Prohibition Caused the Greatness of Gatsby

0:00Well, perhaps you've recently seen the movie The Great Gatsby. Basically, the storyline follows the life and times of mysterious millionaire Jay Gatsby and his friend Nick Carraway. Written by F. Scott Fitzgerald in 1925, the novel remains a classic and has often been viewed as an expose on the American dream. My guest, Dr. Mark Thornton, an American economist and senior fellow at the Ludwig von Mises Institute, rejoins me tonight to discuss how prohibition caused the greatness of Gatsby. Mark wrote his dissertation on the economics of prohibition and understands the value found in the great Gatsby.

0:45Mark is an economics professor at Auburn University and again he is a senior fellow at the Ludwig von Mises Institute. In addition, he is also the book review editor of the quarterly journal of Austrian Economics and served as the editor of the Austrian Economics newsletter and as a member of the editorial board of the Journal of Libertarian Studies. If you would like more information about Dr. Mark Thornton, please visit mises.org, and that's M-I-S-E-S dot org. Welcome back to America Now, Mark. Good evening, Barb. It's great to be with you. I love your program. Thank you for having me back on. Well, thank you so much for rejoining me tonight, Mark. Mark the Great Gatsby, you recently wrote an article on how prohibition caused the greatness of Gatsby. What do you mean by that?

1:37Well, you know, I was supposed to have read the book in school, but I really did not like it at all. I mean, it's a story of licentiousness and promiscuity, and it's really hard to get through. And a friend of mine wanted to go see the movie, and I heard the critics had really panned the movie, but I went to the movie anyways, and it's a really good movie, but You can only really understand the whole thing if you realize that the whole thing is driven by the alcohol prohibition that the government imposed during the 1920s. It set the stage for the whole plot.

2:22So the alcohol drove this whole culture basically back then, or I should say the secretive world of Having to Go Underground, which caused a black market, right? Oh, that's right. You know, it's a very fast-paced movie. You know, there's giant parties and fireworks going off and people are drinking and, you know, partying and it's just way over the top. But you have to realize that alcohol prohibition was going on. There was a huge black market economy in the United States at the time. There was organized crime and smuggling and moonshiners and speakeasies and all this was going on and that's what's really behind the whole plot is that this, the great Gatsby, Jay Gatsby, who came from a dirt poor family and came up from nothing but somehow found

3:57is that he actually starts pharmacies that sell legal alcohol by prescription. So this was a part of the prohibition that there was this loophole that doctors could write prescriptions for whiskey. And so pharmacies became a big business because doctors were making money writing prescriptions and pharmacies were making money selling this legal alcohol which was the pure, you know, market-based alcohol and they were also diverting some of this good tasting pure whiskey into the illegal markets where it was incredibly popular because everybody else was consuming bathtub gin which was highly potent and impure and tasted bad, smelled bad and so, you know, Dr. Hicksby was making lots of money and this is a reflection of the real world.

4:58The Walgreens drugstore chain in 1920 had 20 pharmacies. By 1930 they had 500 pharmacies and there's no doubt that the fact that you could sell medicinal alcohol was a big part of that. Yeah, and it sounds familiar to something going on here in America now, Mark. The parallel between what's going on between marijuana. You can get medical marijuana licenses in many states, which was the precursor to what happened here in Colorado. People were able to get the medical license, but eventually Colorado and Washington State now have finally legalized and are now in the process of trying to figure out how to regulate this. So I think we don't end up in that situation. How do you see that?

5:50I think you're absolutely right, Barb. There's two things going on here. One is that if you create the loophole, people will use the loophole to avoid the prohibition. You had the medical alcohol for alcoholics and a lot of other reasons. It was a legitimate use in medicine at the time and still is. With marijuana, there's legitimate uses, medical uses for for Marijuana and but it gets diverted into non-medical uses but one of the things is people see that well there's really nothing really terrible about that, that even with the diversion of alcohol and marijuana into non-medical uses it's not the end of the world, it's not the cause of the social problems that we imposed those prohibitions in the In the first place, we imposed the alcohol prohibition because we thought we could solve all of these social problems of family problems, of crime, of corruption, of spousal abuse, diverted democracy, and so forth, and it just made all those things much worse.

7:11What people are finding is that in these states with medical marijuana laws is that, well, Well, it's helping patients, and some of it's getting diverted into non-medical uses, but it's not the end of the world. It's not causing social problems. It's actually calming some of those problems down, and of course, you know, with marijuana it's a much less violent drug than alcohol, that's for sure. And basically, too, the Great Gatsby pretty much exemplified the evils of prohibition. All right, we'll continue this discussion about the greatness of Gatsby with Dr. Mark Thornton here on American Hound after the break. My guest this evening is Dr. Mark Thornton and we are talking about the economics of prohibition.

8:00And Mark, you know, we were talking about before how the great Gatsby does really exemplify the evils of prohibition. but it wasn't really that it was so much that that happened but prohibition was forced because of the 18th amendment that we actually ratified an amendment that created prohibition and even though the alcohol was illegal it wasn't eliminated you know all of this forced this black market to just go ahead and What's happening in America now that you can kind of relate to what happened then back in the 20s? Well you know government prohibitions never work. They never actually eliminate what they're intended to eliminate.

8:50They only make it much worse. They only make the product that is prohibited, for example with alcohol, marijuana and other drugs, Drugs, they make those products more potent and more impure. And the example I like to give here in Auburn, Alabama, where we have Auburn University and the Auburn University football team and 100,000 fans coming in in the fall for home football games and tailgating, is that if you walked around you would see many of those fans drinking beer outside of the stadium. But inside the stadium, alcohol is illegal, but many of the fans want to continue to drink alcohol and you never see any one of them bring a beer into the stadium.

9:40What they bring in is the highly potent, double-proof rums and brandies and whiskeys, Meyers 151 rum and that sort of thing. And so that's a perfect example of what happened during Prohibition and it's a perfect example of what's going on around the United States. You make marijuana illegal and what happens, the potency has increased tremendously and now the potency of marijuana today is 1000% higher than it was in the 1970s. And it's worse than that because, you know, marijuana users are discouraged by the high prices of marijuana and so they went to cocaine and then they make cocaine expensive.

10:33And so they've gone to even more dangerous drugs like heroin, methamphetamines, hallucinogenics, which are all smaller, more potent, easier to hide, easier to transport. You can carry, you know, a million doses of some of these hallucinogenic drugs in the same container that you would transport one pound of marijuana. And so the smugglers and the producers are encouraged every time we make it tougher, every time we hire more law enforcement agents, every time we raise the penalties, we encourage the high potency, dangerous, even deadly products. And nowadays, of course, because these illegal drugs are so potent and so dangerous and so deadly, Americans have switched to some of these synthetic prescription-grade opiates, OxyContin, for example, thinking that, well, if I get caught with this, the penalty won't Drugs are just as deadly as the street drugs. We've seen the numbers of people dying from Oxycontin and related drugs such as that rising to more than 10,000 people per year. That's The Theory of Money and Credit

12:33from things like marijuana, which is, you know, it's essentially harmless and has many benefits, you know, as long as you're not using machinery and things like that, you know, compared to some of these other drugs which are very dangerous, very destructive, and very destructive. And so government is, you know, it's gone down this path of trying to reform society and what it's done is It's created chaos in American, in American schools, on the American streets, in the urban areas. It's gutted, you know, our urban areas with all the crime that's associated with all this, with all the violence that's associated with all this. The murder rate in the United States is probably 100% higher than what it ought to be. I mean, in the sense of being The drug war creates a lot of violence, it involves a lot of guns, and a lot of innocent people are being killed every day as a result of all this.

13:39You mentioned the guns, Mark, because back in the 20s, property rights were pretty much determined by machine guns back there. Organized crime came on strong, and what you're talking about, that's exactly what's happening again right here on the streets of America. Absolutely. The murder rate in the United States before alcohol prohibition was 5 murders per 100,000 population. During alcohol prohibition, that rate of murders jumped 100% to 10 murders per year per 100,000 population. And when we repealed prohibition in 1933 and FDR became In the most popular president ever, the murder rate fell right back down to five murders per 100,000 population per year.

14:30So it's clear. I mean, it's unmistakable, it's undeniable that prohibition doubled the murder rate in the United States during that period. And it's done the same thing here in the United States in the last couple of decades. Crime has decreased in the United States as a result of the concealed carry permit laws, but our murder rates and our violent crime rates are still very high, and the murder rates and the crime rates in drug-producing countries is much, much even higher than that. In Mexico, in Colombia, in Venezuela, the murder rates there are very scary, even compared here to the United States.

15:16Yeah, that is scary. You know, I keep thinking about this, Mark, because the push is on now for gun control big time. And as we put this out there, and especially if they're going to make another amendment or do something along those lines and really try to curtail gun rights in this country, we're going to push it a lot harder the other direction. And I want to talk about this on the other side. And America now returns after this commercial break. Well the age of the cocktail might have been the only thing to come out of prohibition that was a good thing other than Fitzgerald's The Great Gatsby. My guest tonight is Dr. Mark Thornton and we are talking about prohibition and the effects this can have on society. And Mark, we were talking again about what the government literally the 18th Amendment which outlawed the alcohol, it really helped the black market bloom and a lot of people like Gatsby, although I'm thinking more along the lines of the Kennedys, they really took advantage of this with the bootlegging and all that and they made their millions and billions and all of that.

16:33Today what's happening in America now though with the gun control issue, Mark? I'm concerned because could this not push it the same way if we go ahead and try to make concealed weapons and many weapons illegal? Oh yes, I mean the, you know, it's unfortunate everybody would love to see less violence in society. Sure. But the fact of the matter is that gun control does not work. I can guarantee you that. It's something I've looked at intensely. And what it does is it leaves citizens knowingly unarmed and unprotected. And when you have concealed carry permit laws, which allow some people to carry concealed weapons, the criminals don't know where the bullets might be coming from. And as a result, crime has fallen. If you look at the spread of these concealed carry permit laws across the nation, Across the states, what you see is that in states that pass these laws and pass strong laws that allow carry permits, crime rates, particularly violent crime rates, fall.

17:46And the national crime rates and particularly violent crime rates have also fallen. So if you watch the mainstream media, if you watch CNN, you think that the world is coming to an End, that crime is everywhere, that people are being shot down and captured and raped and pillaged. They have to go around the entire nation of 300-plus million people to find one of these stories, but the truth of the matter is that crime rates have fallen. And I don't want to say that it's just because of guns, because it's also because of the Spread of Surveillance Cameras on private establishments where people are trying to protect themselves. Those cameras are also shut down the criminals.

18:34Things like burglar security systems have also cut down on crime tremendously and even cell phones have also helped cut down on crime and violence and murder because criminals The problem of crime in the United States, through guns, surveillance cameras, burglar systems, security systems, and cell phones, and we've seen a tremendous drop in crime, so I want to get the word out about this problem.

19:22And I've heard out that, you know, go on the internet and look it up, the statistics are fairly clear to anybody who looks at them, that the private sector has risen up, the number of private security guards has increased dramatically and crime rates have fallen. We have not become a more violent country. We have not become a more criminal country as a result. The crime rates are actually falling as a result. and so the real story is that in a very important sense things have gotten better and you know of course there's still a lot of violence, there's still a lot of murders in this country. It's largely confined to the drug trade and the battles that take place there amongst Street gangs battling for turf, organized crime battling for turf, but overall for the normal average citizen things have gotten better and the only places you have to be worried is where guns are illegal, like on campuses, in school zones, in states that

20:35have gun control laws is where basically people are, you know, known to be and identified by criminals to be unarmed and as a result they can run, you know, over over to people because they know that they don't have any means of self-protection. So what's the solution Mark? I'm sort of hearing you say that maybe we do need to bring guns into the schools and do those types of things, am I hearing you correctly? Well, I think there's a role for that. I think that if it was legal and that schools could have trained teachers and trained professors randomly to have guns and to be trained in the use of guns and to have other means of protection, it doesn't necessarily have to be guns. It can be tasers. It can be other things. It doesn't necessarily have to be Security Guns, but the criminals have to know that they're facing a threat.

21:42They have to know that the movie theater has security guards with guns there and that guns are not illegal on these certain premises. And so I don't think there's any way to eliminate crime entirely, but I think that there are Some well-known and well-tested ways of reducing crime and I think, you know, the most important thing is that criminals know that their victims might have guns. There was a study done in the 1970s where the sheriff of Orange County in Florida, which which is Orlando basically. He put newspaper ads in the paper offering courses for females to learn how to shoot pistols. And this was played up in the TVs and so on and so forth.

22:40And hardly anybody showed up for those classes. But the rape rate in Orange County fell dramatically. It fell by 46% just because criminals thought, well, all these females must be getting trained

23:23permit laws and it's a generally speaking it's a pretty safe place to live. Yeah it's odd that because here in Colorado being part of the West we always had that policy as well but now we've had we've had Columbine we had the New Church shootings we've had the Aurora Colorado shootings you know and now they're trying to regulate all of this so I'm not sure where we can draw the line on all of this because I agree with If they are with you in one sense, but in another sense, the criminals may realize these things. Then they may fear those of us. But I think a lot of the criminals still have their minds marked. I think the whole situation comes down to there's a lot of mentally unstable people in this country.

24:12And I think that's where we need to be really addressing the issue.

24:46On the other side of the break here on America Now with my guest, Dr. Mark Thornton. Stay tuned.

24:57My guest this evening is Dr. Mark Thornton and we have been talking about the economics of prohibition as well as the correlation about what happened back in the roaring 20s and today's culture here in America. What we were talking about before the break, we were talking about gun control specifically and how crime does seem to go down when the criminals know that people have the right to have guns, both concealed and just regular guns in their house. However, what I mentioned, I'm living here in Colorado, we had those horrific acts, Columbine in the New Life, and the latest, the Aurora movie theater shootings. These people were not sane.

25:44I think the bigger issue, instead of running and grabbing the guns from us and restricting us once again and having basically prohibition on guns, is to start doing something about the mental health of people in this country. I couldn't agree more, Barb, I think that that is a huge problem. I think that, but when you look at it historically, you don't see this problem existing to any extent whatsoever 25, 50, 75, 100 years ago. We don't have, we have hardly any examples of the Columbine Aurora type phenomenon in our history and my feeling and my analysis of the situation, I haven't done any academic research, I haven't published any academic research on this, but from what I've been

27:21and Psychoactive Pharmaceutical Medicine

27:51to Commit Mass Murders. And we do know that this was the case in Aurora, in Columbine, Virginia Tech and in Connecticut. We know this for a fact. And so we also know for a fact that none of these psychoactive pharmaceutical prescription medicines have been tested and approved for young adults or teenagers. They were only tested on adults and the mind formation of the brain is not complete in people under 21 years old and certainly their psychological profile, their sociological profile is much more unstable and much less developed particularly nowadays when young adults are are not exposed in many cases to the trials that you and I were exposed to in high school and college.

29:01I think we've created a situation here where once again the pharmaceutical companies have produced products and have been approved by the government, but the approval is limited. But the doctors and the patients feel that if the FDA has approved these things that they must be safe and effective. In my view and my suspicion, I guess I should say, is that these drugs are not safe and they're not necessarily effective, particularly in an age group where they've never been tested except just at random by physicians, not specialists by the way, these are just physicians in many In many cases, who are prescribing these drugs, and I've had friends who have, and relatives as well, who have fallen on hard times for whatever reason, and they've been given these psychoactive pharmaceutical prescription medicines, and their condition deteriorated materially as a result, so that they didn't get better, they got much worse, and so I think this is This is part of a general phenomenon and I have an article about this general phenomenon

30:19on mises.org about prescription medicines and the moral hazard that the government approval of these drugs means that doctors just prescribe these things to everybody out there and that And the patients willingly accept these things and so instead of losing weight to reduce their blood pressure, they just take a pill. Instead of being more physically active to reduce their cholesterol, they just take a pill. And so Americans now, every American man, woman and child on average now consume 13 prescriptions per year.

31:08And I just don't think as a person, I'm an economist, I'm not a doctor, but just as a person I don't think that's a very healthy prescription for the American people. We've gotten more obese, more diabetes, more mental health problems, and so I'm very concerned that the FDA and its approval process and all of the other expense that that places on on American Consumers, that in the end, it's created this moral hazard where we're taking prescriptions to solve problems and we're ending up creating problems. The most extreme example of that, I think, is these psychoactive prescription pharmaceutical medicines being given to children and young adults for which they were never tested.

32:02They were not a part of the testing process and so I think that's something that has to be looked at and examined and reviewed and I think just your audience just needs to take a second look at what their doctors and what the FDA are offering out there is you know As a lot of your great advertisers are saying, take this natural product, it has some effectiveness and it's non-addictive, it might help you but at least it's not going to hurt you. So I think that that natural approach that your great advertisers are promoting I think is something that should be considered by your audience and by all Americans because I think it's creating a lot of problems and you know a nation that's consuming literally billions of prescriptions every year and nobody's even questioning that is something that's of great concern to me.

33:15Yeah, and it's a great concern to me as well, and I agree with you 100%, Mark. We have created, as you called it, a moral hazard here. We have drugged Americans to the point where they can't think, let alone reason, what's right and what's wrong just about anymore. And we're creating a nation of basically drugged out zombies who are acting crazed half the time. They can't drive, they can't think for themselves, they're out there. Not all of them, but so many of them, you know, we've primed them by feeding them from sometimes two years old and on with these psychotropic drugs. It's horrific, you know, and I really hate to see what's going to be coming from this.

34:02Mark, we've run out of time here. Can you please tell people where they can get some information about you quickly? Mises.org and you can email contact at Mises.org and just ask for me or just search our web page and you'll find the article on the great Gatsby and on the prescription drugs and all that kind of stuff. We've got a big, big pile for you to look at. It's all free, by the way, and there's no registration or anything. Great. Mark, thanks so much. I really appreciate it. Good night, Barb. Good night.