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Almost 80 years ago, the country repealed the prohibition of alcohol with the 21st Amendment.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
So, we’re talking about the five wives again.
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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.
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The Mormon population in Idaho can kiss my ass. I think that’s about it. I think the rest is best left to Professor Turley. I mean that with respect.
Tony C: “Nothing in Libertarianism, liberalism or conservatism addresses the issue of how to deal with wholesale corruption. Smaller government isn’t the answer, if the government is weak that just means the corporations can implement directly what they were bribing politicians to allow when the government was strong.”
This nails it down, Tony C. Once I worked for a law firm whose work (very lucrative work) was about 80% representing corporations who were seeking AND GETTING “exceptions” to government regulations for various things they wanted to do that were not permitted by the regs. Then, I was just typing stuff and hardly reading it for content, because in those days there were no computers and the speed of document production was my ticket to being able to afford lawyers to try to GET me some law while the big guys spent there money on GETTING OUT OF some law.
In retrospect I realized what that law firm (and the 200 law firms around it, geographically) were doing. All perfectly legal.
There is no solution to this problem. It either erodes the society by making it necessary to participate in the scandal of corrupt government in the “big picture” or it destroys individuals by making it impossible to prevent the effects of that same scandal of corrupt government in the “little picture” of one or two (or twelve or twenty-seven) little lives.
Barkin’,
Do you long for the days of brown bags with you to the restaurant? Or does every hamburger joint sell “hard licker” drinks now?
@Bron: I am no fan of the actions and decisions of Chris Dodd, Barney Frank, or Harry Reid; I think it is correct to say most Democrats were criminally complicit in both creating the banking fraud and the economic collapse. However, whoever you are quoting is lying by implying the Republicans and “conservatives” were any less complicit.
The collapse was instigated by the repeal of Glass-Steagal, a banking regulation, and that bill was authored by Republicans, supported by enough Democrats to pass Congress and signed by Bill Clinton. Further erosions of banking regulation were likewise a bipartisan effort, and the lack of regulation continues to this day; the supposed new regulations are toothless, with loopholes built in, and won’t be enforced.
The problem is not liberals, or conservatives, or Democrats, or Republicans, the problem is corruption, and specifically, corruption by corporations (banks, energy, and industrialists) with essentially unlimited funds. It is pervasive. If we stopped listening to what politicians say and started paying attention to what they actually do, and how they vote, I think 95% or more of Congress is completely beholden to lobbyists for corporations. I think the 10% approval rating of Congress (Gallup) shows some sense of that, nobody thinks they are working for us anymore.
That is the problem, and I think that is a problem the founding fathers (FF) failed to anticipate, how to prevent wholesale corruption. The division of powers they believed would fix the problem has failed, but so would any system when a super majority of members are willing to collude to circumvent it. The FF wanted to make sure laws were passed with consensus, but what do you do when the consensus is to completely ignore the Constitution?
Nothing in Libertarianism, liberalism or conservatism addresses the issue of how to deal with wholesale corruption. Smaller government isn’t the answer, if the government is weak that just means the corporations can implement directly what they were bribing politicians to allow when the government was strong.
Tony C:
“Funny, I thought you were a fan of letting people do whatever they want with their own money. If they want to join a union, and the union contributes to candidates that support unions, isn’t that them acting in their own selfish best interest? What business is that of yours? Or do you only want to outlaw the behaviors that work against your sociopathic greed?”
A good many teachers join the union because of work related stresses. They dont agree with what the NEA does with their dues money. They really dont have a say in how it is spent. But they join for the protection offered by the unions, both national and state level, against crazy administrators and crazier parents.
There are no competing teacher’s unions with libertarian/conservative ideals to my knowledge. If there were, I have a feeling the NEA would be out a significant portion of its membership.
So I dont think Harry Skip’s objection is based on sociopathic greed or just plain greed.
Just out of curiosity, why do you always think about sociopaths? Are you one? People who think about various behaviors and constantly bring them into conversations are highly suspicious. Are you trying to prove you arent one? Like people who throw around gay jokes or accuse people of being gay to deflect suspicion from themselves.
Seeing as how you are an admitted vulture er venture capitalist, it is highly probable you are indeed a sociopath. I think you talk the way you do to deflect suspicion.
“Too bad Greece and Spain had their economies wrecked by the same property bubble created by the CDS debacle that is currently ruining our economy and Greece’s problem was compounded by a corruption problem that makes ours look quaint and they were lying about their national finances to meet the standards required to participate in the Euro.”
Lets examine some causes of the “property bubble”:
“The day the democrats took over was not January 22nd 2009, it was actually January 3rd 2007 the day the Democrats took over the House of Representatives and the Senate, at the very start of the 110th Congress.
The Democrat Party controlled a majority in both chambers for the first time since the end of the 103rd Congress in 1995.
For those who are listening to the liberals propagating the fallacy that everything is “Bush’s Fault”, think about this:
January 3rd, 2007 was the day the Democrats took over the Senate and the Congress.
At the time:
The DOW Jones closed at 12,621.77
The GDP for the previous quarter was 3.5%
The Unemployment rate was 4.6%
George Bush’s Economic policies SET A RECORD of 52 STRAIGHT MONTHS of JOB GROWTH
Remember the day…
January 3rd, 2007 was the day that Barney Frank took over the House Financial Services Committee and Chris Dodd took over the Senate Banking Committee.
The economic meltdown that happened 15 months later was in what part of the economy?
BANKING AND FINANCIAL SERVICES!
Unemployment… to this CRISIS by (among MANY other things) dumping 5-6 TRILLION Dollars of toxic loans on the economy from YOUR Fannie Mae and Freddie Mac FIASCOES!
Bush asked Congress 17 TIMES to stop Fannie & Freddie – starting in 2001 because it was financially risky for the US economy.
And who took the THIRD highest pay-off from Fannie Mae AND Freddie Mac? OBAMA
And who fought against reform of Fannie and Freddie? OBAMA and the Democrat Congress
So when someone tries to blame Bush.
REMEMBER JANUARY 3rd, 2007…. THE DAY THE DEMOCRATS TOOK OVER!”
Budgets do not come from the White House. They come from Congress and the party that controlled Congress since January 2007 is the Democrat Party.
Furthermore, the Democrats controlled the budget process for 2008 & 2009 as well as 2010 & 2011.
In that first year, they had to contend with George Bush, which caused them to compromise on spending, when Bush somewhat belatedly got tough on spending increases.
For 2009 though, Nancy Pelosi & Harry Reid bypassed George Bush entirely, passing continuing resolutions to keep government running until Barack Obama could take office. At that time, they passed a massive omnibus spending bill to complete the 2009 budgets.
And where was Barack Obama during this time? He was a member of that very Congress that passed all of these massive spending bills, and he signed the omnibus bill as President to complete 2009.
If the Democrats inherited any deficit, it was the 2007 deficit, the last of the Republican budgets. That deficit was the lowest in five years, and the fourth straight decline in deficit spending. After that, Democrats in Congress took control of spending, and that includes Barack Obama, who voted for the budgets.
If Obama inherited anything, he inherited it from himself. In a nutshell, what Obama is saying is I inherited a deficit that I voted for and then I voted to expand that deficit four-fold since January 20th. “
Jeff. You are not correct. Since Washington gave up its monopoly the increase was due to FEES payable to the Washington State Liquor Control Board, as was in the text of the voter approved initiative. The Spirit Tax (20.5%) and the Liter Tax ($3.7708 per liter) was present during the state control period as well. What changed as far as assessments went was for retailers we were required to pay 17% of the sale price to the LCB. Wholesalers were made to pay 10% to the LCB.
http://www.liq.wa.gov/pressreleases/where-your-liquor-dollars-went
The article stops short of blaming Obama for the 5 Wives or socialism of ABC stores.
I plan on selling Five Wives Vodka in my Liquor Store as soon as it hits my freight door. Why? Because I CAN.
I also plan on making a mockery of the Idaho liquor control board in an upcoming newspaper ad. Again, because I CAN.
Freedom’s just another word for Everything to Gain.
You cannot buy a drink in any liquor store in America. Only bottled stuff.
Turley knows from whence he came but not of where he speaks. Here in NC the ABC stores are owned by solo practitioners and are clean, neat, no ads, tidy, people are helpful, friendly. Wine and beer are sold in grocery stores.
Gyges,
You’re the challenger. I named no specifics, and won’t now. If you crow at that, then we know why you are here.
Good luck with that.
Good answer to a wrongly formulated question: Should have been the different singla malt producing regions. But
even on Islay they are starkly different.
Grappa is like vodka, only nore so. Good is very good, bad is terrible. Drank alsways straight. Little on the lips and then inhale while diluting it with saliva. Tastes better than the description .
Blouise,
Try finding a grape called Agliano. Not Sicilian, the foot of the boot.
In general, I look for value, not snob brands or obscure ones. Don’t define mhyself by brands I consume or bear.
General comment, not implying anything about you or others.
Beer is not my beverage of choice. But with some foods, it is a must. Hungarian polf, a stew with paprika and kummin, etc.
One element of the new law in Washington State which Mr Turley fails to mention, and I am sure he didn’t bother to look into before making his pronouncement, is that prices in Washington all went up as soon as the state was no longer involved. That increase did not come from taxes or state controls, but from the need for a multitiered system to add profit at every level. Of course this profit for a few citizens is obviously better than lower prices and more money to spend for all of the citizens of the State. I’ll give up a vodka here or there for that.
@Bron: They should get a pass on property tax, sales tax, social security tax, medicare, unemployment, etc. if they make under $40,000/year and have children.
I do not think children make a difference, but $20K per worker is fine by me. I do not agree with sales taxes, they are regressive (they impact the poor much more than they impact the rich, in terms of hours worked per year to pay sales taxes.) I would replace them with an income tax. As for property taxes, I would approach it the same way; a deduction of about $60K on the value of the property; taxes only apply to the excess value over $60K.
For exact figures, my approach would be to set the figures so the bottom 35% pay no taxes, everybody else pays taxes on earnings or property value in excess of those figures.
I tend to believe that free riders are a small percentage of the population, and 95% or more have at least the ambition to be solidly middle class. So if they could get out of the bottom 35% they WOULD, which means they cannot, for whatever reason, they just do not have the ability, talent, health or smarts to escape the bottom.
So I see no reason to penalize them for being who they are and less capable than average, fate has already handed them the crappy end of a stick. They can still contribute to the economy and do jobs others do not want. I can fund all the government we should have with a progressive tax on the top 65% of workers (including health care and education).
@Skip: Actually Tony we have one of the highest costing public schools systems in the world.
I do not believe you, on a per student basis, I think that is bullshit. Norway will pay for college for any student that wants to go, a full ride, even to an AMERICAN college.
The public school teachers unions are also the second largest campaign contributors to the Democratic Party.
Funny, I thought you were a fan of letting people do whatever they want with their own money. If they want to join a union, and the union contributes to candidates that support unions, isn’t that them acting in their own selfish best interest? What business is that of yours? Or do you only want to outlaw the behaviors that work against your sociopathic greed?
If some of the poorest people in India, can somehow send their children to private schools,
More utter bullshit. I have been to India, dufus, and the poorest people in India can barely eat, they haven’t changed their clothing in thirty years, and they sleep in alleys and crap on the side of the road. Perhaps you should do some research before you start talking about the “poorest people in India.”
The more money we spend on socialism the worse our society will become and that’s the one fact you cannot deny.
It isn’t a fact, and I deny it with gusto; the happiest citizens in the world are citizens of socialist countries with top income taxes over 50%, and even most of the people earning over a million a year in those societies, when surveyed, claim they support socialism and it HELPS their business.
You are a lying fabricator, Skip.
Gyges,
Grappa sounds like Mad Dog!
Tony C, Bron, Mitch McConnell disagrees that the working poor should have generous tax breaks:
“McConnell: Tax code benefits the poor and needs to be changed”
“I understand full well that our friends on the other side live to every day to raise taxes,” McConnell told CBS host Charlie Rose on Tuesday. “Almost 70 percent of the federal revenue is provided by the top 10 percent of taxpayers now. Between 45 and 50 percent of Americans pay no income tax at all.
”http://www.rawstory.com/rs/2012/06/19/mcconnell-tax-code-benefits-the-poor-and-needs-to-be-changed/
“We have an extraordinarily progressive tax code already,” he added. “It is a mess and it needs to be revisited again.”
According to the Congressional Research Service (PDF), almost 100,000 millionaires in the U.S. pay a lower effective tax rate than millions of families earning less than $100,000.”
I used to drink grappa with my Italian landlady. She and her husband would flavor it with either cherries or young pine cones. It’s pretty damn stout. They would serve it in little aperitif glasses. A little goes a long way. Straight I imagine it’s a lot like rocket fuel.
The red and maroon states cited as examples of this conartistive prudery merely serve to emphasize my point.
Gyges,
Never tasted grappa and don’t want to.
I have been experimenting with Italian wines this last six months or so and have been pleasantly surprised by both the variety and quality. Right now I’m into Sicily and a grape named Zibibbo which has become my new favorite.
(P.S — every time my phone rings I think of you 😉 )