Economic Illiteracy And Colorado’s Beer Wars

Denver Post columnist Bill Johnson writes a reliably forgettable column, but this week’s is an exception.  It is remarkable for its deep lack of understanding of economic forces, corporations, and the proper role of government.

The context is Colorado’s beer wars.  To recap, for the past several years, convenience and grocery stores have been lobbying for legislation that would allow them to sell full-strength beer.  Currently, convenience and grocery stores can sell only 3.2 beer, or beer with an alcohol content of 3.2% or less.  Liquor stores are barred from selling low-strength beer and can only sell “normal” strength beer, which usually has an alcohol content of between 3.2% and 9%.  Due to this restriction, in Colorado there is almost always a separate liquor store within a stone’s throw of a grocery store, since one-stop shopping is not permitted.

House Bill 11-1284 would eliminate the licensing distinction between 3.2 beer and regular brews, effectively allowing everyone to sell weak or strong beer as they see fit. Liquor stores have been lobbying against the bill, since many of their business models are dependent on the regulatory ban on competition over beer sales between liquor and grocery stores. 

Johnson is against the legislation:

The legislature this year seems determined to wreck as many small businesses as it can identify. The only possible beneficiary of this measure is the corporate bottom lines of the big grocery chains and 7-Eleven and Circle K-type markets.

* * *

I get how convenient it would be to be able to pick up a six-pack while walking the aisles of the supermarket or stopping for a tank of gas.

It would make life considerably easier, I suppose. But at what cost?

* * *

There is a considerable value and uniqueness small businesses bring to every community. Even when it is difficult and, maybe, doesn’t even make sense, we have a duty to give them our support as a way to enrich the places where we live.

In other words, Johnson thinks it is the responsibility of the legislature to inconvenience the public to ensure that a regulatory-created business model is sustained in perpetuity.  Sorry, that is not the proper role of government.  Quite the opposite. 

Government should not be in the business of forcing people to patronize certain businesses to the detriment of others.  Government has no business favoring mom and pop shops or “big grocery chains and 7-Eleven and Circle K-type markets.” 

Indeed small, independent liquor stores are owned by one or a handful of people, who are the primary beneficiaries of any profits.  Circle-K, on the other hand, is a publicly traded company owned by lots of shareholders, such as people with 401K retirement plans.  Why should private liquor store owners be favored over everyone who owns Circle-K stock?

Complicating matters further, 7-Eleven “operates, franchises and licenses close to 7,200 stores in the U.S. and Canada. Of the 6,100 stores the company operates and franchises in the United States, more than 5,000 are franchised.”  In other words, most 7-Elevens in the U.S. are locally owned small businesses, just like most liquor stores.  Why should government favor one set of small businesses over another?

Look, I understand that Johnson likes the idea of small local businesses.  So do I.  Like Johnson, I am concerned that the bill would cause some liquor stores to close.  But displacement by market forces is a necessary though unpleasant fact of allowing markets to flourish. 

And I predict that grocery stores will never carry the selection of craft beers that I like to have, increasing convenience at times while decreasing variety.  But that is no reason for the legislature to prohibit me and every other consumer from “pick[ing] up a six-pack while walking the aisles of the supermarket or stopping for a tank of gas.” 

People who just want a six-pack of Budweiser or Fat Tire can choose the convenience of grocery stores.  People who want a bomber of Arrogant Bastard can choose the variety available at a liquor store.  The government has no business restricting those choices.

Via PPC  by way of Complete Colorado.

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Published in: on March 29, 2011 at 1:21 pm  Leave a Comment  

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