Russell Roberts discusses the perverse incentives that motivate politicians.

This wiggle room for politicians in a democracy leads to some strange outcomes. It allows politicians to do the right thing and the wrong thing at the same time. How is that possible? We shall see below. Even stranger, the imperfect information available to voters can even allow politicians to do the wrong thing and pass it off as the right thing if we're not paying close enough attention.

Bruce Yandle uses bootleggers and Baptists to explain what happens when a good cause collides with special interests.

When the city council bans liquor sales on Sundays, the Baptists rejoice--it's wrong to drink on the Lord's day. The bootleggers, rejoice, too. It increases the demand for their services.

The Baptists give the politicians cover for doing what the bootleggers want. No politicians says we should ban liquor sales on Sunday in order to enrich the bootleggers who support his campaign. The politician holds up one hand to heaven and talk about his devotion to morality. With the other hand, he collects campaign contributions (or bribes) from the bootleggers.

Yandle points out that virtually every well-intentioned regulation has a bunch of bootleggers along for the ride--special interests who profit from the idealism of the activists and altruists.

If that's all there was to Yandle's theory, you'd say that politics makes for strange bedfellows. But it's actually much more depressing than that. What often happens is that the public asks for regulation but inevitably doesn't pay much attention to how that regulation gets structured. Why would we? We have lives to lead. We're simply too busy. Not so with the bootleggers. They have an enormous stake in the way the legislation is structured. The devil is in the details. And a lot of the time, politicians give bootleggers the details that serve the bootleggers rather than the public interest.

And it is not like it is a new thing. The directors of an opium trading company had this to say about the Opium Wars in China:

"If the trade is ever legalized, it will cease to be profitable from that time. The more difficulties that attend it, the better for you and us." -- Directors of Jardine-Matheson

"The Latin American drug cartels have stretched their tentacles much deeper into our lives than most people believe. It's possible they are calling the shots at all levels of government." - William Colby, former CIA Director, 1995

Well it is for the children. Of the drug kingpins. For the American children illegal drugs are easier to obtain than beer. The bootleggers are very fortunate to have a whole large government agency devoted to maintaining their profits. The DEA. Not to mention every police force in America. So let me see here. Drug cartel cash flows in America track expenditures on the drug war. Approximate numbers are: $50 billion spent on enforcement (Federal, State, and local). Giving the agents of enforcement a powerful incentive to "save the children." And the cartels? They too reap very roughly $50 billion a year from enforcement. How else can the value of a pile of vegetables be escalated to be worth its weight in gold?

So you have very powerful constituencies who depend for their funds on the strong enforcement of the prohibition laws. For the children. Which is why it is very hard to put an end to this stupidity which takes $100 billion a year (or more) out of the American economy.

Don't believe me? Here is what the prospect of pot legalization is doing to the market in California.

For decades, illegal marijuana cultivation has been an economic lifeblood for three counties in northern California known as the Emerald Triangle.

The war on drugs and frequent raids by federal drug agents have helped support the local economy -- keeping prices for street sales of pot high and keeping profits rich.

But high times are changing. Legal pot, under the guise of the California's medical marijuana laws, has spurred a rush of new competition. As a result, the wholesale price of pot grown in these areas is plunging.

Mar 24, 2010 10:20pm EDT

You have GOT to be joking! That's exactly what we need in California: Drug cartels bringing their violence even further into the state to protect their illegal drug trafficking under that guise that it is now 'legal.'

Hey, if you think the cartels will sit still for losing even a penny of their revenues, I've got some beachfront property in Oaklahoma I'd like to sell you.I'm sorry, but I will not have California become "North Mexico" and allow us to be subject to the violence they have just across our border. I will fight this with every donation I can to organizations that are working to stop this from becoming legal, and to organizations that will challenge its legality should it pass. I really will not stand for this.

Oh, just to let you know, my brother died last year because of years of drug and alcohol abuse that started with pot when he was young. I won't allow anyone to go through what he went throught and what we all went through with him, not without a fight.

Well Jeff, this post is for you. RIP. I will not rest until this stupidity ends.

Some books on the Opium Wars.

H/T Jccarlton Talk Polywell

Cross Posted at Power and Control