Social engineering and economic tomfoolery are on display more prominently than usual in the United Kingdom amid calls for minimum prices on alcohol. “‘When beer is cheaper than water,”
sermonized nanny David explained Prime Minister David Cameron, “it’s just too easy for people to get drunk on cheap alcohol at home before they even set foot in a pub.”
From the Telegraph:
The Prime Minister will indicate today that a minimum price of 40p per unit of alcohol in England and Wales will be set under laws to be introduced later this year.
Supermarkets and other retailers will be barred from offering “multi-buy discount deals.”
Mr. Cameron will acknowledge that the alcohol crackdown will not be “universally popular.” But he will insist that the move is necessary to stop the “scourge of violence” caused by binge drinking.
The minimum price, demanded by medical groups, will mean that a bottle of wine cannot be sold for less than £3.60; a can of lager will cost at least 80p; and a bottle of spirits between £10.40 and £11.20.
Price controls are seldom economically prudent: for starters, the price floor would cannibalize the liquor industry at a time when England can’t exactly afford a reduction in national output. But Cameron’s chief objective, as he made clear, is to reduce Britons’ alcohol consumption: “I know this won’t be universally popular. But the responsibility of being in government isn’t always about doing the popular thing. It’s about doing the right thing.”
Is it really “the right thing” to protect citizens from their own voluntary–if imprudent–choices? Laws against drunk driving, theft, battery and assault protect citizens from one another (and debate over the link between intoxication and violence rages on in Britain). But price controls to curb consumption only increase the financial cost of purchasing alcohol for the individual user; if government officials are to be believed, this will reduce the amount of alcohol consumed, and therefore alcohol-related disturbances, too.
But calls to reduce the supply of alcohol ignore the fact that it’s much harder to reduce demand for alcohol. The British government can only regulate the public market for alcohol: if the law required all alcohol producers to publicly register so the Exchequer could squeeze their business with taxes and regulations, does anyone doubt underground production would surge? Even if law enforcement cracked down on bootleggers, would constables really be able to catch all the malcontents, and before they could distribute their brew? Wouldn’t this expansion of the shadow economy for booze increase the very crime and violence Cameron intends to reduce?
Ironically enough, government taxes likely would increase the price consumers paid for alcohol. But the government wouldn’t be collecting this in the form of tax revenue: bootleggers would command high prices to compensate the risk of illicit activity. A violent drug war to wipe out competition could increase their market power, too. The price for alcohol would exceed the price in a competitive market, but the value-added would line bootleggers’ pockets, not government coffers.
Cameron’s call to impose an alcohol price floor is worse than a sanctimonious decree from the nanny state: it would increase crime and violence, present innumerable quality-control concerns and likely not reduce alcohol consumption in the United Kingdom.
For more about self-righteous politicians:
For more about the follies of prohibition: