Liquor Privatization Works for Taxpayers, Teetotalers

Published September 23, 2016

A Utah state lawmaker is “threatening” to campaign for pro-consumer, pro-taxpayer reforms by championing a ballot amendment returning liquor sales to the domain of private businesses — if his colleagues fail to propose legislation getting the state government out of the booze business.

In late July, State Sen. Jim Dabakis (D-Salt Lake City) told Utah news television reporters, “[S]tate control of the economy doesn’t work in North Korea, and it doesn’t work in Cuba … state control of alcohol in Utah isn’t working.”

Some may feel Dabakis is promoting immorality, but abolishing the state government’s control over voluntary exchange is morally good for those concerned about what the government does in their name and with their tax dollars. Instead of forcing abstaining taxpayers to fund the Department of Alcoholic Beverage Control (DABC) — the agency tasked with maintaining a government-imposed monopoly — liquor privatization would allow people to choose whether they partake in commerce they may find distasteful.

Government-administered commerce requires all taxpayers to be responsible for the commerce, because they’re all paying for it with their tax dollars. Allowing economic freedom to take root would allow people who wish to buy and sell the goods to buy and sell the goods, and the ones who wish to abstain to abstain.

In addition to these philosophical considerations, there are more empirical reasons to liberate libations from government command and control.

Talking to the same news reporters, one of Dabakis’ colleagues, State Sen. Jerry Stevenson (R-Layton), says the government restrictions and monopolies are enacted out of benevolence and good intentions.

“We have the lowest DUIs in the country,” Stevenson told reporters. “We have the lowest traffic-related alcohol deaths in the country and we have the lowest level of binge drinking in the country from our youth. We need to make sure we stay there.”

Stevenson’s claims about Utah are widespread among those who share his views, but academic research suggests Stevenson’s moral panic is not supported by the evidence available.

Studying traffic-fatality rates from 49 states over a 20-year period, Duquesne University economics professors Antony Davies and John Pulito found alcohol-sales privatization had no significant effect on most alcohol-related fatalities. In fact, contrary to common wisdom, government control actually decreased public health.

“In one case, we find fatality rates are significantly higher under heavy control versus no control,” Davies and Pulito wrote. “In all other cases, we find no difference in fatality rates for any of the cases under any degree of control versus no control.”

Instead of falsely crediting economic command-and-control with saving lives, lawmakers in liquor-control states should remember free markets do not cause behaviors, they simply reflect existing behavior and attitudes.

“While there is a natural tendency to blame markets for people’s behaviors, in fact, markets are merely the aggregation of people’s behaviors,” Davies and Pulito wrote. “In other words, markets do not cause behavior; behavior causes markets. […] As is the case with all social policies, implementing the policy may lead people to falsely believe that the government is judiciously spending its resources in pursuit of a valuable social goal, and to erroneously equate spending and regulation directed toward the goal with the achievement of the goal.”

By absolving taxpayers of the obligation to fund government economic-control agencies with which some may disagree and allowing consumers to purchase or not purchase goods as they wish, lawmakers can do the right thing for everyone, allowing free markets and voluntary exchange to flourish.