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November 15, 2012 4:09 PM The Two Sides of the Dear Beer Agenda

By Ed Kilgore

By now many of you, I hope, have already read Tim Heffernan’s provocative article from the November/December issue of the Monthly about the possible descent of the United States into a drunken condition similar to that of the United Kingdom or pre-Prohibition America, and how to prevent it from happening without denying access to John Barleycorn altogether.

In his post on Heffernan’s article this morning, Paul Glastris emphasized the “cheap beer” angle of vertical integration of the brewing industry. I immediately wondered if it wouldn’t make sense to leave the system alone and just tax the hell out of the final product, essentially capturing for the public treasury the “dear beer” harvest in higher prices that might otherwise go to private-sector middle-men.

But in an email exchange with Paul, he noted the other side of Heffernan’s argument: leaving the system as it is also leaves in place the current and ever-expanding easy availability of strong drink at all hours of the day and night that a more regulated market might restrict.

This is an argument worth considering. In much of the country, it’s now possible to buy beer, wine and liquor 24-7 in grocery and drug stores. And the ability of these retailers to hustle a kiss o’ the hops is prodigious. I can’t find a real link to this, but New Orleans’ now-defunct grocery pioneer Schweggman’s was famous for making its own house-brand beer (brewed by Dixie) available near the entrance of its stores, and implicitly encouraging shoppers to drink a few while “making groceries.” This was undoubtedly a shrewd way of stimulating demand for food and drink products, but not exactly designed to avoid problem drinking.

I still think resuscitating an economically inefficient way to sell alcoholic beverages isn’t necessarily the ideal path for dealing with the problem. But it’s true easy availability when one might have already had a few too many, combined with price, are both parts of the equation. And there ought to be a happy medium somewhere between state-owned monopolies on hooch and drive-thru daiquiri outlets.

Ed Kilgore is a contributing writer to the Washington Monthly. He is managing editor for The Democratic Strategist and a senior fellow at the Progressive Policy Institute. Find him on Twitter: @ed_kilgore.

Comments

  • jharp on November 15, 2012 4:23 PM:

    Definitely need to raise taxes on beer, wine, and liquor to offset the cost of the destruction they cause.

    Around here I can get a 30 pack of Hamm's for $9.99.

    On fishing trips to Canada, and this was 4 or 5 years ago, we had to pay $50 for a 24 pack of cheap beer.

    35 cents per beer here or $2.08 per beer in Canada.

    Someone is not doing it right.

  • Peter C on November 15, 2012 4:33 PM:

    I don't really care about alcohol taxes, but I think we should reconsider our puritanical drinking age. It infantilizes young voters unnecessarily. Old enough to vote? Yes! Old enough to be subject to the draft and die in combat? Yes! Old enough to have a glass of wine??? No! It's AGAINST THE LAW!

  • martin on November 15, 2012 4:37 PM:

    Besides agreeing with Peter C, hows about we start enforcing (or reinforcing if need be) our anti-trust laws?

  • Zorro on November 15, 2012 4:46 PM:

    The Pennsylvania Liquor Control Board (PLCB) gets a bad rap, but, overall, it strikes an excellent balance between wine + hard liquor (beer is sold elsewhere) being available, yet not *too* available. As a bonus, the PLCB brings in money to the Commonwealth every year.

    -Z

  • shivas on November 15, 2012 4:48 PM:

    In Canada alcohol and tobacco are taxed at a rate commensurate with the costs to society of the use of these products. With the data available it is possible to calculate health costs associated with the use and abuse of tobacco and alcohol, the costs associated with the mayhem on the roads due to drinking and driving, and the impact on the environment with all the detritus left behind by the consumption of these products. Calculate it all and add on a healthy 20% or so and you can at least make it a zero sum game instead of a burden on society.

  • JMG on November 15, 2012 5:18 PM:

    And it's not as if beer's gone out of style in Canada as a result of the prices.

  • boatboy_srq on November 15, 2012 5:19 PM:

    @Peter C: IIRC, the drinking age was one of those great Reagan accomplishments - done as the price for raising the speed limits on Interstates and state highways: to obtain federal funds for that infrastructure, any state that didn't want to keep 55 had to raise its drinking age to 21. I just missed getting grandfathered into FL's old threshold (19) by mere hours.

    We've seen with Standard Oil and Ma Bell what monopoly looks like, and the Telecom Act of 96 hasn't exactly made the Baby Bells more robust in themselves or produced the kind of durable competition we all hoped for when AT&T was broken up. Allowing the Busch, Coors et al to grab another piece of the brewing pie will have similar effects.

    I'm more concerned about what this will do to the microbreweries and the older, smaller houses (Yuengling and Anchor spring to mind). How long before their trucks have to be Busch or other big-beer services? How long before they're bought out and watered down (literally as well as figuratively)?

    And there's the question about home brew, that others have asked. On one end of the spectrum we had home brew as illegal as the commercial variety (under Prohibition): on the other, it's as likely that the big brewers would demand that home brew be outlawed to protect their margins - er, product.

    Keeping the market diverse keeps all these forces in check. It may not be as efficient as some would like, but in a case like this efficiency may be the other side of the cheap beer coin: even if the taxes are raised, if the brewers keep the prices low (and perhaps artificially low) the tax rates will hardly matter.

    The distribution grab should be opposed as unfairly anticompetitive as well as contributing to alcohol-related issues. Availability is a separate issue: if we make getting alcohol - cheap or not - too hard to obtain legally we run the risk of fostering illegal production and consumption again. The last thing we need on that score is a cottage industry of illegal stills and speakeasies.

    Last: the alcohol industry is providing a teachable moment in how not to regulate recreational substances. Big Beer is having a field day: imagine what Big Weed would become if treated similarly. I'm all for a regulated RecSub industry - but a sensibly regulated one.

  • Altoid on November 15, 2012 5:21 PM:

    There's more to life than economic efficiency. When airlines were regulated, one of the big reasons for it was to enure they'd have enough money sloshing around to pay their employees and to keep their planes maintained. They could compete on anything so long as it wasn't price, in order to support safety and the living standards of their employees. And indirectly, everybody their employees bought things from.

    Of course, it wasn't a perfect system by any means; it encouraged complacency and stasis, and high fares kept airline traffic much smaller than it could have been. But like so much of the political economic thinking that came out of the Depression experience, it was aware that people are not only consumers, but also employees whose pay supports other employees, and that everybody has a human interest that extends far beyond their lives as consumers. Or as capturers of value.

    Getting away from that kind of thinking has led us in an almost direct line to the misery of today's air travel and to the Wall Street crash of 2008.

  • Crissa on November 15, 2012 5:30 PM:

    Limits on when you can buy alcohol are stupid.

    They penalize those who don't have traditional schedules to catch the few who can't plan ahead to have enough drink to make it through the dry times.

    It's a stupid law that does no good.

    Now, if you're talking about imposed dry times at a bar, sure, that breaks a cycle of drinking or partying - assuming you can't just drink water or soda and dance for the hour(s) that the bar can't serve. (Which is what I do).

    But stores? It's just annoying.

  • Doug on November 15, 2012 6:02 PM:

    There hasn't been a time since the end of Prohibition that one couldn't stock up with purchases from a carry-out while it was open and drink to insensibility at home when bars, etc were closed, so that's not new.
    However, when two companies share 80% of a market via their horizontal control of a product and are starting to expand that horizontal control into vertical control as well, I have to ask, where's the DoJ? The first Roosevelt went after JP Morgan and the Great Northern when, had the deal been permitted, that railroad would have controlled much less than 40% of US rail traffic.

  • KK on November 15, 2012 7:02 PM:

    100% agreement with Pete C above. Maybe go to 19 drinking age but 21 is absurd. We made it through the 18 years fine. Less bingeing as well. You get too F'd up in a bar u get tossed. You get tossed you miss the ladies, so u don't get tossed.
    I think all those States looking to dump the control method are just R privatizers. I'm a NYer, we have little controls- 4 am bars, can buy any day. We are still standing. While I don't give 2 if beer is cheap I do hate vertical integration. It is immoral and DOJ shouldn't allow it.

  • anon on November 15, 2012 10:33 PM:

    Around here a 30 pack of Lebatts Blue can be obtained for 22.00--at a beer store. The Giant Eagle grocery store lets one leave with one twelve pack of whatever, and if one looks for more it takes multiple trips to the door. Having shown driver's license and likely on record.
    Still pretty regulated in Pennsylvania. The closest they got to privatizing was letting a singular grocery store--and not all of them--sell some beer. DUI arrests are so prominent that people kind of take care.

  • Allan Snyder on November 16, 2012 10:07 AM:

    I live in Pennsylvania under the "control" of the plcb, and it's an a prime example of going to far to the opposite extreme of a government wine and liquor monopoly, both retail and wholesale. Our rates of binge drinking and DUI are higher than most states that allow private sales, our prices our too high, and the product selection absolutely sucks-not surprising since the monopoly is staffed by government employees most of whom don't have any real interest or knowledge of the products they buy and sell.

    To top it all off, the recently departed chairman, along with the current "CEO" are under investigation for corruption, exchanging gifts and favors with vendors for favorable treatment. One of the few issues where I agree with Governor Corbett is his desire to privatize wine and spirits sales. Tax it, regulate it, enforce the laws, including anti-trust, but a monopoly is bad no matter who runs it.

  • Allan Snyder on November 16, 2012 10:20 AM:

    Great place to learn about the absurdity of our state monopoly, and how NOT to go about regulating alcohol.

    http://noplcb.blogspot.com/?m=1

  • Anonymous37 on November 16, 2012 1:45 PM:

    "In much of the country, itís now possible to buy beer, wine and liquor 24-7 in grocery and drug stores."

    That would not include California, where you can't buy alcohol after 2 a.m. (or maybe 3 a.m., it's been a while since that particular issue has come up for me).