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Underground Economy

With alcohol prohibition gaining strength in the late 19th century, an Atlanta druggist created an alternative: a patent medicine called Coca-Cola, which combined kola leaves and cocaine (a common legal drug often mixed with wine.) Only when cocaine became illegal in the early 20th century did the company remove cocaine from the soon to be popular soft drink.

Underground EconomyStreet performer, Venice, CA, 2004. Throughout its history, the United States has tried to control social behavior and has often failed. For example, the federal government and the states have criminalized prostitution, pornography and gambling, and drugs like alcohol, marijuana, heroin and cocaine. The prohibition of al­cohol from 1920 to 1933 did not stop people from drinking. Instead it gave rise to organized crime and violence and created fortunes for bootleggers like Al Capone.

After prohibition ended, marijuana, the "Devil's Har­vest," became the new drug to be feared and both Con­gress and the states banned it. Even so, marijuana usage increased enormously in the 1960s with the growth of the counterculture. President Nixon's "War on Drugs" in 1971 signaled a new turn in drug policy. While the effort to stop the sale of illegal drugs has been a failure, this "war" has led to the mass incarceration of people involved in the drug trade and a prison industry to house them. The economic crisis has made it difficult to imprison so many people, and California under a U.S. Supreme Court order will have to release tens of thousands of inmates due to overcrowding.

Calls for the legalization of marijuana have increased be­cause of the futility of prohibiting it and as a potential new revenue source for government. In 2011, Representatives Barney Frank and Ron Paul sponsored legislation to end the federal prohibition on marijuana. States could then le­galize, regulate and tax marijuana as they had tobacco and alcohol. States and localities would also save money on law enforcement and prisons. According to a report by Profes­sor Edgar Feige, of the University of Wisconsin-Madison, unreported income from all categories in the United States is between $2- 2.25 trillion, a significant share of gross domestic product.

Underground EconomyProstitute at the Moonlight Bunny Ranch, Carson City, NV, 2011