Writings and observations

Who profits


One of the books on my bookshelf since its publication in 1986 is Who Profits: Winners, Losers and Government Regulation, by Robert Leone. It’s an academic treatment, but it offers a useful framework for looking at regulation, and an ironic one too: His academic background (Harvard) notwithstanding, Leone suggests that regulations – meaning law and rules generally – are best examined from a practical and economic standpoint, not ideological.

On page 135, he writes that “the first and perhaps most obvious characteristic of management to government policy is that it tends to be ideological. That is to say, management’s first reaction, especially to the adverse consequences of regulation or government intervention, tends to be a principled one and not an economic one.” Leone argues that while ideology has a useful place in politics, it is “counterproductive” in evaluating policy. Look instead, he suggests, at the practical effects. (For his full and compelling argument as to why, read the book.)

All that comes to mind in reading the excellent Seattle Times column out today by Bruce Ramsey on Initiative 1183, the measure that would allow for sale of hard liquor in private stores, instead of (as at present) only in state stores. It is a revision of two measures that failed at the polls last year.

Among the key arguments (implicitly or explicitly) against the measure are that liquor could be sold in thousands of tiny shops all over the place, and that teenage drinking could be expected to rise. Ramsey makes short work of these. He noted studies showing that teenage drinking is actually at lower levels in California, Nevada and Arizona, where private store sales are allowed, than in Washington, Oregon and Idaho, which all are state-store states. And he points out that, in contrast to at least one of the 2010 measures, few stores under 10,000 square feet – meaning few if any convenience stores or mini-marts – could qualify to be sellers.

Having made clear that the debate over the initiative isn’t about any of these things:

“This is a high-stakes fight. It’s fun to write about public safety, or whether selling schnapps is a proper function of government. But the organizations writing million-dollar checks are playing to win. To them it is a fight over the market for alcoholic spirits in a state of 6.6 million people — and also about Washington’s rules for selling wine, which 1183 frees from pricing restrictions. Costco is bankrolling the Yes campaign. It wants to get into the market in bottled spirits in its home state. It also wants more freedom to buy wine and sell it at good prices. The Wine & Spirits Wholesalers of America are bankrolling the No campaign. Their members like the rules just as they are — and they do not want to compete with Costco.”

The rest, he said, is just “face paint and rubber masks.” He seems to have it about right. The guess here is that Leone might agree.

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