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Prohibition vs. Private Solutions at the Electric Daisy Carnival

Mises Daily: Monday, July 11, 2011 by

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[An MP3 audio file of this article, narrated by Joel Sams, is available for download.]

The weekend of June 24–26, 2011, I attended the Electric Daisy Carnival (EDC), a three-day electro-house music festival held in Las Vegas. If you have heard stories of just how prevalent drugs are in modern society, EDC is prime empirical evidence.

Of the estimated 80,000 attendees per day, it probably would not be an exaggeration to suggest that no less than three-fourths planned to consume illicit drugs, predominantly ecstasy. It would be no less of an exaggeration to make the claim that even a substantial number of the volunteer workers recruited by Insomniac, the event planners, were also consuming drugs during the festival. As bad as it may sound, EDC and drugs enjoy a relationship much like bread and butter.

EDC's reputation precedes it. Traditionally held in Southern California, Insomniac was forced to search for a new host after the previous year's event, at the Los Angeles Coliseum, was marred by the death of a 15-year-old girl by means of drug overdose. Amid rumors that EDC would not be held again, Insomniac found Las Vegas a willing and able candidate to host the event. Not only did it find a new host, but Insomniac also decided to extend the carnival for a third day, drawing record-breaking crowds and making EDC the largest electro-house music festival outside of Europe.

That the festival's relationship with drugs jeopardized its future did not incentivize the company to tighten security. As long as your hiding place for your drugs was not too obvious, it seems as if Insomniac's security was more than willing to let you into the event. Usually, the trick is to hide your stash high on your inner thigh. At EDC there was no reason to get quite that professional. Concealing the drugs in your socks was enough to see you through "security." I spoke to one man who told me that he had hidden his ecstasy pills in his hair! But this type of "security" is to be expected from a company that makes its profits almost entirely on the freedom to consume drugs during its events.

Very likely aware of this fact, Nevada State Police and Las Vegas Police deployed a small army of officers to survey the event, both inside and out. While state and local authorities did not actively search every event attendee (although, supposedly, state police were patrolling the parking lot with narcotics-trained canines), their purpose — outside of next morning's traffic control — was obvious: drug control. While their ability to screen the huge volume of incoming narcotics was definitely dampened by the fact that they did not control the pat-down process at the entrance, they nevertheless stood ready to pounce at any sight of drugs once inside the Las Vegas Motor Speedway. One could hardly walk 100 feet without seeing a group of officers.

While to most this comes as no surprise, the official narcotics operation was a dismal failure. The police's presence certainly did not dissuade anybody from consuming the drugs they had successfully smuggled in. The times I saw police officers stand inactive despite the obvious stench of marijuana are too many to count on my hands. No less ridiculous was the consumption of drugs in clear sight of officers standing on rooftops. Overall, throughout all three nights, state authorities managed only 27 felony and 31 misdemeanor arrests. Such a failure is to be expected, though, of a small corps of regulators intending to exert their authority over a crowd outnumbering them 500 to 1.

Knowing that the worst-case scenario is the death of an unpredictable number of attendees, what is the solution to EDC's drug problem? What should be distinguished are the markedly different approaches the state and private enterprise take to the dilemma. The state "handles" the problem with its one traditional mode of attack: prohibition. Insomniac's owners, by comparison, true to their nature as entrepreneurs, tackled the issue by adapting their services to meet the needs of their consumers, including their health. While Insomniac's record is hardly without its blemishes, in Las Vegas — remember, the largest festival of this sort outside of Europe — Insomniac's precautions kept deaths to zero.

The Entrepreneurial Solution

While it is true that Insomniac's profit is heavily based on the recreational use of narcotics, especially ecstasy and cocaine, there are nevertheless various incentives for the company to avoid the deadly consequences of drug overuse.

The ability to find cities to host their events lies largely on the ability to minimize drug-related problems, including injuries and deaths. No less important, a poor track record of drug-related deaths can lead to a fall in attendance for future events, especially among those who are not heavy recreational-drug users. For example, first-time drug users or those who consume certain narcotics only at these types of events are less likely to do so if the threat of death is high enough. Finally, there is little need to point to the degree of negative press that these types of events receive. Giving negative press more fodder is hardly in Insomniac's interest.

It seems, though, that the incentive to avoid the costs of drug overuse does not manifest itself in Insomniac's security. As mentioned above, as long as it is not completely obvious, smuggling in drugs of any kind is not particularly difficult. Attendees smuggled in anything from a few ecstasy pills for personal consumption to already-rolled marijuana joints and large quantities of various kinds of drugs meant for distribution. Once inside the event, Insomniac's security is even more lax, although you may find the occasional security guard scrambling to follow the trailing smell of a lit joint — probably more to appease state and local authorities than out of authentic concern.

Mises Academy: Robert Murphy teaches Production and the Market Process
"Evolving, adapting, and catering to the consumer is what the entrepreneur does."

It is not just that the drugs form an important aspect of what drives Insomniac's customers to these raves. The measures any company is willing to implement are based on juxtaposing costs and benefits. Insomniac not only knows that heavier drug-prevention security would lead to lower revenue; they are also well aware of the sheer manpower that such an endeavor would require. We also know from experience that no security, however tight, can completely thwart the smuggling and exchange of narcotics — just ask the US Border Patrol, and whatever other federal and local agencies are responsible for monitoring the illegal import of narcotics across the Mexican-American border. The costs are simply well beyond the benefits.

Insomniac's solution to the drug "problem" — placed within quotation marks because we know that drug consumption is an individual choice — is much cleverer and simpler than anything a government agency could devise. The key is working with consumer preferences, not against them. Knowing how useless it is to try to stop someone from doing something they desire, Insomniac instead tailors their services to these desires.

First and foremost, the event company made sure that their volunteer workers provided attendees with plenty of water (the leading cause of death while under the influence of ecstasy is dehydration). While customers had to pay for a water bottle (though it was not too difficult to get one for free), these were refillable free of cost at any of the various water stations placed throughout the venue. Each water station was equipped with dozens of hoses to cater to as many people as possible and as quickly as possible. Even those without bottles were provided with free water, able to hydrate themselves at the water stations with no questions asked. Any injuries caused by dehydration at Las Vegas's EDC were most likely entirely based on negligence on the part of the injured individual; there simply was no lack of water.

Second, at EDC there were private medical crews, paid for by Insomniac, tasked with the provision of first aid. The degree of focus and concern expressed by Insomniac volunteers and the event's medical crews was astonishing. Any sign of a problem, and it was almost guaranteed that at least one worker would approach you hoping to help. They were there to provide for your every need, and their response time was remarkable. Unlike law-enforcement agents, who stood around as if they were vacationing, Insomniac's workers and contractors were not there to waste time; they were there for you.

Third, unwilling to deal with and rely on only Las Vegas hospitals' ambulance network, Insomniac contracted with a private ambulance company, MedicWest, to ferry the injured from the speedway to local hospitals. Once again, Insomniac's mantra was entirely based on its dedication to servicing the consumer as efficiently and quickly as possible.

"The key is working with consumer preferences, not against them."

It is also worth mentioning that the carnival includes a good deal of vendors who sell products designed around the needs and desires of the crowd. Ecstasy is notorious for eliminating hunger, but despite this there was no shortage of food at EDC for people who were vigilant enough to force-feed themselves during the event. Similarly, there was a wide array of products (including fruit and fruit smoothies) designed for people coming down from their highs, to allow for them to better cope with any potential negative side effects. These were all provided at a price, but better at a price than not there at all.

That only about 330 attendees were injured over the first two nights, and only 17 taken to a hospital, is a truly remarkable figure when compared with the total 160,000 people who attended over that Friday and Saturday. That is, only about 1 in 485 people suffered an injury, and only 1 in 9,411 experienced serious, immediate health problems. Even considering the past stains on EDC's track record, including the unfortunate deaths of a 15-year-old girl in Los Angeles in 2010 and a 19-year-old boy in Dallas in 2011, Insomniac's ability to contain immediate drug-related health problems to such a relatively miniscule figure is a tribute to the extraordinary effort put forth by it and the companies it contracts to.

But Insomniac and similar event planners do not rest on their laurels. The effort to avoid casualties is always escalating. Without a doubt, Insomniac will be continuously working to reduce injuries to zero by providing better care and service. Evolving, adapting, and catering to the consumer is what the entrepreneur does.

Prohibition

Insomniac's efforts to avoid injuries and deaths at their events are all well and good, but some may think outright banning the event seems like a much more sensible solution if the objective really is to bring injuries and deaths to zero. Why even allow for the opportunity? This was certainly the route taken by Los Angeles and Dallas; and many feared that Las Vegas would soon follow (although the lack of deaths this year may be good news for festival-goers next year).

Prohibition, however, does not lead to the eradication of the use and supply of drugs. Our decades-long "war against drugs" and the early-20th-century prohibition of alcohol are evidence enough of this fact. Indeed, these case studies show us that prohibitions usually make these industries more dangerous than they otherwise would be. Not only do prohibitions allow for the use of violence — drug cartels and the early-20th-century city-based mobsters being prime examples of this — but they usually also make the product more unsafe and risky. Take, for instance, the rise of crystal meth as an acceptable replacement for much more expensive cocaine; when cocaine was more available, before the crackdown on the distribution of cocaine, crystal meth was hardly a demanded product.

The same is true for ecstasy. Ecstasy is composed of two major parts: the characterizing chemical is methylenedioxymethamphetamine (MDMA), but this is oftentimes cut with other stimulants, including heroin, cocaine, caffeine, and speed. The shadier the production process, the more difficult it is for the consumer to know the purity of the product being bought. As purity falls, the chance of injury or death rises, especially considering how nebulous the issue of the effects of different combinations of drugs is. The more that federal control and regulation of production (especially outright prohibition) grows, the more suspicious ecstasy production becomes. As it stands, the current system is absolutely disastrous if the intention is to reduce drug-related injuries and deaths.

Prohibiting officially held raves and other forms of music festivals is of no help either. These large, organized raves largely replace the more suspect spontaneous raves that characterize the underground teenage and college culture. Those who have attended these types of raves, myself included, know full well that there is no effort put toward hydrating attendees and providing medical care. There is neither the incentive nor the capital required. If anything, you might have some individuals looking to score a small profit by selling beer — which, admittedly, is better than nothing.

In the case of prohibiting music events of this type, just as much as in the case of outright drug prohibition, the result is a force that pushes the individuals involved to continue doing as much in more dangerous environments. We can see that if the intention is to save lives, the result is the exact opposite. The injured no longer enjoy the services provided by major event holders; rather, they face the prospect of drug overdose or dehydration without any means of preventing it. Thus capitalism is not allowed to work its wonders in providing its beneficiaries with the products they crave. Prohibitionary policies lead to more injuries and more deaths.

When compared to the steps taken by professional businesses designed specifically for these types of events, products, and services, government policy seems almost medieval. How such a policy can seem sensible — especially considering the vast technologies and innovations that have made our world safer without having to fall back on the clear inefficiencies of outright proscription — is beyond comprehensibility.

Government does not innovate. Its "solutions" are not the products of creativity. Simply put, there is no incentive for the state to be innovative or creative. Government policies, especially those concerning unwanted market products, have always been the same: prohibition and tyranny. Even when government implements these policies with the best intentions, the result is always the opposite.

The fact is that you cannot control the preferences of any individual. There is simply no foolproof way of disallowing an individual from satisfying his or her desires, because the creativity of the individual will always be superior to the ineptitude of the state. So what better way is there to match the creativity of the individual than with the genius of the entrepreneur?