Over the millennia, governments have enacted edicts banning the production, import and sale of certain goods. But despite these bans, local markets still exists for the banned products. Traders merely develop more innovative methods by which to transport such products across borders. For instance, at various times, traders have used trained birds such as carrier and homing pigeons to carry small items to designated destinations, or animals such as mules to carry contraband across borders. Regardless of how vigilant authorities become at enforcing bans on the import of prohibited products, such products continue to move across borders.
America’s era of prohibition was a classic example of how a product got to customers who wanted it, even at elevated prices. During that era, production of alcoholic beverages moved offshore and into hidden production facilities. At some locations, a tire repair shop operated in the front part of a building while brewing occurred in the rear part of the building. Freight and passenger trains crossed the US-Canada border on daily schedules. Prohibition officials often undertook surprise checks of train manifests, along with randomly inspecting the contents of freight and passenger carriages.
Sometimes they were lucky, the result of a tip that some metal milk containers in a railway baggage car contained booze, for instance, often cheap alcohol mixed with flavoring, a possible decoy. Nevertheless, officials were pleased with their successes at having intercepted illegal shipments. Despite the occasional success of such surprise inspections, the speakeasies of Chicago received a regular and reliable supply of precious beverages via passenger trains from Toronto that had been subject to “successful” border inspections. Al Capone’s associates had discovered ingenious hiding places for booze on trains.
During the prohibition era, boats that sailed on the ocean and along inland waterways carried a large percentage of the trans-border alcohol trade. Boat owners of that era had ingenious ways of disguising their boats, such as painting different colours on either side of the boat. They had innovative ways of making a laden southbound boat appear to be riding high in the water, and the empty boat ride low in the water on the northbound sailing. Other boat owners learned to camouflage their vessels so as to make them more difficult to detect.
Some of the lessons learned during the prohibition era to make a boat more inconspicuous still apply today, except for a different purpose. About a month ago, an American coast guard ship made a rare discovery when the ship encountered a vessel known as a self-propelled semi-submersible sailing in the eastern Pacific Ocean. A four-person crew may operate such a vessel that is purposefully designed to be inconspicuous and very difficult to detect. They are designed to sail with minimal wake (virtual absence of bow wave) and generate a minimal thermal signature.
While it is rare for coast guard patrols to capture such a vessel, this one carried a payload of 2,380 kilograms of cocaine, worth an estimated $107 million based on market prices. High market demand combined with restrictions on supply assures high prices for substances such as cocaine. Those high prices then translate into substantial profits—sufficiently substantial to fund the development of semi-submersibles capable of carrying the product. This is only the second incident in recent years to involve a navy or coast guard crew discovering a semi-submersible.
Whereas the smuggling trade of an earlier era may have used carrier pigeons and mules to transport items across borders, modern smugglers have access to a wide range of alternative, off-the-shelf transportation technologies. Fully-operational scale-model radio- and computer-controlled cars, motorcycles, trucks, airplanes, boats, and helicopters are readily available at hobby and toy stores, while hobbyists are capable of building larger and more sophisticated versions of such toys. Small boats are easily available at sporting goods stores, and interested customers may also purchase readymade mini-submarines.
The mere existence of a self-propelled semi-submersible that can sail almost undetected is testimony to the ingenuity of private people who design and build such technology using private funding. Companies engaged in the tourist trade provide underwater sightseeing trips, showing interested visitors the spectacular coral reefs off some nations’ coasts. These private sightseeing submarines provide their owners with reliable and profitable service, as do the semi-submersibles that sail just below the ocean surface.
Some readers will be aware of the debacle surrounding Canada’s purchase of used British built submarines, at considerable cost to taxpayers. While the publicly funded submarines were in the dry dock for extended durations while under repair, privately funded and privately owned submarines and semi-submersibles were in service earning revenue for their owners. During the summer, when tourists visit the Arctic, it may be quite possible for a private owner using a modified sightseeing submarine to offer undersea sightseeing services of the Arctic seafloor. Tourists may even get to see a foreign submarine.
Private entities design, build and operate the transportation technology used by both the smuggling trade and the tourist trade. Designers and builders of the technology operate in an unrestrained, competitive free-market environment where customers seek only the most reliable technology that best does the required job. Such has been the case for the majority of tourist cruise ships, and especially so for the sightseeing submarines and even for self-propelled semi-submersibles.
Government prohibition presents a challenge to an unregulated free market to deliver the goods to customers who are willing to buy. It requires the development of reliable and cost-competitive transportation technology that can carry cargo and cross borders without being detected. It also requires the development of telecommunications technology that assures total privacy. The increase in the monetary value of illicit international trade suggests that an unregulated free market can actually work very well, and debunks those economic theories that call for state regulation and control of national economies.
* Harry Valentine is a free-marketeer living in Eastern Ontario.