Wednesday, February 14, 2007

Pakistani paper critiques prohibition

I was fascinated to see an article titled CONTROVERSY the economics of alcohol prohibition in the Pakistani paper, the Daily Times. Apparently the issue has been discussed recently in the Pakistani parliament.

The article is by an economist called Nadeem Ul Haque who describes how :

'Economic theory argues that curtailing an economic activity for which there is demand will lead to ‘underground’ sources of supply for that demand. But driving economic activity underground has consequences; among other things, it allows criminals to collect large rents who engender corruption and criminalize the society. The government not only loses revenue because of prohibition, it also diverts resources from other more productive activities to deal with the crime that has resulted from the prohibition. The prohibition also means that government loses control of the prohibited market and cannot tax it or set standards for it. Most importantly, economic theory suggests that prohibition will fail in its intended objectives.

Research has vindicated the economic theory to show that prohibition in the US failed on all counts.'

He then describes that failure before concluding:

'Subsequent serious research has informed us of the true costs and benefits of prohibition. Based on this research Nobel Laureate Milton Friedman even argued for the legalisation of all drugs. Perhaps we in Pakistan too should be informed by serious research!'

It is perhaps not suprising that in a country with strict Islamic laws and moral codes (as well as a huge and mostly unreported heroin problem), it takes an economist to broach an issue such as this. Economists tend to have a more cost/benefit-anlaysis led pragmatism that allows a more rational and objective analysis, one rarely seen in the polarised and invariably futile moral and ideological debate that dominates the discourse when it is left to politicians and religious leaders.

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