How Nanny States Perpetuate

When I began this blog, I figured that any time I wanted material, I could just stop by the Houston Press for some easy left-wing targets. But aside from having plenty of other material, I have actually found material from the Press to be pretty solid, with the lefty politics being more of a minor annoyance than a major complaint.

So it was today. No. I didn't lack for material. I had a few ideas which I may or may not get to today. But in an email from a fellow home brewing club member, I got a pointer to a very interesting article on the Texas Alcoholic Beverage Commission (TABC), an agency that should be universally despised by the alcoholic beverage industry in Texas, but which is actually perpetuated by the same!

Insofar as the coverage is concerned, the article is a good example of how frustrating it can be to read a left-wing rag these days. The mainstream left is pretty much intellectually bankrupt. The socialist ideology is cynically given lip service, but you never hear anything resembling an argument for it. A sort of dilute socialism is just taken for granted. And along with this, you will sometimes get a certain concrete-bound reporting style, as you do here. This article reports some really hair-raising facts about this agency, but goes nowhere. The left likes government regulation as a rule, unless it smacks of Christianity, which the regulation of alcohol certainly does. So the article slants a little in favor of abolishing the agency or at least revamping it. But then, the left hates large corporations, which are thwarted in some ways by the TABC.

So the article really goes nowhere. What's really frustrating is that, had the author any clue at all about individual rights, the facts presented therein would have made for a hard-hitting polemic against government interference in the industry. So, with that in mind, here's the pointer to the article. I'll follow with just a few samples and comments.

I once bartended at my graduate school's student bar, Valhalla (Their web presence used to be much more imposing.), so I knew of the TABC's loony inspections by reputation. Luckily, I managed not to experience anything like the following.

[D]uring one inspection, a TABC agent came growling to him about a flagrant violation: On his outdoor tables, he had put up those common umbrellas sporting wine names and the Italian tricolors. In Texas bars, that's forbidden advertising.

For water carafes, the establishment had carefully removed all the labels from used tequila bottles of a particularly classic design. The agent looked all over the seemingly clear, clean containers, until he spotted a tiny etching of the maker's logo in the base of the carafe -- and ordered all of them banished.

"He carried on like we'd committed a felony," the restaurant operator says. "You never know what they're going to come up with."

Another bar owner tells of having to call the Texas Parks and Wildlife Department to convince a TABC agent that the fish in his aquarium were just pacus -- not the man-eating piranhas that the agent insisted they were.

And the operator of a Houston drinking establishment displayed a banner proclaiming him winner of the Houston Press Best of Houston category for serving a particular premium beer. That display lasted only until a TABC officer ordered it removed immediately. The apparent violation: The sign mentioned the name of the bar and the beer it served.

In the words of a former head of the TABC, who likened the agency to the IRS, "Take three experienced TABC agents and give them the same fact situation. You'd have at least five different interpretations of the Alcoholic Beverage Code." These aren't just idiots. They're idiots with the power of government force at their disposal. How would you like to be a restauranteur trying to get your business off the ground, only to be fined for something like this?

The bar owners and restauranteurs certainly get the worst of it. It would be a sucker bet that the TABC, which does at least face abolishment every twelve years, would go the way of Prohibition were matters left up to these businesses, but this is not the case. Predictably, large alcohol distributors appear to benefit from the existence of the TABC.

The TABC mandates absolute separation of the three levels of the booze business in Texas: manufacturers, wholesalers and retailers. The concept's roots go back to efforts to keep organized crime and undue influence from affecting the industry when alcohol was legalized in the '30s.

But critics contend that it has evolved into a rigged game. ...

The groups most responsible for those laws -- the Texas Package Store Association, the Wholesale Beer Distributors of Texas and the Licensed Beverage Distributors of Texas -- declined to be interviewed for this story.

For decades, wholesalers have been allowed to basically write the rules by making generous campaign contributions to state legislators. The result is a near-monopoly on the sale of alcohol at the wholesale level, leaving bars and restaurants with little choice of who they buy from -- or even when and how they pay.

"The current regulatory scheme is not set up to protect the public," says Howard Wolf, a retired Austin lawyer appointed to the Sunset Commission by Lieutenant Governor David Dewhurst. "It's set up to protect monopolies."

Three companies -- Glazer's Wholesale Distributors, Block Distributing and Republic Beverage Company -- distribute more than 90 percent of the wine and distilled spirits in Texas. Buy a Budweiser, Tecate or Miller Light in Houston, and it could have come from only one place after it left the brewery.

"Brewers and distillers are forced to take their product and drive right by the retailer," says Wolf. "Instead, it's taken to a warehouse and brought right back. Who pays? You do."

But do they really "benefit" from having their monopolies? When you accept government regulation in your life, you will lose sooner or later, and so it has been with the big distibutors! In this case, sooner is now!

With 30 stores in the area, Spec's sells more liquor than any package store chain in Texas. Owner Rydman says there's a good reason for keeping big corporations out of the package store business.

Rydman says that California did away with the three-tier system, and then "a few big stores gobbled up the little ones by lowering prices and squeezing out the competition. Then prices went back up.

"The responsibility of selling alcohol works best when the owner is in the community. Big corporations don't feel a responsibility to the community," says Rydman. "Thousand-dollar fines are nothing to them. To us it's a big deal."

(As an aside: The surest sign of a scoundrel is a profession of altruism like Rydman's lip-service to "responsibility." Where there are calls for sacrifice, there are collectors of the sacrifice. Rydman does both here.) So these big distributors can't branch out into other segments of the industry -- and profitable segments by the looks of what happened in California! And notice something else. Mr. Rydman claims that he's being "protected" from the big corporations by these laws. But is he? One particularly assinine provision of the TABC is that distributors like him can't purchase beer on credit!

But beer wholesalers are fighting hard to keep the demand-payment rule on the books, despite criticism in the Sunset report. Not only does the law ensure beer wholesalers get paid, it also provides another revenue source: If the money were allowed to sit a few extra weeks in Wal-Mart's coffers, for example, Wal-Mart would be pocketing the interest.

Should the demand-payment rule be rescinded, millions of dollars each year effectively would be transferred from beer wholesalers to retailers. John Rydman, owner of Spec's liquor stores, says, "Would I like to have beer on credit? Sure. Cash flow is cash flow, and my profits would go up immediately."

So, rather than having to argue from principle that government regulation harms even its alleged benefactors, I can just point out actual occurrences! I love Spec's. Some of their stores are emporia with excellent selections of beer and gourmet food, for example. At least one has a walk-in humidor. (I'm one of those lucky souls who can take tobacco or leave it, so I enjoy a fine cigar every now and then.) I wish I could say I admired its owner. He deserves huge profits. But he forgoes them from fear of competition! I want to give this guy my sympathy, but it looks like he got what he asked for.... What a bitch! Poetic justice can really trash your bottom line, eh John?

Read the whole thing. It's a textbook case of why America is in the mess it's in now, economically. No one is willing to forsake the illusion of security offered by the TABC for the real benefit of greater freedom that could be gained by its abolishment. The end of the article is especially revealing: "Beer distributors make large political contributions, a lot of charitable contributions, and they've got friends that vote," says [Allen] Shivers[, former head of the TABC]. "They're not bad people, they're just protecting their interests. It's the American way." Government intrusion into one's livelihood is not the American way. Capitalism is the American way.

Legally, a lot of this could be fixed permanently by that constitutional amendment penned by Judge Narragansett near the end of Atlas Shrugged. (If I remember correctly it was, "Congress shall pass no law abridging freedom of production and trade.") But as this article shows, the American public are miles away from where they need to be to support something like that. In an earlier post, I suggested that, in laziness, Americans accept new governmental intrusions into their lives. The desire for "security" causes them to allow them to continue.

How can we keep our republic if we fear freedom?

-- CAV