What the People Tolerate

In "Rum Deal: Counting Up All the Ways America's Booze Laws Are Terrible", Jim Saksa of Slate exposes an absurd regulatory environment and the perverse incentives it creates. Although these regulations vary quite a bit by state, many of the same economic phenomena play out across the country. Perhaps the most obviously ridiculous regulations, in terms of purchasing alcohol, exist in Pennsylvania:

... And in Pennsylvania, the state-run Wine and Spirit Shoppes (the extra "pe" is for "pricier ethanol") are the exclusive retailers of both hard alcohol and wine, making the Pennsylvania Liquor Control Board the largest purchaser of wine and spirits in the United States.

Pennsylvania's eccentricities don't stop there. You can only buy a case or a keg of beer at a privately run beer distributor, and I mean only a case or a keg: Pennsylvania beer distributors are prohibited from selling in smaller quantities. If you want a six-pack of Keystone Light in the Keystone State, you need to go to a bar, deli, or bottle shop with an "eating place retail dispenser" license, which allows the purchase of up to 192 ounces at one time, or 16 twelve-ounce beers. But there is no restriction on how many times in a row you can do this, so College Me has personally (1) walked into a deli, (2) bought a 12-pack, (3) handed that 12-pack to an underage friend outside, and repeated steps 1-3 until we had enough booze to forget how expensive our tuition was. [links in original]

Throughout the article, it is clear that these regulations are vestiges of Prohibition, and do little to encourage anyone to enjoy alcohol responsibly -- not that that would be a legitimate function of government, anyway.

The reader will indeed wonder why such silliness remains on the books at all -- and Saksa will have a big part of the the answer. These laws create an artificial set of circumstances that enable some individuals to enrich themselves. This parasitical class sees to it that nothing changes:

All regulations have the ability to create winners and losers, and this phenomenon is particularly potent in potables. Economists noticed [PDF] that the winners often are a concentrated group, such as beer wholesalers, whereas the losers--consumers, usually--are diffuse. Our beers are a bit pricier, our choices a bit constrained, and we might need to visit more than one kind of store to stock up for a party, but these costs are barely noticeable to all but the most tightfisted of tipplers. Yet all those little costs add up to princely sums for today's booze barons, motivating them to defend the lucrative status quo through lobbyists and political donations.

Economists call this legitimate [sic] racket "regulatory capture." When a regulatory scheme is transformed into a competition-stifling tool of the ostensibly regulated industry, that industry has "captured" the regulations. Regulatory capture in turn encourages rent-seeking behavior. [links in original]

Let me emphasize that I respectfully disagree with Saksa's use of the term "legitimate" to describe this racket. It may be legal, but the government has no business making such laws in the first place.

And that issue leads me to a larger point about the many other similar tales out there about absurd regulations. Too many people take for granted the notion that the government is right to regulate the economy, and see such rules (and their inevitable consequences) as somehow unusual or "excessive". But that glosses over the nature of government as having "the legal power to initiate the use of physical force against other individuals or groups and to compel them to act against their own voluntary choice". What is absurd is not so much any particular regulation, or whatever legalized criminal enterprise it creates -- but the very fact that the government is meddling with ordinary trade. The government should be protecting us from those who would violate our rights -- not doing just that by telling us what to do.

Were more of us intolerant of being told what to do, no amount of lobbying or demagoguery on the part of the creatures of government meddling would succeed in maintaining the idiotic -- and wrong -- status quo of the government running practically everything for long.

-- CAV