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Almost 80 years ago, the country repealed the prohibition of alcohol with the 21st Amendment.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
@Bron @Tony C. Public Schools have not accomplished what they were intended to do. Drop out and truancy rates are even higher today than when public education was begun and I believe that literacy is actually down. Home schooling is huge because of what people perceive as bad education. Anyone with money and any common sense sends their kids to private schools.
This is a market where other than taxation and licensing there is no legitimate governmental interest that creates a social benefit. Fiat monopolies are only appropriate when there is legitimate governmental interest in creating a benefit for society (such as maximizing the size of the risk pool the reducing the cost of risk and administrative costs by providing universal health care insurance).
@bron: that is most magnanimous of you, considering the working poor and most of the middle class cannot afford both property tax, income tax and private school tuition.
You are right, it is magnanimous of me; because I would ensure the children of the working poor get an education whether their parents pay a dime of taxes or not.
You see, here is where you separate from reality. I have BEEN the working poor, I grew up with the working poor, and by definition the working poor do not have enough money to do everything they want. If public school was not free, they would not send their kids to private schools instead. They would spend the money on food, better shelter, healthcare, fixing the car, and getting by. Their children would be put to work and receive NO education, which was generally the case before public schools, and that would in turn waste their potential as more productive middle class citizens, after their prime learning years spent working as laborers, they would pretty much be laborers for life, and continue that cycle of poverty.
The working poor do not pay enough taxes for the public schooling their children get. Instead they are subsidized by the working non-poor, in order to help end the cycle of poverty and not waste the potential of the children of the working poor.
Yes, it is true that only the rich can afford private schools, but the same thing was true when there were NO public schools, schooling was reserved for the wealthy and privileged and everybody else was a serf, living meal to meal. Public schools give the children of poverty a chance to escape serfdom, and it works: the majority of Americans receive enough education from public schools to be productive with a standard of living far above the typical life of uneducated people in areas with no public schools.
OTOTOT BAD NEWS
Friend in AZ uncle has had his cancer operated. Cause. Agent Orange. They know this after its use in Vietnam.
She passed along this. Seems weeds are getting resistant to Monsanto’s Roundup.
Solution: Agent Orange from Dow Chemical (2,4,D).
Enjoy it in your veggies and in your drinking water.
EPA is weakly considering what to do. Here’s what you can meanwhile. Good eating!
————————————
Big Ag armed with 2,4-D is a scary scenario — 2,4-D
has been shown to be contaminated with dioxins, is linked to numerous health problems, is highly likely to drift onto neighboring fields, is frequently found in groundwater, and is likely to already be negatively impacting several species of at-risk animals. But despite this, the USDA has not done any meaningful review of possible consequences to human health, the environment, or other farms that could result from approving “2,4-D resistant,” genetically engineered corn.
With the USDA seemingly ready to approve the 2,4-D resistant corn, the EPA’s involvement is crucial. If the EPA stands strong,and rejects 2,4-D, they can effectively kill Dow’s 2,4-D resistant corn and soy. Please take action now:
http://act.credoaction.com/r/?r=6883009&p=poison_corn&id=42033-3626525-TxR_1tx&t=6
——————————————————
Just so you know: corn is fed to most of the animals that we in turn eat. Dioxin does not break down and become harmless when ingested in animals we feed on.
Are you feeling like being a part of a huge test?
Our genes have survived a lot. RoundUp and Agent Orange are not some of them.
Rafflaw,
Let’s put it another way, it is not Socialism.
It’s a simple question if you want the neighbors barfing on your lawn, the bums panhandling for a drink, or other social ills. Is requiring prescriptions for drug purchase socialist?
Good misleading joke. You’re doing fine.
Some even feel that bathing suits should be required at swimming pools. What a shock. (back at cha)
Great article Professor. Who would have guessed that Socialism is ok as long as it pertains to booze?
Echoing mespo727272
I spent 4 hours last Friday (here in GA) for my 15 year old son to get his learner’s driving permit. The DMV personel were fantastic: friendly, helpful, and very apologetic about the wait. BUT we were one of gazillions of people who had waited until the last minute to get permits before the summer school offering of driver’s ed class. Our DMV was prepared as best they could be, and terrific to work with. My hat is off to them, especially for their patience.
Here in GA, the problem isn’t so much that municipalities don’t want Sunday liquor sales, but that the PTB finds ways to keep them from voting on it. Granted, we don’t have ABC-type stores, it is a fight between various business interests, along with “values voters.”
Dr. Turley fails to mention that he can easily cross a river (or walk from his GW office) and pay some of the lowest liquor prices in the country in DC where we make a fortune on liquor taxes from Virginia and, esp. from the bizarrely micromanaging Montgomery County in Maryland.
“Holdover from prohibition”. True. And the problems of pre-prohibition and under prohibition to some degree are still problems today.
Do it the Swedish way: Give him his poison, but with
moderation. Lagom är bäst.
Most prohibitions are a scams upon society by existing businesses to limit competition. Guess who were the big contributors to the anti-gambling initiative here in Florida a decade back or so. Parimutuels, Cruise lines (off shore gambling), owners of the football and baseball teams, etc.
I think government regulations in some areas are necessary…. As stated above this is a holdover from prohibition. It has long been a way for states to raise revenue…..Without additional taxation or use fees…..
The liquor license is another regulatory usurpation of rights that discriminates against the potential; providers and consumer by limiting the number of providers. By limiting the the number of providers, the consumer is limited by both who he does business with and most likely the price, as reduced providers (the supply demand principle) generally would cause an increase in price. The mere fact of the high costs of the licenses, $25K to 100K, provides an inducement to charge higher prices just to return the cost of the investment, if that is what you would call it. The high cost of the license also reduces the number of providers. The cost of opening a store, bar or restaurant is high enough without having to come up with an additional large some of money, surely limits the number of providers.
Tony C:
that is most magnanimous of you, considering the working poor and most of the middle class cannot afford both property tax, income tax and private school tuition.
Only the rich are able to take advantage of your “beneficence”.
BTW, the products are described by circle diagrams, and word characteristics such as: developed, dominant barrel, vanilla, citrus, etc depending on the beverage type.
Which is best is your choice.
The 21st Amendment repealing prohibition was in 1933.
Some folks are dragging their feet.
Do they still have brown bags in Carolina?
Of course the idea was that the wife after church would hava a chance to get her husband home before the ABC opened (and he got drunk). Not needed in today’s moderation.
I enjoy in Sweden the information offered in most “System” stores on choice and use of wines, grappa, and malt. And just think of the thrills of discovering rhum and tequila. Over time a developed palate can be developed distinguishing many factors.
And if I want rotgut I know which shelf it will be on.
The choices are not made by bureaucrats but by expert tasters. There’s never a weekly special, never price competition, and most of the price is taxes.
Tax the drug users, just like we should do with marijuana too.
Perhaps the American control system could be trained to add value to the distribution system, and increasing health by increasing choice of healthier drinks.
Pizza is actually better with wine than Coke, if both are of good quality.
And the Prof. knows where his unregulated market with its concern for the end customer leads to. Have any methyl poisonings lately.
I agree, the state should have nothing to do with alcoholic beverage sales; or any flavored beverage sales either, they are not critical to life in any way. These are morality police that should not exist.
For “beverages” the state should ensure clean water is available at cost from the tap; to me that is enough.
My own philosophy of socialism is that even if the government is going to provide something (like health care, or free school) there should be no restriction on private enterprise providing the same thing. I do NOT believe in vouchers or any other redirection of government funds, but if you want to pay your property tax that funds the public school system AND you want to home school your kids or send your kids to a private school at your own expense, have at it.
You think it’s bad that you can’t buy alcohol before one on Sundays? Try living in Indiana where you can’t buy it at ALL on Sundays! :o)
While I agree that the privatization of liquor stores here in Virginia is advisable, my experience with ABC store employees hardly mimics Professor Turley’s. I find the stories well-organized and clean. The employees are helpful and knowledgeable about the product, and they scrupulously enforce the prohibition on sales of alcohol to minors. For the record, I find DMV offices herein Richmond manned by helpful employees, too. No brag, just fact.
Were a long way from “the land of the free”.
While we’re at it, could we do something about the laws in some states (including NC, where I live) that ban sales of alcohol before 1 pm on Sundays? Because, of course, if you can’t buy a bottle of wine, you’ll just get bored and go to church.