FREE TRADE - THE MARKET FOR PROHIBITION

We know the supply and demand of goods affects what we do in the market
place. How does supply and demand affect morality. What are the
interactions?

The market in prohibited substances is one of the clearest examples of free
market unfettered capitalism that can be found any where on the planet. It
is the essence of supply and demand in the face of numerous hostile forces.
These hostile forces help illuminate the nature of market economics, and how
the desire to impose morality on the market affects it.

Let us start at the beginning. The beginning is demand. People want. And
they are willing to make a certain effort to get what they want. Ever since
we mostly left the barter system we measure wants in dollars or some other
medium of exchange. So we have demand.

What limits demand? The amount of effort required to satisfy demand. We buy
beans by the pound but not diamonds. Why? Because diamonds cost way more,
they take more effort to acquire. Their supply is more limited. So we can
say as a general rule that as price goes up demand goes down. So we have
demand. From demand comes supply. I know where to get beans for sixty cents
a pound and I can sell them for a dollar. After all the expenses are
accounted for I will have a few beans left over for myself. Sell enough
pounds of beans and I will soon be eating more than beans. What limits
supply? If the price of beans goes below my cost of supply I'm not going to
be buying any more beans. In fact if the price of beans goes below my cost
to deliver them to the customer I'm certainly going to reduce my bean buys.
On the other hand if customers are willing to pay more for beans I'm going
to order more. Until supply comes in balance with demand. With beans, since
an order to grow more takes about six months to execute, there will be peaks
and valleys in the cost because of the delay factor. Because of delays
prices will fluctuate. This is one of the things that makes the gasoline
market so volatile. It takes three to six months for supply to respond to
demand. The oil must be pumped. It must be shipped. It must be refined. It
must be shipped. It must be sold. This all takes time. It is not a gasoline
company rip off. It just feels like it. It is supply and demand meeting at a
price.

So by the magic of the market where people can exchange information on
supply, demand, and prices, supply comes into balance with demand. With the
price always fluctuating in order to keep supply and demand in balance.

How does this apply to dope? Government policy in this area is to unbalance
the supply and demand factors in order to disrupt the market. How does this
work? The government goes looking for "contraband". Sometimes it can find
it. Government claims it finds ten percent. I claim it is closer to one
percent. In any case this risk factor means I can't be sure any particular
shipment will get through. But I have customers. Profitable customers. So
what do I have to do? Until I can be assured of a steady flow I have to ship
more than initial demand would account for. These extra shipments will be
accounted for in the price I can charge. A risk premium.

The risk premium brings extra supplies on the market. A lot of extra
supplies. This means I have to have more customers. I have to PUSH the dope.
If I don't push the dope my market collapses. After all these are
agricultural commodities we are talking about, vegetable matter or refined
vegetable material. Eventually the distribution channels get efficient the
bribes regularized and prices drop. Always. Supply and demand balance at a
price.

Repeat again - Supply and demand balance at a price. No government any where
ever has been able to beat this law of human nature for very long. In fact
if you say that life and death balance at a certain rate of energy flow you
have the essence of biological relations. If cats can't deploy the energy to
run fast enough there will be more rabbits. If the rabbits get too slow
there will be more cats. For a while. Until it all comes back into balance.

Just so with the market for prohibited substances. Government can disrupt
the markets for a time. But they always come back into balance. Which is why
fighting drugs spreads them. This is how markets destroyed the Soviet Union.
Markets can be understood. They can be to a certain extent regulated.
Information can be gathered and disseminated. Good suppliers can be
separated from the bad. But the one thing you cannot do is to prevent supply
and demand from meeting at a price. I put this misunderstanding down to the
lack of economics training in school. If more people understood economics
fewer would fall for the illusion of prohibition.

This weeks saying:

What is the difference between a pile of vegetables and a million dollars?
Prohibition.

Ask a politician:

Do you support drug prohibition because it finances criminals at home or
because it finances terrorists abroad?

This week's politician:

Senator Mitch McConnell (KY) Voice 202-224-2541 FAX 202-224-2499
senator@mcconnell.senate.gov

M. Simon is an industrial controls designer and independent political
activist.