Prohibition and the Authoritarian State

I recently encountered a reference to the film “Collapse”, and spent part of my afternoon today viewing it.  Essentially a long, wide-ranging interview with a fellow by the name of Michael Ruppert, the movie covers Ruppert’s view of the interconnected nature of peak oil, the financial crisis, and the series of wars that’ve been fought over the last twenty years.  Some of it I found riveting, some I disagree with, and I’ll be mentally chewing on the remainder for quite a while; it’s definitely worth a watch.

Though not the focus of the film, one thing I found particularly fascinating was the beginning of Ruppert’s career as a dissident.  An LAPD narcotics officer in the late 1970s who’d graduated from the top of his class at the Police Academy, Ruppert, while on the verge of a promotion, was forced off the force after he was invited to help sell drugs for the CIA.  He blew the whistle and, it seems, was at the center of a rather intense scandal.  I’ve heard of the government selling drugs before, but I’d never really looked into it very closely.  After encountering Ruppert’s narrative, however, I came to reflect upon the role of drug trafficking and prohibition for a police state.

It is exceedingly rare for an authoritarian government to be totally up front as to its oppressive nature; with the possible exception of North Korea, virtually all repressive regimes hide behind a veneer (however thin) of popular support expressed through the political process in addition to an affirmation of “rights” and the “rule of law”.  Even archetypal authoritarian regime of Nazi Germany had courts and a seemingly predictable set of laws.  That the Gestapo and SS could violate those laws with impunity was not flaunted, and there were even certain moments when, after being publicly confronted by outraged citizens, those organizations backed down in order to preserve the regime’s respectability.

In a political system with at least some real independent oversight and scrutiny, it’s harder for the extra-legal organizations which define an authoritarian regime to operate without destroying the public perception of “government by the people, for the people.”  This problem can be circumvented through such devices as the “$800 hammer” in defense appropriation bills; the excess money can be used without a paper trail for illegal purposes.  However, determined bill readers tend to notice such things, and awkward questions have a tendency to be asked.  This is where the usefulness of government-created black-markets come in.

During the civil war which rent Nicaragua in the 1980s, a large faction of the U.S. government wanted to support the rebel group known as the “Contras”.  After the Contras committed numerous atrocities (including the murder of four American nuns), the people’s representatives in Congress passed a law barring the government from furnishing them any more aid.  However, this faction within the government viewed Congress as an annoying obstacle to their goals rather than the supreme law-makers of the land, and proceeded to implement numerous schemes by which they could violate the law without Congress noticing.  The most famous example was the Iran-Contra affair, for which Oliver North went to prison; however, there is also strong evidence that the CIA rendered assistance to the Contras’ drug smuggling operations (the profits of which went to buying the Contras weapons).

Such a scheme is only possible under a regime of drug prohibition; essentially, by prohibiting drugs, the government creates an enormous risk-premium in drug prices.  For private drug merchants, this price reflects the cost of doing business (including legal costs, private property-rights enforcement, etc.) plus a small profit.  For government-based drug-dealers, on the other hand, those risks don’t exist, and they can pocket the *entire* risk premium as profit.  Such profits, needless to say, are not reflected in departmental budgets, and can thus be spent on projects without worrying about the pesky interference of Congress or the concerned public.

By this mechanism, a government can appear to be entirely open (and thus retain its legitimacy as a “free” system) while authoritarian mechanisms operate freely within its structure, violating the law when necessary due to the fact that they don’t require the approval of the peoples’ representatives for funding.  As such, drug prohibition is not merely stupid and costly (economically and socially), but it is also deeply dangerous to liberty.  As long as the government creates black markets, criminal groups (both within and outside of its ranks) will exploit them to the detriment of the rest of society; in a free market, however, the criminals will starve as commodity prices move to reflect their true value and the government will *require* the approval of the peoples’ representatives before it takes any actions.  Tyranny breeds in the shadows; let’s end this insane “War on Drugs” and shine a light into the darkness created by a century of Prohibition.