Prohibition – Economist Writing Every Day

Why does the average drinker consume alcohol? There are plenty of reasons, one of which is social. Alcohol, while inhibiting clarity, precision, and discretion, is a social lubricant. If you’re one of those drinking, then it’s enjoyable to be around other drinkers. Also, people build the habit of drinking *something* while socializing. We all know that prohibition resulted in bootlegging and tainted cocktails. But what were the legal alternatives? One was that you could purchase grape juice and make your own wine (that’s a story for another time). Another is to switch to another drug.

Alcohol is a depressant and arguably the most popular one in the US. It’s not a clear substitute for alcohol in terms of its direct effects on the body. However, it’s a liquid, safe, and tasty. That make is a good candidate for satisfying the physical urge to imbibe. But, importantly, it is also a social drug. People would get so hopped up on coffee and feed off of one another’s high that Charles the II of England banned coffee houses in order to prevent seditious fomentation. This brings us to an important characteristic of coffee. It’s a stimulant. You’d think that a stimulant would not be a substitute for alcohol. If anything, one might think that they are complements. Coffee helps to provide that kick in the pants after having an enjoyable night. But, the social feature makes coffee a good candidate to substitute alcohol, should the times be dire.

Illegal activity aside, people wanted an outlet for their physical and social proclivities. They wanted intoxication. Coffee provided exactly that. Conveniently, the continental US didn’t grow any of its own coffee. That means that imports and domestic consumption have a tight relationship.

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English philosopher G.K. Chesterton traveled to America for a lecture tour. His observations are recorded in What I Saw in America (1922).

The book is not primarily about Prohibition nor is it mostly critical of America. He wrote one of his essays on Prohibition, which begins as follows:

This was 100 years ago, so start with this summary of the facts from Britannica:

Prohibition, legal prevention of the manufacture, sale, and transportation of alcoholic beverages in the United States from 1920 to 1933 under the terms of the Eighteenth Amendment. Although the temperance movement, which was widely supported, had succeeded in bringing about this legislation, millions of Americans were willing to drink liquor (distilled spirits) illegally…

Chesterton clearly is not a teetotaler, and I will not argue for or against temperance here. What was counterproductive about Prohibition is that elites passed a law that they would not abide by themselves.

Consider the decision by an individual to drink or not drink. For many people, drinking is social. If your friends are meeting at a bar, then you will drink at the bar to be with them. If your friends are going hiking with water bottles, then many people can pass the day without alcohol happily. We can model a game called Meeting Friends that has multiple equilibria.

Borrowing from Myerson (2009):

In such games, Schelling argued, anything in a game’s environment or history that focuses the players’ attention on one equilibrium may lead them to expect it, and so rationally to play it. This focal-point effect opens the door for cultural and environmental factors to influence rational behavior.

There was an opportunity for American elites to move social life to a new focal point after the 18th Amendment was passed. They could have led by example. Laws that do not follow norms cause problems, such as a large prison population arrested for drug offenses today. In 2021, I wrote about why attempts at drug prohibition helped the Taliban defeat the US coalition in Afghanistan.

Here’s my tweet thread last week about Chesterton and the American work ethic.

Myerson, R. B. (2009). Learning from Schelling’s strategy of conflict. Journal of Economic Literature, 47(4), 1109-25.