The problem with Prohibition
Indonesia’s United Development Party (the country’s oldest Islamic party) is seeking an effective ban on the sale, production and consumption of alcohol in the Muslim-majority nation. The proposed legislation imposing the ban is among 70 priority bills scheduled for consideration in 2013. The party intention is to bring the nation “in line with religious guidelines” as well as address the negative health impact of excessive alcohol consumption. In Indonesia as a whole, only 2.7% of adults drink alcohol but this rises to over 40% in Bali. However, Indonesia has one of the lowest rates of per capita alcohol consumption in the OECD.
Indonesia already strictly regulates alcohol sales, and some people question whether further legislation is necessary.
The intentions of the legislators seem noble enough. But what really happens to alcohol consumption when alcohol is made illegal? The experiences of America during Prohibition might give some insight.
Alcohol was illegal in the United States from 1919 to 1933. However not only were the unintended consequences of the ban largely negative, people demonstrated extraordinary ingenuity in finding ways around it.
Many thousands of jobs were lost when liquor manufacturers and distributors were closed and Prohibition had a devastating impact on tax revenue. It is estimated by PBS that Prohibition cost the federal government a total of $11 billion in lost revenue, while costing over $300 million to enforce.
The illegal trade in alcohol led to a rise in criminal and corrupt behaviour, with bribery and corruption becoming institutionalised. The complexity of the bootlegging trade encouraged the rise of organised crime and contributed to the establishment of the Mafia. In states and counties of the US where alcohol is illegal or strictly regulated, bootlegging continues. In India alcohol is thought to generate roughly US$5 billion in ‘black money’ in the form of bribes, protection payments and profits from illicit alcohol.
Despite the illegality of alcohol, Prohibition did not in the end, have much of an impact on alcohol consumption. Though consumption fell sharply at the beginning of Prohibition, it soon returned to around 60-70% of the pre-Prohibition level. Legal deterrents seemed to have had little effect on consumption other than their effect on price. In India, for example, prohibition has had little impact on the consumption of home brew, and less impact in rural than in urban areas. Two-thirds of the alcohol consumed in India is from illegal sources. Even in countries that are nominally dry, such as Saudi Arabia, people still find ways to obtain alcohol, either through making it themselves, or smuggling.
In fact, restricting access to legal alcohol seems to stimulate the production of illegal or locally brewed alcohol. An estimated 50% of global total alcohol consumption is from ‘local alcohol’.
In the Prohibition era in America, the ban on regulated alcohol led to the rise of the home brewer and the bootlegger. According to the Encyclopaedia Britannica for example, American industries were still permitted to use denatured alcohol. Millions of gallons of this were illegally diverted, “washed” of noxious chemicals, mixed with tap water and sold by bootleggers. Bootleggers and moonshiners also manufactured their own liquor, using whatever materials were available.
Unfortunately, poor quality control can make home brew deadly. PBS estimates that on average, 1,000 Americans died every year during Prohibition from the effects of drinking tainted liquor.
Contemporary cases of methanol and other poisoning have been reported, for example, from the Czech Republic, Britain, Laos, and Ecuador. This should be especially worrying to Indonesia, given their recent spate of deaths and illnesses arising from methanol-tainted drinks.
Prohibiting alcohol production, sale and consumption may well be an extreme and somewhat ineffective way for the United Development Party to achieve its goal. According to the OECD 2012 Factbook for example, curbs on advertising, sales restrictions and taxation have all proven to be effective measures to reduce alcohol consumption. Prohibition, not so much.