Below is today’s column on the continued use of state controls over alcohol in the United States. With the decision this month of Washington state to embrace the free market system and drop controls, citizens in other states are rightfully asking why officials keep this form of central planning, including officials in conservative states that purportedly favor free enterprise over government regulations.
If current political rhetoric is to be believed, we are on the brink of either a Communist or Socialist takeover. Republican leaders and pundits have repeatedly denounced Obama administration programs from health care to bailouts as part of a creeping “socialist agenda,” which appears to mean any centralized control of a market.
What is fascinating is that the warnings over state monopolies omit one of the longest-standing institutions of central planning and control in the U.S.: state liquor boards.
Seventeen states continue to exercise control over liquor as absurd relics from the 1930s. Ironically, there is no better example of the failures of central planning than the “ABC stores” around the country from Alabama to Pennsylvania. Indeed, if Karl Marx were alive and trying to buy Schnapps today, he might reconsider aspects of Das Kapital after dealing with our central alcohol planners.
This month, many people were enthralled with a controversy in Idaho where the State Liquor Division had barred the sale of Five Wives Vodka. The division refused to allow Idahoans to buy the popular vodka because it might be offensive to the Mormon population in the state.
I represented the distiller of the vodka, Ogden’s Own Distillery of Utah, in raising a host of constitutional objections to the enforcement of such religious mores. The state recently agreed to rescind its bar on sales, but the controversy should not pass without some discussion of continued existence of these state monopolies on alcohol sales.
Out with prohibition
Almost 80 years ago, the country repealed the prohibition of alcohol with the 21st Amendment. Many states emerged from prohibition with strict state control boards, but the majority dispensed with this inefficient system years ago. However, millions of Americans continue to live in states that control where and what they can buy in terms of liquor. Beer sales are generally not subject to such controls.
Indeed, the Idaho Division blocked Five Wives Vodka despite the fact that bars in the state serve Polygamy Porter. However, when it comes to liquor, these states stand between the consumer and companies with an army of bureaucrats who add costs and delays for the public.
In the case of Idaho, the division’s director, Jeff Anderson, noted that his staff tasted the vodka and preferred the pricing and quality of other products. Imagine those enlightened folks you meet at the post office and think of them passing judgment on the relative value of different types of alcohol — literally of thousands of products sought by citizens. These alcohol apparatchiks in states such as Idaho sit around and debate whether citizens should be allowed to buy a particular liquor of their choice.
Anderson said they concluded that this vodka was not “something we want to have on our shelf, sitting next to Absolut vodka.” Putting aside the perceived need to protect this Swedish vodka from being seen near Utah vodka, there remains a question of the function and power of these bureaucrats. Like Anderson’s vodka of choice, the bureaucrats consider their power over consumers as absolute.
Most states have gotten rid of these boards and fared well in relying on the market and conventional regulations to protect consumers. Just last month, Washington state embraced the free market and got rid of its state control. Thirty-three states rely on what Adam Smith called the “invisible hand” of the market where consumers choose among products — and the law of supply and demand handles the rest. However, eleven of the seventeen control states — Alabama, Idaho, Maine, New Hampshire, Vermont, Oregon, North Carolina, Ohio, Pennsylvania, Virginia and Utah — exercise direct control over the retail sale and price of liquor, sometimes even owning the ABC stores where it is sold.
Out with the boards
Because I live in Virginia, I have to drive to an ABC store to buy liquor — a store that is insulated from competition, and it shows. Like many government-run enterprises, the place is run with all of the care and concern of your local DMV.
States differ on the rationale for these boards. The Utah Department of Alcoholic Beverage Control, for example, uses its authority “not to promote the sale of liquor” but to “promote moderation and to enforce existing liquor laws.” The heavily Mormon state is famous for imposing arbitrary limits on the sale of alcohol from formerly banning of bars (in favor of “clubs”) to the required use of “Zion curtains” to prevent bartenders from being seen pouring alcohol.
These and other laws seem based on the belief that “for the bureaucrat, the world is a mere object to be manipulated by him.” The man who said that was Marx, a great believer in central control. These states have allowed a fixed bureaucracy to take hold of a market — a self-perpetuating and inefficient middleman in the market.
Ironically, alcohol board heads often defend their decision to bar particular brands because of the limited space that they have at warehouses and stores — ignoring the obvious point that there would be no limitations if they were removed as a chokepoint in the system. Anderson noted that he and his staff have to decide between hundreds of vodkas in choosing what will be made available to consumers while in most states this is the function of the market and consumer choice.
Unlike Marx’s vision, free enterprise is the touchstone of our society. With such free enterprise comes free choice — not simply the freedom to choose between the options approved by the government. Smith in The Wealth of Nations stressed that “it is not from the benevolence of the butcher, the brewer, or the baker, that we can expect our dinner, but from their regard to their own interest.”
Smith could just as well have added that it should also not be from the benevolence of the bureaucrat any more than the brewer — at least in deciding our drink of choice.
Jonathan Turley, the Shapiro Professor of Public Interest Law at George Washington University, is a member of USA TODAY’s Board of Contributors.
June 18, 2012