Alcohol prohibition was repealed in America in 1933, during tough economic times. Today, with our economy in shambles yet again, the discussion around drug policy reform seems to be gaining traction. Michael A. Lerner is the author of the terrific book Dry Manhattan: Prohibition in New York City. I asked him a couple questions intended to put the contemporary debate in some historical — and economic — context.
DLB: In Dry Manhattan, you write about the stock market crash of 1929 and say “if social conditions had already given New Yorkers sufficient reasons to call for reform, economic conditions now made the case for repeal even more compelling.” Was an economic argument about repeal made explicitly by advocates, or was it just a factor in the background of the debate?
Lerner: There were many repe al advocates who made the case explicitly after the 1929 crash that legalizing alcohol, and beer especially, would provide an important boost to the economy. The AFL argued that a return to beer production would yield 2 million jobs. The brewer August Busch (Anheuser-Busch) estimated repeal would generate $400 million in federal tax revenue. In addition, the economic crisis had many Americans questioning whether the cost of Prohibition enforcement, which was about $50 million a year, and the costs associated with Prohibition-related crime, which were hard to estimate but huge, were worth the expense in the midst of such hard times. So I would say economic concerns became a very central part of the debate over Prohibition in its final years.
DLB: As you know, a California lawmaker has proposed legalizing and taxing marijuana to generate tax revenue to deal with California’s severe revenue shortage. Does the example of the campaign for repeal suggest anything about whether the economic argument is likely to be successful in that context?
Lerner: From all the press generated by the California marijuana proposal (and there are several other states as well looking at both marijuana taxes and changes in alcohol regulation as ways to generate state revenue), it certainly appears that the current economic crisis has people thinking about marijuana and alcohol regulation in a new light. But I’m skeptical that the economic argument alone is going to change the situation. In the prohibition era, the economic argument definitely helped boost the growing movement for repeal. It helped being more people into the repeal camp, but it wasn’t the economic argument alone that ended Prohibition.
DLB: Alcohol prohibition and the contemporary “war on drugs” both have/had a very overt moral component, and yet pressure for policy change seems to have come about in each case in part because of fiscal concerns. Do you have any thoughts about why the economic argument seems to resonate with people, when arguments strictly about the merits of the policy are sometimes less convincing?
Lerner: I’ve always found it interesting that when economic times are good, Americans can get much more fixated on moral causes, but that when economic times are bad, attention rapidly shifts away from moral reform and back to “bread and butter” issues. So it is no surprise to me that now we’re seeing new calls for marijuana legalization based on economic arguments. For the time being, those arguments are going to resonate strongly with people who are worried about their jobs and homes and taxes. What taxpayer wants to see teachers laid off when you see there is a revenue source that is going untapped?