The sweetest little black market

Inadvertent leaders in economic research, public school officials seem dedicated to discovering again and again just what it is that sparks the creation of a black market. What have they found? Restricting goods that school kids want inspires many of them to foray into the world of underground entrepreneurship.

California school officials have discovered -- surprise! -- that banning "junk food" creates economic opportunities for kids willing to take a few risks in smuggling and peddling contraband. The lesson comes courtesy of the drive to promote healthy eating, or else, among the nation's pudgy youth. Golden State officials have cracked down on unapproved foodstuffs and put their official weight behind healthier -- but less popular -- alternatives.

“It’s created a little underground economy, with businessmen selling everything from a pack of skittles to an energy drink,” said Jim Nason, principal at Hook Junior High School in Victorville.

This has become a lucrative business, Nason said, and those kids are walking around campus with upwards of $40 in their pockets and disrupting class to make a sale.

The results could have been predicted by an economist or student of history who has paid even cursory attention to repeatedly thwarted efforts by government officials to restrict people's access to goods and services that they want. The situation in California (and in Boulder, Colorado, earlier) not only emulates the reaction to Prohibition and drug bans -- it directly reflects students' response to junk food bans elsewhere. Says the U.K.'s Daily Telegraph:

The situation echoes that in the UK where a similar drive to promote healthy eating sparked a playground black market in junk food with pupils trading snacks and fizzy drinks and the most organised staging lunchtime runs to local shops and McDonald's to fill junk food orders.

British officials shocked by widespread resistance to their efforts are considering barring students from leaving campus at lunch, and even preventing fast-food restaurants from opening near campuses -- schemes intended to further restrict the flow of contraband. Considering, though, that flat-out outlawing marijuana and heroin has failed to cut off the supply, it's hard to see how tighter restrictions on legal products can do anything more than slightly raise prices (and profit margins) on goods smuggled through school doors.

Oddly enough, surreptitious peddling of cokes and candy may offer public school students the best economic education they're likely to receive in tax-supported institutions. School officials may barely be able to teach kids to read and write, but they're offering an excellent lesson in the hurdles faced by any effort at prohibition and the inevitability of the underground economy.