Prohibition as a public policy is being experimented once again across states in India. Alcohol prohibition (leading to complete ban) is becoming a popular political instruments to woo voters. This is hence the best period to further examine the policy of prohibition itself. There are two questions. What could be the purpose for prohibiting alcohol? Will prohibition serve this purpose?
The answer/s to the first question is ambiguous. There is no single purpose but health is often highlighted as a concern. This has been more or less fed into our conscience through scattered bits of information, anecdotes from the lives of others and a lot of data assembled and collected by the state from its own retail outlets. The biggest advantage for the government of Kerala is that no single individual has ever been able to systematically examine the veracity of these numbers and stories. Chronic cases of addiction are often highlighted as anecdotal evidences; and individuals feel they have enough evidence in these cases to know the trouble with alcohol. It is notable that the campaign against liquor is largely run by politicians and government departments.
The second question at least has historical and theoretical possibilities that cannot be discounted. Complete prohibition as history proves was always a gimmick. Alcohol and intoxicants have existed throughout the history of humans and these trends are highly indicative that it is bound to continue. The possible reason is that while policy can create shortages, it cannot completely eliminate demand. The response to shortages has always been to satiate this demand by accessing new markets. Shortages could also create substitutes. Kerala is witnessing a mixture of all these responses. If the purpose of prohibition has to be served, theoretically the state government will have to dismantle all the departments which were created to coordinate supply of liquor. This means managing all staff and support services at 22 warehouses and approximately 338 outlets across the state (several of which have reportedly been closed). Although the state has announced a strategic plan to reduce size of its operations, it has largely failed to explain systematically how it would manage the expenditure associated with rehabilitating workers whose jobs are threatened.
While these are obvious fallouts requiring attention, what is worth probing is much deeper. Our experience with government policy on alcohol is that it has had consequences which were completely unpredicted. And the state is the only institution that can successfully erode the economy without being answerable to its conduct. Thinking on the same lines government policy to ban alcohol could have similar outcomes. It is most likely that we will be unable to predict them systematically. Milton Friedman’s observation assumes significance here. As he says
“Nothing is so permanent as temporary government programmes”
A ban could actually create several temporary programmes and departments which could last forever. Although these could be trivialized as mere hypothesis it is better to have competing hypothesis to face the policy outcomes. On similar lines we ought to be wary of a new department coming up to address job losses in the beverages corporation as much as a programme to educate people on the benefits of not drinking. Such a growth in state departments and programmes only strengthens the state even as it should have reduced its size in the context of prohibiting alcohol.
As much as it becomes difficult to predict the growth and existence of newer departments by the state, it becomes equally difficult to predict the course of the market due to prohibition. Here again we need to hypothesize. Prohibition will not be easily absorbed by individuals who drink and they too are significant stakeholders in the state. A possible scenario could be growing markets to cater to newer issues in health, including a crowding in of psychologists and counselling workers. Given our education system and innumerable licenses to practice, providers of undervalued courses could crowd the scene. To the state this becomes areas of new challenges and possible avenues to interfere adding to its power kitty. For people it would be further evidence to blame the worthless markets. But none would be interested to trace the course of a misjudged government policy for these outcomes – a policy to prohibit alcohol.
Click here view the article published in The Indian Economist: The Temporary Permanence of Alcohol Prohibition?
Rahul V Kumar is a Research Fellow at CPPR. He has an MA in Economics and an MPhil in Applied Economics and International Relations from Jawaharlal Nehru University (New Delhi). Currently, he teaches graduate students.