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One of the biggest problems with regulations is their inflexibility. You try and regulate one product that is viewed by some as potentially dangerous, and as a result you end up harming a product that shares enough qualities to make it fall under the regulation, yet does not share the qualities that motivated the regulation in the first place. For instance, when safety regulations targeting large toy manufacturers put handmade toy companies out of business. This is exactly what has happened with the Four Loko regulation, which has also banned a small microbrew that uses caffeine.
The beer is called Moonshot ’69, and it was created by one of the founders of Sam Adams. The New York Times provides the details, including the fact that the beer was going to be sold at a beer festival this month, and that the owner has $25,000 worth of inventory she can’t get rid of.
As you read about Moonshot ’69 you may find yourself thinking that the regulation was clearly not designed to affect a microbrew like this, and that the ban shouldn’t affect the kind of beers that get sold at beer festivals. This is because while the regulation is ostensibly about caffeinated beer, as Robin Hanson argues, it’s actually about regulating a “particular vaguely-imagined classes of people”. Politicians want to regulate Four Loko drinkers, not caffeinated beer.
If you find this troubling just be glad that you and all the former Four Loko and Moonshot ’69 drinkers can, for some strange reason, console yourselves with a Redbull and Vodka. That is, for now.
It’s rare that a plea for regulation presents as clear of a picture of the slippery slope as Oregon D.A. Rob Bovett’s recent op-ed in the New York Times did. He asks us to walk with him farther down the slope, acknowledging that we’re already on it, and offering a preview of what’s next.
The regulation he is proposing concerns pseudoephedrine, an ingredient in several allergy medicines and, unfortunately, methamphetamine. Where we are on the slope right now is that it can only be sold from behind the counter and buyers are required to present some for of photo identification. Purchases are recorded and buyers are prevented from going over a certain amount in a given time-period. Lost your allergy medicine? Too bad, we gave you 10 days worth, so you have to wait 10 days before you can get more.
This, however, has not stopped the determined meth makers who still manage to get enough pseudoephedrine to keep the streets supplied. Which brings us to the next step on the slippery slope. Bob Bovett wants us to follow Oregon and Mississippi’s leads and require a prescription for any drugs with pseudoephedrine.
Uncharacteristically for regulation advocates, he provides a glimpse into the next and final step on the slippery slope: complete prohibition.
In 2009, Mexico, which had been the source of most of the methamphetamine on the streets of the United States, went further, banning pseudoephedrine entirely. The potency of meth from Mexico has since plummeted. This is great news. But now the ball is back in our court.
You will notice not an inkling that Mexico may have gone too far. Clearly he believes that if prohibition is what it takes to reduce the potency of meth (notice he’s not even promising it would get rid of it) then it’s worth it.
So we tried putting it behind the counter. That was step one on the slope, and it didn’t work. Now he wants us to require a prescription, that’s the second step. When that doesn’t work, he’s shown all indication that he’d be willing to push for complete prohibition. I’m not sure what we’ll do when that won’t actually get rid of meth users but simply reduces the potency of their meth. I guess from then on it will just be asking for more funding for enforcement, and stricter penalties for violators.
It’s also worth noting that the first step above isn’t really the first step down the slippery slope of pseudoephedrine regulation, just the most notable. There’s a long history of gradually increasing regulations, detailed nicely in this paper from the American Economic Review:
There were significant changes in the federal regulations enacted in 1988, 1993, 1996, 1997, 2000, and 2005. In 1988 the Chemical Diversion and Trafficking Act (CDTA) imposed reporting, record-keeping, and import/export notification requirements for regulated transactions in bulk (powder) ephedrine and pseudoephedrine. However, it did not control tablets or capsules. The Domestic Chemical Diversion Control Act (DCDCA) was passed in 1993 and implemented in 1994 and 1995. The legislation removed the record-keeping and reporting exemption for single-entity ephedrine products. The DCDCA also required distributors, importers, and exporters of List I chemicals to register with the DEA. The DEA could deny or revoke a company’s registration without proof of criminal intent. In 1996 the Methamphetamine Control Act (MCA 1996) regulated access to over-the-counter medicines containing ephedrine. The following year, the Methamphetamine Control Act (MCA 1997) regulated products containing pseudoephedrine or phenylpropanolamine with or without other active ingredients. Significant elements of the MCA were implemented in early 1998. In 2000, the Methamphetamine Anti- Proliferation Act (MAPA) established thresholds for pseudoephedrine drug products. Finally, in 2005 the Combat Methamphetamine Epidemic Act (CMEA) included limits on retail over-the-counter sales of products containing ephedrine, pseudoephedrine, and phenylpropanolamine.
Some of these may have been perfectly reasonable regulations, but it’s important to see where these seemingly sensible regulations have brought us, and where they appear to be leading us.
Also important is the result of the aforementioned study, which looked at the impact of a huge supply disruption in the illicit pseudoephedrine market by the DEA. Despite the huge success of the crackdowns in reducing supply and increasing prices, the long-run results they found are not encouraging for those who want to stop meth use by supply disruption:
The DEA successfully shutting down two major precursor suppliers in mid-1995 significantly disrupted the supply of methamphetamine. The evidence suggests that, at the peak of the short-age, supply was reduced by over 50 percent in California. During the four months after the intervention, the price per gram of methamphetamine tripled, and purity dropped from 90 percent to less than 20 percent. Prices recovered within 4 months, while purity required 18 months to recover to 85 percent of its original level.
…This is quite possibly the DEA’s greatest success in disrupting the supply of a major illicit substance. This success was the result of a highly concentrated input supply market and consequently may be difficult to replicate for drugs with less centralized sources of supply, such as cocaine and heroin. That this massive market disruption resulted in only a temporary reduction in adverse health events and drug arrests, and did not reduce property and violent crimes, is disappointing.
The slogan for regulation like this should be “Contrary our assurances that they would, the powers you’ve granted us to stop this problem have not worked. Therefore we need more powers, and we assure you they will work.”