MARY LOUISE KELLY, HOST:
Nationwide, governments have ordered many bars, gyms and restaurants closed for months now, but the markets for those things have not just gone away. So Greg Rosalsky from our Planet Money podcast went underground.
GREG ROSALSKY, BYLINE: Our story starts with a woman in Tucson, Ariz., named Christina (ph). She asked us not to give her last name because her story, it involves some illegal activity. You see, she's got a problem.
CHRISTINA: It's like a drug.
ROSALSKY: ...A drug that can be found in rooms with people sweating, breathing heavily and getting a surge of endorphins.
CHRISTINA: It's really hard to quit.
ROSALSKY: Christina is talking about her gym. Arizona said it had to shut down during the pandemic. And for Christina, this prohibition was a hard thing to accept. She loved her gym. She spent so much time there, she got to know the owner. And two weeks into the shutdown, he reached out to her.
CHRISTINA: Because he had noticed I hadn't been there for two weeks...
ROSALSKY: The gym owner said he was staying open, you know, illegally and secretively. It was now a speakeasy gym, like the underground bars during prohibition. And these underground gyms seem to be popping up everywhere, from California to New Jersey, which doesn't surprise Jeffrey Miron, a Harvard economist who has spent three decades studying prohibitions.
JEFFREY MIRON: So the simple lesson of the economics of prohibition is that prohibitions don't eliminate things, they drive them underground. But when you drive a market underground, it tends to behave somewhat differently.
ROSALSKY: Take Christina's gym. In late April, she decides to go back. She drives to the strip mall where it's located and fiddles with her fob to get in the door.
CHRISTINA: And I walk in. There's at least 10 people there that I had never seen before.
ROSALSKY: Her tiny gym is now packed with all these strangers.
CHRISTINA: And they are the typical gym bros. These are the guys from the free weight section of any major gym grunting, using all the equipment. And they're all in the mirror taking selfies of them flexing their triceps. It's bizarre.
ROSALSKY: And, Christina says, the worst part was they were completely ignoring COVID safeguards.
CHRISTINA: No one's wearing a mask. No one's sanitizing anything.
ROSALSKY: When markets get pushed underground by prohibitions, quality control tends to go down. In the black market for drugs, it means maybe finding rat poison in your weed. In today's black market for gyms, it means maybe creating places that are more likely to spread the virus than aboveground, regulated gyms. Here's Miron again.
MIRON: When you drive it totally underground, your ability to regulate it goes away.
ROSALSKY: Christina learned that these swole (ph), maskless bros were refugees from big chain gyms, which had followed state orders and closed.
CHRISTINA: So I don't know how they heard about our gym, but word spread like wildfire.
ROSALSKY: She says the gym has doubled its membership, and it's charging these new members all more. This is classic prohibition economics. With less competition and higher risks in black markets, entrepreneurs can charge extra, which convinces more people to get into the illegal business. It's a reason why Miron's research has found that prohibitions become less effective over time.
MIRON: People figure out new, clever ways to get around prohibition laws.
ROSALSKY: ...Like making moonshine in your bathtub or creating a secretive workout facility in a strip mall. The longer the prohibition goes on, the more likely people will ignore it. And as the shutdowns wear on, that could mean more speakeasy gyms.
Greg Rosalsky, NPR News. Transcript provided by NPR, Copyright NPR.
