Wednesday, September 29, 2004
Professor Bainbridge on Interstate Shipments of Wine
by Tom Bozzo
Prof. Bainbridge calls limits on interstate shipments of wine a "pet bugaboo" and links an amicus brief for a Supreme Court case(*), authored by a star-studded and (probably) ideologically varied cast of economists, including three Nobel laureates, that concludes that such limits are not economically justified. (It would have been more accurate of the Prof. to call this, correctly, an AEI-Brookings [Joint Center for Regulatory Studies] piece, rather than just AEI, which would enhance its credibility on the left side of the aisle.)
The conclusion is no surprise, as most mainstream economists (this one included) tend to regard restraints on trade as undesirable as a rule, absent compelling evidence to the contrary, and would thus share Prof. Bainbridge's "bugaboo." Indeed, the economists note that the wine market, while not subject to much empirical study, is unlikely to have characteristics that would make it an exception to the rule.
In fact, the reported conclusion something of an understatement, the fault of a poor single-sentence abstract on the AEI-Brookings Joint Center site. Once the economists get past a plodding (and to my mind uncompelling, though I claim no insight as to what SCOTUS might find compelling) section on how the restrictions make it somewhat harder and more expensive for conoisseurs in certain states -- not Wisconsin, thankfully -- to obtain some boutique wines, they get into the heart of the matter, which is that wine shipment restrictions and other such trade regulations act very much like taxes on the public that support narrow interests, here local liquor middlemen. These are sometimes justified in the name of "orderly market conditions" (brief at 3**), which should be taken as code for "check your wallet." (***)
--------------------------
(*) Actually, two cases involving Michigan liquor laws.
(**) In the case of regulations on liquor sales, "promotion of temperance" and "protection of minors" are also cited as state interests. It is left unremarked that the nature of the restrictions under consideration, which discriminate against out-of-state wineries, effectively negates those reasons, as it's permissible to get loaded on Michigan hooch and allowing any shipments would seem to facilitate enterprising teenagers' efforts to circumvent the drinking age (****).
(***) In Wisconsin, a Depression-era minimum price law is supported by the petroleum marketer and convenience store associations, who don't want Wal-Mart and Woodmans to compete away their profit margins on gasoline sales. The Wisconsin law is notable from an antitrust standpoint in that it makes some non-predatory pricing illegal.
(****) Not, from the looks of UW campus-area bars, that they actually would need to go to such lengths. Plus, someday I'll start doing proper HTML footnotes.
I've actually been a fairly regular reader of conservative UCLA law professor Stephen Bainbridge's blog. The non-partisan content there has included entertaining wine- and car-blogging, and the wine part has been split off into its own blog, Professor Bainbridge on Wine -- link happily provided, FWIW. If he pulled in the car blogging (and threw in a bit of real estate and sports blogging), it could be the "Personal Journal" of the blogosphere.
Prof. Bainbridge calls limits on interstate shipments of wine a "pet bugaboo" and links an amicus brief for a Supreme Court case(*), authored by a star-studded and (probably) ideologically varied cast of economists, including three Nobel laureates, that concludes that such limits are not economically justified. (It would have been more accurate of the Prof. to call this, correctly, an AEI-Brookings [Joint Center for Regulatory Studies] piece, rather than just AEI, which would enhance its credibility on the left side of the aisle.)
The conclusion is no surprise, as most mainstream economists (this one included) tend to regard restraints on trade as undesirable as a rule, absent compelling evidence to the contrary, and would thus share Prof. Bainbridge's "bugaboo." Indeed, the economists note that the wine market, while not subject to much empirical study, is unlikely to have characteristics that would make it an exception to the rule.
In fact, the reported conclusion something of an understatement, the fault of a poor single-sentence abstract on the AEI-Brookings Joint Center site. Once the economists get past a plodding (and to my mind uncompelling, though I claim no insight as to what SCOTUS might find compelling) section on how the restrictions make it somewhat harder and more expensive for conoisseurs in certain states -- not Wisconsin, thankfully -- to obtain some boutique wines, they get into the heart of the matter, which is that wine shipment restrictions and other such trade regulations act very much like taxes on the public that support narrow interests, here local liquor middlemen. These are sometimes justified in the name of "orderly market conditions" (brief at 3**), which should be taken as code for "check your wallet." (***)
--------------------------
(*) Actually, two cases involving Michigan liquor laws.
(**) In the case of regulations on liquor sales, "promotion of temperance" and "protection of minors" are also cited as state interests. It is left unremarked that the nature of the restrictions under consideration, which discriminate against out-of-state wineries, effectively negates those reasons, as it's permissible to get loaded on Michigan hooch and allowing any shipments would seem to facilitate enterprising teenagers' efforts to circumvent the drinking age (****).
(***) In Wisconsin, a Depression-era minimum price law is supported by the petroleum marketer and convenience store associations, who don't want Wal-Mart and Woodmans to compete away their profit margins on gasoline sales. The Wisconsin law is notable from an antitrust standpoint in that it makes some non-predatory pricing illegal.
(****) Not, from the looks of UW campus-area bars, that they actually would need to go to such lengths. Plus, someday I'll start doing proper HTML footnotes.
