Alcohol Policy Reform Round-Up

A few links on alcohol policy reform, but first a quick comment.

The main thing that is annoying me about the official debate over this topic is the preoccupation with the question of how much money the state will get from selling the state stores.

Corbett and Turzai put this $2 billion number out front, and are now backtracking, admitting that this was pulled from an old study and we don’t actually know the real number. Advocates seem to feel the need to justify changing the state’s alcohol policy on the grounds that it will plug part of the budget hole.

That’s too bad – even if it doesn’t plug the state’s budget gap, we should still do it. It’s still going to be worth doing because the most efficient way to regulate alcohol consumption and the attendant social ills is on the demand side (taxes), not the supply side (making alcohol difficult/annoying to buy).

Now, the problem with trying to shift to demand side regulations is that once you scrap the supply side regulations, the price of alcohol is going to drop. The Commonwealth Foundation notes that the PLCB adds a 30% mark-up, and Pennsylvanians pay up to 50% more for liquor than in other states.

A drop in price is going to lead to increased consumption and associated harms unless you hold prices constant by increasing taxes by the same amount that the price drops.

This would appear to run up against Tom Corbett’s No Tax pledge, even though it wouldn’t result in any noticeable change in prices for consumers. You’d really just be swapping one form of tax for a more efficient one.

So when you read the testimonials at the state Senate hearings where opponents are warning about increased social harms, what they’re really saying is that the drop in price will lead to more consumption. But politicians aren’t powerless to stop that from happening – they have the power to raise taxes on alcohol to reduce consumption.

Links:

 

• John Micek and Jim Panyard report on the first Senate hearings. It would be better for Senators to be hearing from more economists and fewer ideologues.

• Craft beer creates jobs.

• Lew Bryson reminds us that it’s illegal to sell mixed cases of beer at beer distributors because of a dumb case law.

• State stores are dropping brands. In a market system, stores would do a much better job of matching local tastes, and thus would avoid the problem of carrying a bunch of stuff people don’t buy.