecedented wave of killings in Mexico. . . . Many of the victims were tortured. Beheadings have become common.” Because of this escalating violence, Mexico now ranks behind only Pakistan and Iran as the administration’s top international security concern.

Despite the rising death toll, drug war hawks at the U.S. Drug Enforcement Administration (DEA) remain adamant that the United States’ and Mexico’s “supply side” strategies are in fact successful. “Our view is that the violence we have been seeing is a signpost of the success our very courageous Mexican counterparts are having,” acting DEA administrator Michele Lionhart said recently. “The cartels are acting out like caged animals, because they are caged animals.” President Obama also appears to share this view. After visiting with the Calderón government in April, he told CNN he intended to “beef up” security on the border. When asked whether the administration would consider alternative strategies, such as potentially liberalizing pot’s criminal classification, Homeland Security Secretary Janet Napolitano replied that such an option “is not on the table.”

A New Remedy

By contrast the Calderón administration appears open to the idea of legalizing marijuana—or at least reducing criminal sanctions on the possession of small quantities of drugs—as a way to stem the tide of violence. Last spring Mexican lawmakers made the possession of personal-use quantities of cannabis and other illicit substances a noncriminal offense. And in April Mexico’s ambassador to the United States, Arturo Sarukhan, told CBS’s Face the Nation that legalizing the marijuana trade was a legitimate option for both the Mexican and U.S. governments. “[T]hose who would suggest that some of these measures [legalization] be looked at understand the dynamics of the drug trade,” Sarukhan said.

Former Mexican President Vicente Fox recently echoed Sarukhan’s remarks, as did a commission of former Latin American presidents. “I believe it’s time to open the debate over legalizing drugs,” Fox told CNN in May. “It can’t be that the only way [to try to control illicit drug use] is for the state to use force.”

Writing recently on CNN.com, Harvard economist and Freeman contributor Jeffrey Miron said that ending drug prohibition—on both sides of the border—is the only realistic and viable way to put a permanent stop to the rising power and violence associated with Mexico’s drug traffickers. “Prohibition creates violence because it drives the drug market underground,” he wrote. “This means buyers and sellers cannot resolve their disputes with lawsuits, arbitration or advertising, so they resort to violence instead. . . . The only way to reduce violence, therefore, is to legalize drugs.”

Growing Support

Americans’ support for legalizing the regulated production and sale of cannabis—an option that would not likely rid the world of cartels, but would arguably reduce their primary source of income—is at all an all-time high. In May a national Zogby telephone poll of 3,937 voters by the Republican-leaning O’Leary Report discovered, for the first time ever, that a slight majority (52 percent) of Americans “favor the legalization of marijuana.” A separate Zogby poll reported even stronger support (58 percent) among west-coast voters.

Predictably, critics of marijuana legalization claim that such a strategy would do little to undermine drug traffickers’ profit margins because cartels would simply supplement their revenues by selling greater quantities of other illicit drugs. Although this scenario sounds plausible in theory, it appears to be far less likely in practice.

As noted, Mexican drug lords derive an estimated 60 to 70 percent of their illicit income from pot sales. (By comparison, only about 28 percent of their profits are derived from the distribution of cocaine, and less than 1 percent comes from trafficking methamphetamine.) It is unrealistic to think that cartels could feasibly replace this void by stepping up their sales of cocaine, methamphetamine or heroin—all of which remain far less popular among U.S. drug consumers anyway. Just how much less? U.S. Department of Health and Human Services survey data show that roughly two million Americans use cocaine, compared to 15 million for pot. Fewer than 600,000 use methamphetamine, and fewer than 155,000 use heroin. In short, this is hardly the sort of demand that would keep Mexico’s drug barons in the lucrative lifestyle to which they’ve become accustomed.

Of course, it’s unrealistic to think that pot legalization would wipe out prohibition-inspired violence altogether. After all, ending alcohol prohibition in America didn’t single-handedly put the Mafia out of business (though it greatly reduced its power and influence). And it’s always possible that Mexico’s drug cartels would continue to engage in violent acts toward one another as competing factions fought over the crumbs of America’s drastically shrunken illicit-drug market.

That said, it’s equally unrealistic, if not more so, to think that continuing our same failed drug war policies will do anything but exponentially increase the catastrophe they’ve spawned, both in Mexico and at home. It’s time to engage in a different strategy. It’s time to seriously consider legalizing marijuana and other drugs.

Federal drug agents won’t pursue pot-smoking patients or their sanctioned suppliers in states that allow medical marijuana, under new legal guidelines to be issued Monday by the Obama administration.

Under the European Union rules, shops will no longer be allowed to buy or import most incandescent frosted glass bulbs starting Tuesday. Retailers can continue selling off their stock until they run out.While some Europeans are eagerly jumping on the bandwagon, others are panicking and have been stockpiling the old-style bulbs for aesthetic or practical reasons. Others are resigned to the switch, if grudgingly.

Hat tip www.linkiest.com.

Does anyone still think the “war on drugs” is a good idea?

That may strike some people as an odd question under the circumstances, so let’s take it from another direction. Have you seen the news stories about the violence on the border being perpetrated by the Mexican whiskey and cigarette cartels?

No? That’s probably because there was no such violence and are no such cartels.

So why are there violent cartels in marijuana, cocaine, and heroin but not in whiskey and cigarettes?

All together now: prohibition.

“Our” Fault?

Of course the politicians blame everything and everyone but themselves for this spreading violence. “Our insatiable demand for illegal drugs fuels the drug trade,” Secretary of State Hillary Clinton said. “Our demand”? Including hers? “Our inability to prevent weapons from being illegally smuggled across the border to arm these criminals causes the deaths of police officers, soldiers and civilians.” Her answer, in addition to sending the Mexican government taxpayer money, is to go after consumers of drugs and manufacturers and dealers of guns she doesn’t like.

Drug users and gun dealers are to blame for drug-cartel violence? That makes no sense. If it did, then drinkers and smokers would be creating violence, too. What’s missing?

Once again in unison: prohibition. Who brought us prohibition? Politicians. Every politician, bureaucrat, and agent who facilitates or enforces prohibition is an accomplice in the violence because he or she helps to create the conditions in which thugs have a comparative advantage in dealing drugs.

For years advocates of free trade in drugs—that is, basic rights to life, liberty, and property for drug consumers, producers, and merchants—have pointed out that prohibition, besides being an immoral invasion of liberty by the state, sets in motion a variety of concrete evils that harm innocent people. (No one has been more consistent and rigorous in this than Thomas Szasz). These evils include the corruption of law enforcement, violent crime, and the expansion of intrusive government. Besides these domestic evils, the U.S. government has alienated farmers in foreign lands by helping to destroy their crops and livelihoods. If that’s not terrorism, nothing is. Crop destruction has been a recruiting tool for guerilla organizations, while black-market profits finance them and others with malign intent.

Few listened to these Cassandras against the anti-drug crusade. Maybe people will listen now.

Government Impotence

While violent gangs that make their money selling drugs in the black market are murdering and kidnapping people, invading homes, and committing other atrocities, the politicians have nothing to say but the same bromides they’ve been repeating for years. Thinking we’re either simpletons or amnesiacs, they expect us to be comforted by their words. (Will they be right?) They promise to defeat the cartels, crack down on drug use, and disrupt the gun trade. It won’t work. It’s never worked. It can’t work. Black-market operators are always steps ahead of the plodding bureaucrats. Break up one gang and another emerges. The drugs keep flowing (there’s plenty of bribe money), and consumers will have what they want when they want it. The profits made possible by the black market are powerful incentives to keep the industry going. Government is impotent. (They can’t even keep drugs out of prisons!)

Yet the gangs could be put out of business overnight. How? By removing the criminal penalties for the production, trade, and consumption of all drugs; by bringing the black market into the open, so disagreements can be resolved through civil channels and a talent for violence is no longer an advantage; by dissolving the extraordinary profits that illegal industries always reap.

Yes, it is that easy.

People will recoil. We can’t do that! No? Then accept as normal the unspeakable violence that is starting to spread from city to city, because that is the alternative to the stubborn refusal to end the “war on drugs,” which is really a war on people. Even full police-state tactics will not be able to control it, though that won’t stop demagogic politicians from giving them a try.

The Drug War Finances Government Careers

I don’t expect the multitude of officials who depend on the drug war for their livelihoods and power to endorse an end to prohibition. They have shown themselves more than willing to accept the violence (against others) as the price of their ambition. The new threat to us is an opportunity for them to amass more power, bigger budgets, and higher salaries.

But the rest of us have no reason to support the complex of government and “private” tax-financed agencies that grow fat prosecuting this war. The worn-out rationalizations can’t stand examination. Prohibition keeps no one from getting any drug he wants at an affordable price. On the contrary, it encourages the creation of cheaper, more potent drugs, just as alcohol prohibition replaced wine and beer with hard liquor. (More bang in a more compact form.) Prohibition doesn’t keep our children safe. It makes drugs into enticing forbidden fruits and pushes the trade into less-visible channels. Drugs aren’t “dangerous,” though people are capable of doing harmful things with them—and many other things. (Jacob Sullum’s Saying Yes is an eye-opening book that I highly recommend.) Addiction is not a disease; it’s a choice.

Everything the drug warriors have said is wrong—and often a conscious lie.

Drugs are to our society what Eurasia and East Asia were to Oceania in Orwell’s 1984: a convenient conjured-up demon to justify expansion of power and the usurping of liberty—in the name of keeping us safe.

What will it take, if not the current violence from Mexico, to make people see through the scam?

Look around. It’s our self-proclaimed protectors from whom need we protection most.

So, just what is Vermeer’s Hat?

It’s a little bit of everything, organized around several Vermeer paintings. Vermeer’s canvases, Brook points out, don’t merely depict scenes of Dutch life, but also help us understand an era of rapid economic change. There are stories to be teased out of these exquisite paintings, and the author does so brilliantly.

As a young man, Brook was cycling through Holland and had a minor accident in the city of Delft.  A woman who had seen his accident took the scraped, muddied cyclist in for a meal and some rest. Thus began Brook’s fascination with Delft, which soon came to include the paintings of its most famous artist, Vermeer.

The title comes from a painting of a man in a fancy coat and impressively large hat, seated at a sunlit table speaking with a young woman. (It can be seen in The Frick Collection in New York City.) Brook explores various socioeconomic features of the painting, but devotes most of his pages to the hat. How had it come to be? The material was beaver, not an animal native to Holland. Beaver hats had become highly popular due to their durability and fashion, which meant a lot of commerce in beaver pelts. They came through Amsterdam along with a fabulous array of exotic goods that led French philosopher René Descartes to proclaim it “an inventory of the possible.”

At this point, Brook embarks on an extended discussion of the great Dutch trading empire. Before the seventeenth century most commerce was local. Once the Dutch (and a few other seafaring nations) established global trade routes with centers in Asia, Africa, and the Americas, the quantity and variety of goods available increased dramatically. Beaver pelts from North America, spices from tropical islands, porcelain from China, and much, much more became available to consumers at steadily falling prices. Trade enlivened the previously drab existence of most people.

In the seventeenth century, however, trade was beset not only by the frailties of wooden ships and the hazards of weather and navigation but also by violence. Armed ships of the trading nations regularly preyed on cargo vessels of other nations. Naturally, piracy also ate into profits. Officials of the Dutch East India Company, seeking a justification for having seized a Portuguese ship, turned to a young lawyer named Hugo de Groot (now known as Grotius) for a legal brief. What he produced was a document entitled Freedom of the Seas. Brook writes that Grotius made several bold arguments: “The boldest of all is one that no one had thus far thought to make: all people have the right to trade.” Eventually, it became an accepted canon of international law that no government has the right to prevent nationals of other states from using the sea lanes. This principle’s effect on living standards is obvious.

Especially intriguing to Freeman readers will be Brook’s chapter on money. Global commerce depended on specie payments, chiefly in silver. His discussion of that subject is triggered by a Vermeer painting showing a woman weighing something with scales. Once Brook identifies that something as silver coinage, the chapter takes off on a global tour that includes mining, minting, and the exchange of goods for money. Brook’s readers learn some important lessons about money. After he observes that Europe had coinage from different countries in circulation, he writes, “Fortunately for the burgeoning commercial economy, the substitution of one type of coin for another did not interfere with the main purpose of money, which is to calibrate the relative value of objects.”

Another illustrative historical lesson concerns the futility of attempting to ban allegedly harmful substances, tobacco in particular. Globalization in the seventeenth century brought tobacco and smoking to the Far East, and some rulers wished to prevent the people under their control from indulging in the pastime. Banning tobacco, however, didn’t work any better than banning alcoholic beverages worked in the United States early in the twentieth century.

For a stimulating read that digs far into our history and unearths a wealth of information about trade and cultural exchange, I highly recommend this beautifully produced volume.

For the most part, the strident voices of the anti-immigration crowd have drowned out and intimidated those who do not believe that illegal immigration is a threat to the nation. There are, however, some people willing to stand up for the right of people to move across international borders freely. One of them is Philippe Legrain, whose book Immigrants: Your Country Needs Them was reviewed in the May 2007 issue of The Freeman. Another is Kevin Johnson, a law professor at the University of California – Davis. His book Opening the Floodgates makes an impassioned case for an open-borders policy.

Although the book has some serious flaws, it makes a worthwhile contribution to the debate over this key issue.

Johnson writes, “To the extent that the idea of open borders is even mentioned in public discussions, it is immediately brushed off as hopelessly impractical and not worthy of in-depth analysis and consideration as a possible policy option.” He wants to change that by showing the numerous, frequently tragic consequences of our current, highly restrictive immigration policy and emphasizing the benefits of scrapping it in favor of openness.

The most visible harm resulting from the status quo is that many people die every year in the effort to move to the United States. It’s strange that Americans who used to be appalled when East German border guards killed people trying to leave are mostly indifferent when Haitians drown or Mexicans die of heat and dehydration trying to leave those countries. Johnson shows that the death toll from our immigration laws is very high, but largely ignored.

Another harm is that illegal immigrants are outside the protection of the legal system. Unscrupulous employers can and do cheat them. Sometimes the immigrants are hardly more than slaves. Anti-immigrationists retort that those unfortunate people have only themselves to blame for having had the temerity to disobey our laws. Johnson finds this morally chilling. It is.

Johnson aptly compares our efforts to stop immigration to Prohibition. The latter didn’t prevent people from drinking alcoholic beverages but instead led to unsafe products sold by criminal syndicates, violence, and a gigantic waste of resources. Our prohibition of immigration has similar consequences. The parallels are strong and Americans ought to ponder them.

What about the impact immigrants have on our culture? Writers like Samuel Huntington wring their hands over the “damage” that dark-skinned and non-English-speaking immigrants (legal and illegal) inflict on “America’s” culture. Johnson says: Relax. Similar attacks were made in the past against the Irish, Italians, Chinese, and other groups. But more to the point, there is no reason to believe that any harm comes to us when different peoples settle here. Besides, he says, recent immigrants seem to be “assimilating” just fine.

I think Johnson would have made a stronger case if he had, apropos of that last point, challenged the notion that “assimilation” is really important. What does it matter if a group lives in the United States and chooses to keep to itself, speaking some language other than English, adhering to traditional customs, and ignoring American political institutions? The Amish are a very much unassimilated people, but there is no reason to complain about them. Live and let live—as long as an individual abides by that rule, there is no moral ground for interfering with him.

That point is something of a quibble, but there are more serious problems with the book.

First, Johnson’s grasp of economics is weak. For example, he takes seriously the notion of “the multiplier effect,” long ago shredded for its errors. And he repeatedly extols labor unions as if they have the power to transform low-paid jobs into “decently” paid jobs. The impact of unions is greatly exaggerated, and they have little or no impact at the bottom of the labor scale.

More important, Johnson thinks it would be good policy to allow free immigration, but then attempt through taxation to “even things out.” If we had open borders, he says that “business” would gain but low-paid workers would lose because of added competition in the labor market. Therefore he advocates taxation to compel the supposed winners to pay the supposed losers.

That’s where he really loses me. Increasing freedom to migrate should not be offset by decreasing freedom elsewhere.

by Kevin R. C. Gutzman

Regnery • 2007 • 258 pages • $19.95 paperback

Reviewed by J. H. Huebert

Conservative commentators often tell us that if only we would get back to the Constitution as it was understood, say, 100 years ago, all would be well with our Republic again.

The reality, however, is not so simple. It’s true that government was smaller before the New Deal, when presidents, Congress, and judges sometimes considered themselves more constrained by the Constitution than they do now.

The problem is that, apart from a few amendments, we had the same Constitution then as now. Our supposedly sacrosanct Constitution created a government that became our government. Whatever nominal restraints the Constitution contains weren’t enough to stop this from happening, as Lysander Spooner noted in “The Constitution of No Authority.”

Kevin Gutzman tries to show where things really went wrong in his new book, The Politically Incorrect Guide to the Constitution—and to his credit, he at least goes back further than the New Deal.

Gutzman shows how the Constitutional Convention had three factions, rather than the usual two that are taught in civics classes: the monarchists (who were extreme nationalists), the nationalists (a.k.a. the Federalists), and the true federalists (a.k.a. the Anti-federalists). In Gutzman’s unorthodox account, the Anti-federalists actually won at the time of ratification. Despite remaining skepticism among many Anti-federalists, the states signed on to the Constitution only because they had been assured that it would respect federalism. Since that interpretation was an implicit condition of their ratification, Gutzman says that is the correct interpretation; the Constitution cannot be read to give the federal government any more power than the states agreed to.

Whatever the states may have understood, and however “correct” their interpretation may have been, the key people in all three branches of the national government soon showed that they did not consider themselves so constrained.

An early offender against federalism was not an FDR appointee, but Chief Justice John Marshall, who among other things defined the Constitution’s “Necessary and Proper” clause as allowing Congress to use any means “convenient” to exercising its power; he began the abuse of the Commerce Clause that today allows Congress to do almost anything it likes.

Whatever the states may have declared or understood in ratifying the Constitution, its language was highly susceptible to a nationalist interpretation like Marshall’s, as the Anti-federalists pointed out. Over the years, federal courts have gone much further in that direction, putting ever more power in the hands of the federal government and the courts in particular, as Gutzman documents well. Of course that’s what the Constitution’s authors—monarchists like Hamilton and nationalists like Madison—wanted in the first place.

How could things have ended otherwise?

Gutzman doesn’t say so, but these problems will be inherent in any constitution. A legal document will always be open to multiple interpretations (some more strained than others), and when the government gets to interpret its own rules, it will of course choose an interpretation that gives itself more power in the long run. Without the people’s eternal vigilance, the nationalists will prevail.

Gutzman thinks strong legislatures, especially at the state level, are preferable to our powerful federal judiciary because voters can at least hold legislators accountable to some extent. But the Congress’s actions, with and without judges’ help, and its high reelection rate show that this option is hardly more appealing than the status quo.

Gutzman admits in his final chapter that federal courts will not soon adopt his judicial philosophy, so the whole issue is rather academic. Nonetheless, he offers much more than the usual conservative clichés and provides a history of the Constitution’s creation and ratification that is worth knowing, if only to see how the Constitution’s creators pulled the wool over so many people’s eyes—and continue to do so today.

J. H. Huebert, an award-winning attorney, is an adjunct professor of law at Ohio Northern University College of Law, a former FEE intern, a former law clerk for a judge of the U.S. Court of Appeals, and an adjunct faculty member of the Ludwig von Mises Institute.

The Pearl Harbor Myth: Rethinking the Unthinkable

by George Victor

Potomac Books • 2007 • 365 pages • $27.50 hardcover; $18.95 paperback

Reviewed by Robert Higgs

Almost from the moment the Japanese bombs began falling on the U.S. fleet at Pearl Harbor, the prime question has been, “What did President Franklin D. Roosevelt and his subordinates know about the impending attack, and when did they know it?” A series of official investigations during and immediately after the war failed to silence the president’s critics or to satisfy those who were skeptical about the official explanations. Even now, the debate continues. George Victor’s Pearl Harbor Myth is the latest substantial contribution to this controversy.

Although Victor, a retired psychologist, might seem an unlikely candidate to make an important contribution, and presents no new evidence, he adeptly exploits the relevant official reports and historical literature. He expresses his account in clear, fact-filled prose, highlighting the inconsistencies in various testimonies.

He finds that the Roosevelt administration deliberately provoked the attack, knew it was coming, and did not attempt to stop it. Yet Victor describes himself as an admirer of Roosevelt and declares that “moral and legal judgments are outside the purpose here.” If the president and his lieutenants conspired to bring the United States into the war in Europe through the Pacific “back door,” he concludes, they did only what all governments sometimes do—conspire, blame scapegoats, and then cover up their conspiracies by destroying evidence, coercing witnesses, and lying—and they did it for an excellent reason, to save the world from conquest by Hitler.

The government conducted this Machiavellian maneuvering because the great majority of the populace opposed entry into the war unless the United States were attacked. Hence Roosevelt, who ardently desired (and worked relentlessly) to take the country into the war, needed to incite such an attack to unify the people in support of U.S. entry. “Establishing a record in which the enemy fired the first shot was a theme that ran through Roosevelt’s tactics.” Despite hostile but clandestine U.S. naval actions against German ships and submarines in the North Atlantic in 1941, the Germans refused to take the bait.

On the other side of the world, more than two years of U.S. economic warfare against Japan had placed the Japanese economy in a tightening stranglehold. War was almost inevitable, yet for Roosevelt’s political purposes it remained imperative “that Japan commit the first overt [military] act,” as a dispatch from Washington cautioned General Walter Short, the Army commander in Hawaii. Short and the Navy commander, Admiral Husband Kimmel, were set up as the fall guys to be blamed for lack of preparation when the U.S. forces at Pearl Harbor were caught “by surprise” in a “sneak attack”—such surprise and sneakiness being key elements of the enduring myth that Victor aims to explode.

As Secretary of War Henry L. Stimson wrote two weeks before the Japanese attack, “the question was how we should maneuver them into the position of firing the first shot without allowing too much danger to ourselves.” The attack “was expected to get Congress to declare war on Japan. The crucial needs were to save the Soviet Union [from a Japanese invasion] and have Japan attack in circumstances that would move Congress to declare war on Germany.”

Why didn’t the President instead make a frank, straightforward request that Congress declare war, explaining why he considered U.S. entry into the war to be desirable? Because he thought that approach would fail.

On December 2, 1941, Roosevelt “told a subordinate that he expected to be at war with Japan within a few days. On December 4 [Secretary of the Navy Frank] Knox told a subordinate the same [thing].” Yet Short and Kimmel were not alerted to the attack that high officials in Washington expected to occur shortly. Mid-level army and navy officers had urgently recommended that the commanders in Hawaii be warned, but their superiors had rejected those pleas.

After news of the attack reached Washington, Roosevelt convened his War Council. According to Harry Hopkins, “[T]he conference met in not too tense an atmosphere because . . . all of us believed that . . . the enemy was Hitler and that he could never be defeated without force of arms; that sooner or later we were bound to be in the war and that Japan had given us an opportunity.”

Although Victor’s apology for the Roosevelt administration’s aggressive, devious actions during the years preceding the attack on Pearl Harbor strikes me as highly problematical, I recommend The Pearl Harbor Myth as a thorough, clearly written, and generally even-handed account of the events that led to U.S. engagement in World War II. For the typical American, still clinging to the myth, the book will be a revelation.

Robert Higgs is Senior Fellow in Political Economy for the Independent Institute (www.independent.org), editor of The Independent Review, and author of Depression, War, and Cold War (Independent Institute/Oxford University Press).

Until Proven Innocent: Political Correctness and the Shameful Injustices of the Duke Lacrosse Rape Case

by Stuart Taylor Jr. and KC Johnson

Thomas Dunne Books • 2007 • 405 pages • $26.95

Reviewed by George C. Leef

In an infamous 1931 case, several black youths were arrested in Alabama and charged with raping two white women. Those young men—eventually called the Scottsboro Boys—could have been executed for the crime. Newspapers throughout the south wrote about the case as if the defendants’ innocence was inconceivable. It perfectly fit the reigning stereotypes—white women were virtuous and black men were vicious sexual predators.

As it turned out, the accusers had lied. The women were sure they could play on the prejudices of law-enforcement officials to cover up their own indiscretions, so they made up a story. Good work by dedicated defense attorneys ripped apart the prosecution’s case and the defendants were freed.

The Duke lacrosse case of 2006–07 mirrored the Scottsboro incident. A black woman, Crystal Mangum, hired as a stripper (almost always referred to in the media as an “exotic dancer”) at a party thrown by the captains of the Duke University lacrosse team, showed up so drunk that she passed out after just a few minutes. Later, to avoid possible legal consequences from her drunkenness—she had two young children—she told a nurse that she had been raped at the party. The nurse, eager to credit the story, said that some of Crystal’s injuries were consistent with rape.

After that, the case grew like a wildly malignant cancer. A police official with an animosity toward Duke students got his hooks into the case and drove it relentlessly, but never with any interest in finding out what actually occurred. Then the district attorney, Mike Nifong, a white man who desperately wanted to win favor with the predominantly black electorate in Durham, seized on the case as his salvation. He never bothered to investigate the accuser’s veracity—she told several different and inconsistent versions of the alleged crime—but instead took to calling her “my victim.” Flagrantly violating prosecutorial rules, he rushed to indict three Duke lacrosse players.

The media had a field day with the case. Story after story in papers ranging from the New York Times to the Durham Herald-Sun excoriated the accused players with ideologically tendentious pieces that presumed not just guilt but racism. Yet that was nothing compared to the academic left on campus—Duke’s and many others. To leftist professors, the case seemed to be the perfect validation of their worldview that America’s evils stem from oppression on the basis of race, gender, and class. Their speeches and articles seethed with righteous indignation over the alleged crime.

Until Proven Innocent is a thorough recounting of the case by veteran political columnist Stuart Taylor and Brooklyn College history professor KC (Robert) Johnson. In exasperating detail we learn about the shoddy police work and abuses of prosecutorial power by DA Nifong. By the time Taylor and Johnson reach the climax of the story—Nifong’s disbarment and removal from office—readers will yearn for condign justice to be meted out to the many villains of the piece.

Alas, there was no justice for the Duke officials who went along with the lynch mob, nor for the professors who eagerly pronounced guilt and demanded punishment of students who had committed no crime at all. The authors make it clear that in the minds of many of those academics, the concept of guilt has little to do with individual conduct. White male students from well-to-do families are necessarily complicit in the whole oppressive, exploitative class structure of America, so punishing some of them is good, whether or not they actually committed any crime.

One big lesson from the book is how poorly our justice system works. Police and prosecutors often have their own agendas and will obliterate the truth if it suits them. Perhaps the fact that the vicious Nifong has been disbarred and branded as a criminal himself for lying in court will cause prosecutors to think twice before trying to railroad defendants into prison just to make themselves look good. But maybe they’ll think it was just a fluke that he got caught.

The other big lesson is that many university professors who incessantly proclaim their dedication to “social justice” don’t care a whit about true justice. Even after the case unraveled as a hoax, many of them continued to defend their previous statements, claiming that “the narrative” about how dominant classes oppress the subservient classes must remain vital.

What the case demonstrates, however, is that injustice doesn’t fall along the lines of race, class, and gender. It falls along different lines—those who wield coercive power and those who don’t. Thus the book not only tells a crucial story, but also supports the libertarian critique of modern society.

George Leef is book review editor of The Freeman.

Dry Manhattan: Prohibition in New York City

by Michael A. Lerner

Harvard University Press • 2007 • 351 pages • $28.95

Reviewed by Robert Batemarco

Give the Prohibitionists this much credit: they didn’t just preach to the choir. They brought their battle to its most formidable opponent—New York City. Unfortunately, their cause was misguided, providing a textbook’s worth of examples of the law of unintended consequences. In his book Dry Manhattan, Michael Lerner (associate dean at Bard High School Early College in New York City) not only portrays the impact of Prohibition on the Big Apple in fascinating detail, but also offers key insights into the political process that both made Prohibition possible and led to its demise.

While people with some knowledge of history are aware that Prohibition created opportunities for corruption, filled the coffers of organized crime, undermined respect for the law, and made drinking more dangerous but no less common, Lerner offers specifics that lend greater immediacy to those things than mere statistics can. He writes, for instance, “[M]ore new pharmacies opened in New York between 1920 and 1923 than in the ten previous years combined, undoubtedly because pharmacies, which could legally dispense prescription whiskey, offered a perfect front for bootleggers.”

The part of the book I found most enlightening was the confluence of political factors that enabled Prohibition to pass. Lerner highlights the role of the Anti-Saloon League in assembling the coalition that obtained ratification of the Eighteenth Amendment. In doing so, he makes clear that much more was at stake than simply eradicating the social consequences of alcohol abuse. The Prohibitionist movement was driven by a nativist desire to remake urban and ethnic America in the image of the Anglo-Saxon heartland, combined with a Progressive penchant for social engineering. Saloons made an obvious target. The connection between saloons and corrupt politics had given them a bad name. For instance, in New York City, saloons played a central role in Tammany Hall’s graft and vote-buying and helped launch many political careers. However, in urban immigrant communities the saloon was much more, serving a multiplicity of social functions, including providing a bridge “between the old world and the new, places where newly arrived immigrants could learn from their predecessors and begin the often painful process of adapting to a new homeland.” (Many of those functions were soon to be usurped by the welfare state.)

But the factor that served as a tipping point ensuring ratification was America’s entry into World War I. In the shadow of wartime hysteria, Prohibitionists demonized brewers and distillers for their predominantly German ancestry, then played the patriotism card to muzzle dissent. As passage of alcohol prohibition started to assume an air of inevitability, owners of motion-picture theaters and producers of such putative liquor substitutes as tea, soft drinks, and ice cream opportunistically jumped on the bandwagon, hoping to get their share of dollars that had been spent on alcohol. A bit of deceit also helped put Prohibition over the top. It was never made clear that beer and wine were to be prohibited as well as hard liquor. Once Prohibition took effect, its selective enforcement against Jews, Catholics, and ethnic minorities furnished strong evidence that “the main objective of the dry lobby was to police the habits of the poor, the foreign-born, and the working class.”

Prohibition had its economic impact, too, and the author displays a better grasp of economics than most historians. He does not take at face value the allegations of either “wets” or “drys” that every increase or decrease in employment and inflation was the result of the Volstead Act, which implemented the Eighteenth Amendment. Rather, he sees through their fallacious reasoning and understands that other events, such as the Federal Reserve’s credit creation, had a much stronger impact on macroeconomic variables.

The book concludes with the repeal of Prohibition. The heroine of Lerner’s account in bringing about repeal is Pauline Sabin, a one-time Prohibition supporter who reached beyond her own upper-crust background to assemble a winning coalition for repeal. Lerner paints Franklin Roosevelt less heroically, showing how he waffled on this issue until the eve of his nomination.

In all, this is a well-written narrative of a disturbing episode in our history, filled with local color that makes it especially interesting to New Yorkers. Despite being clearly in the anti-Prohibition camp, Lerner covers both sides in a fair-minded way. Yet there is something bittersweet in his conclusion that “New Yorkers who opposed Prohibition rejected the idea that the state had a right to dictate the private conduct of its citizens.” These same New Yorkers would embrace the state’s “right” to control rents for apartments and prevent citizens from owning guns.

Robert Batemarco is a vice president of a marketing research firm in New York City.

 The standard account contains grains of truth. Undoubtedly, many Americans during the Progressive era possessed a fervent faith in democratic government and a burning desire to “uplift” the lot of humankind. The temperance movement meshed with the Progressive spirit: use government to engineer better social outcomes—in this case, enforced sobriety. And there is no doubt that Prohibition not only failed to stop Americans from drinking, but also fueled organized crime.

But this account is simplistic. It overlooks the realities and complexities of political behavior, as well as important facts. The ideology of temperance played a role in staging Prohibition, but the raw logic of politics was the true director of this drama.

The central character was federal taxation. Specifically, the income tax proved a viable alternative to liquor taxation for raising revenue, making Prohibition politically possible. Despite decades-long agitation for Prohibition, Congress could not afford to sacrifice liquor-tax revenues until it discovered just how lucrative the income tax could be. That tax’s revenue-raising prowess reduced the cost to Congress of voting for Prohibition. Fourteen years later, though, matters changed abruptly when the onset of the Great Depression severely slashed income-tax revenues.

Before the modern personal income tax in 1913, Uncle Sam relied mainly on customs duties and liquor taxation. From 1870 through 1912 receipts from these two taxes alone accounted for more than two-thirds of federal revenues (and in many years accounted for more than 75 percent). Liquor taxes trailed only customs duties as the largest single source of revenue during the half-century preceding the modern income tax, with liquor taxes accounting for about a third of federal revenues.

Then came the income tax (implemented first in 1914) and, on its heels, America’s entry into World War I. During the war federal revenues received through income taxation for the first time exceeded those from any other single source. Income taxes went from about 16 percent of the federal government’s revenues in 1916 to double that proportion in 1917. By 1918 the income tax supplied nearly two-thirds of those revenues.

Income-tax revenues accelerated most dramatically in 1918, but the income tax had already demonstrated its prodigious revenue potential the year before. Receipts in 1919 were almost triple those of 1916. More important, Congress passed in October 1917—two months before it successfully proposed the Prohibition-enabling Eighteenth Amendment—the legislation that would yield 1918′s enormous increase in income-tax receipts: the War Revenue Act of 1917. It raised more than $2.3 billion in 1918.

By fall of 1917 Congress saw the income tax as its chief source of revenue, reducing the cost of voting for Prohibition in December 1917. The lost liquor-tax revenues (beginning January 16, 1920) were trivial compared with the huge and rapidly growing revenues derived from the individual and corporate income taxes. The temperance movement’s decades-long quest was seemingly brought to a triumphant conclusion.

Yet Prohibition’s cost to Congress increased not long afterward, so the Eighteenth Amendment was repealed in 1933.

This conventional explanation for repeal—that Prohibition was widely defied—can’t explain why Congress ended Prohibition after such a short trial run, particularly in light of the dearth of organized support for repeal during the 1920s. It’s far more likely that Congress proposed the Twenty-First Amendment (to repeal the Eighteenth) in February 1933 not so much because it was a faithful agent of voters who recognized the futility of Prohibition, but because the politicians desperately wanted more revenue.

The Great Depression severely reduced individual and corporate incomes, and income-tax revenues correspondingly plunged beginning in 1931. By 1932 federal income-tax receipts fell by well over a third from their level in 1931 and to almost half their 1930 level. In 1933 fiscal matters got even worse, with income-tax receipts that year less than 40 percent of their 1930 level. The revenues in 1933 were the lowest since 1917. The income-tax stream that had swelled so promisingly during Woodrow Wilson’s second presidential term was running dry.

A Search for Taxes

So Congress searched for another taxable activity. This search led the framers of the 1932 Democratic party platform to call for repeal of the Eighteenth Amendment in order “to provide therefrom a proper and needed revenue.” Jouett Shouse, president of the Association Against the Prohibition Amendment and an influential figure in the Democratic Party, predicted that repeal of the Eighteenth Amendment would generate at least $1 billion in additional revenue. A prominent House leader in the fight for the Twenty-First Amendment admitted in 1934 that “if we [anti-Prohibitionists] had not had the opportunity of using that argument, that repeal meant needed revenue for our Government, we would not have had repeal for at least ten years.”

And sure enough, Prohibition’s repeal did indeed generate higher liquor-tax revenues. As a percentage of federal government revenues, liquor taxes jumped from 2 percent in 1933 to 9 percent in 1934 to 13 percent in 1936. Repeal did not fully compensate for lost income-tax revenues, nevertheless it promised a sizeable stream of additional revenue.

Congress had strong allies in this revenue-seeking cause. Among the interest groups that supported the Twenty-First Amendment was organized labor allied with wealthy industrialists (such as Pierre and Irénée du Pont). Labor leaders and the very wealthy hoped that higher liquor taxes would restrain or even reverse the expansion of income taxation.

The loss of revenues from the income tax made it less costly for Congress to satisfy these interest groups than just a few years earlier. Beginning in 1934 effective income-tax rates were cut for all taxpaying groups with net incomes of $20,000 ($300,000 in 2007 dollars) or less. Although the typical income earner paid no taxes on his income during the 1930s, a significant number of unionized workers took home incomes high enough to be liable for the tax. For example, the median unionized worker in the building trades earned more than $2,000 a year all during the 1930s (nearly $31,600 in 2007 dollars). Workers with annual incomes between $2,000 and $3,000 and a single exemption saw their effective income-tax rate fall from 2 percent in 1933 to 1.6 percent for the years 1934 through 1939.

On the whole, then, income-tax rates for persons owing federal income taxes fell for all but the very highest earners. So while the du Ponts and their peers failed to win lower income-tax rates for themselves as a consequence of Prohibition’s repeal, the great majority of Americans who paid federal income taxes (including large numbers of politically potent unionized workers) had their income-tax burdens eased.

It is no coincidence that Congress first acted to repeal the Eighteenth Amendment only after the severe revenue-reduction shock administered by the Great Depression. Openly collecting taxes on freely traded liquor without repealing the Eighteenth Amendment and the Volstead Act would have too blatantly flouted the Constitution. So they were repealed.

As the cliché goes, money is the mother’s milk of politics.

Trans fats will be banned in the city’s restaurants and undoubtedly before long in Chicago and other places because health authorities say they raise cholesterol and cause heart disease. 

Ironically, trans fats became popular in food preparation as people were being scared away from the saturated fats in butter and lard. I’m beginning to think the diet authorities, who unfortunately are close to government power, aren’t as sure about things as they claim. They told us (on the basis of evidence that has been questioned in many quarters) that saturated fats are bad for our health. So we turned to polyunsaturated and trans fats, only to be told later that they aren’t so great either. This sounds familiar. Oh yes. Heroin was developed to help people break their morphine habits. Then methadone had to be invented to break the heroin habit. Now I read that kids are using methadone for kicks. We’d probably prefer they consumed trans fats. 

I don’t know what, if anything, trans fats will do to you. I am not a physician or a nutritionist. Maybe they are as bad as the most vocal health “experts” say. But I want to point out two things before moving on to the political implications. First, there is some reason for skepticism about the indictment of saturated fat. (For details on the political inspiration for the war on fat, see Gary Taubes’s 2002 New York Times magazine article “What If It’s All Been a Big Fat Lie?”) And second, former Cato analyst Radley Balko points out that as consumption of trans fats has increased over the last two decades, heart disease has decreased and life-expectancy has lengthened. (See his article “Stop Doing What I Said,” July 27, 2006, at the Cato Institute website.) What are we to make of that? 

Whatever the truth is, this is shouldn’t be a political issue. People are perfectly capable of keeping up with the latest dizzying news on what’s good for you and what’s not without the government banning things. Earlier generations of Americans would have been appalled by New York City ‘s action. But now many people think nothing of demanding prohibition of anything they dislike. And most of the others accept it. 

It’s as though the process of prohibition meant nothing. But it means a great deal. Let’s assume we won’t miss trans fats and that healthy substitutes will be easily found and cheap to use. So what? Prohibition is objectionable in itself. If government has the power to ban trans fats in the name of health (an example of what Thomas Szasz calls the Therapeutic State ), it will necessarily have the power to prohibit—or, yes, require—other things in the name of health. Power won’t be contained, and sooner or later it will wash over something the trans-fat opponents like. 

Why is government looking after our health? To keep the price of medical care down, perhaps. But that’s only a concern of government because it pays for a lot of medical care (using our money of course). And many people want it (that is, the taxpayers) to pay for it all. When government first intervened in medical matters, we were assured it would not interfere with our lives. Many people believed that story. Now we know better. With the government’s medical budgets running wild and its programs facing bankruptcy, control of our decisions has become a matter of fiscal conservatism. The scary thing is that people seem willing to give up freedom to preserve and extend the subsidies. The choice is between government responsibility for medical services or freedom to make decisions. In the long run we can’t have both. 

We have to drop the idea that if government doesn’t protect us from things like trans fats, we are defenseless. Have you read a food label lately? Virtually every product boasts it has no trans fats. Private activities are educating the public (assuming the science is right), and profit-seeking food companies are responding. A margarine, Smart Balance, has been touting its trans-fat-free ingredients for years. Restaurants would do the same. In the meantime, concerned customers can ask questions or avoid situations of uncertainty. 

Yes, that means some inconvenience. But it’ll be a lot less inconvenient than the impositions of the Therapeutic State .

* * * 

If global warming is manmade and a matter of concern, what should be done about it? Max Borders has an answer to the easier question: What shouldn’t be done? 

It’s been over eight years since Julian Simon died. For those who don’t know his work—and for those who do—Paul Cleveland and Erin Hagert contribute an appreciation. 

The evolution of property rights on the North American continent didn’t have to happen. A fortunate confluence of many elements made it possible, as Andrew Morriss explains. 

As hard as it is to believe, government-to-government aid is still the establishment’s preferred strategy for lifting Africa out of poverty. Joshua Hall and Matthew Hisrich show why this is so wrong-headed. 

Most people believe that patents and copyrights are essential to encourage innovation. But this assumption runs up against a modern phenomenon: open-source software. Michele Boldrin and David Levine show how it works. 

The Federal Reserve System was supposed to create monetary stability. So why did it bring so much economic turmoil to the twentieth century? Kirby Cundiff has an idea. 

A substantial effort has been invested of late in arguing that the presidency is full of heretofore unknown unenumerated, implied, and inherent powers. Joseph Stromberg consults some early strict constructionists on the Unitary Executive Theory. 

From our columnists, the following: Richard Ebeling compares the euro to competitive currencies. Donald Boudreaux describes the reach of the Federal Reserve. Stephen Davies reminds us of some overlooked dates in history. David Henderson, who joins our roster of columnists this issue, wonders if government can provide security. And George Leef, reading that we need more college graduates, replies, “It Just Ain’t So!” 

Books coming under review examine three kinds of fascism, neighborhood power, economic common sense, and Stalin.