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Private biz, not state, ought to be running liquor distribution

As I See It

It was hard to miss the Jack Daniel`s bottle on the front page of the April 18th perspective section in The Clarion-Ledger. After reading Sid Salter`s piece on the business of booze in the Magnolia State, I began to think about a few things.

Why is the State of Mississippi in the liquor business? Why are narcotics not controlled and distributed by the state? Both are dangerous in the hands of minors, drivers and addicts but alcohol alone is singled out for state monopolized sale and distribution.

Society has long cast a disapproving eye on any substance that impairs judgement and risks public tranquility. Getting drunk and shooting up the town, wife beating and dangerous driving is the legacy that drinkers must contend. Though social drinkers pose little threat to themselves or others, the stigma is there nonetheless.

Prior to the mid-1960s, all legal drinking in Mississippi was limited to beer. The low alcohol content of beer was believed to protect society since the drinker would likely burst before imbibing enough beer to pose a real threat. Whether that attitude was valid or not, it prevailed from the time of Prohibition until liquor was legalized in the mid-60s.

The time before liquor was legalized in Mississippi was a humorous situation. Youngsters had to produce proper, or falsified, identification to buy beer. However, the only requirement to buy illegal liquor was being tall enough to put the money on the counter. Everyone knew where the houses with the driveways around back were located and buying liquor posed no more difficulty than buying a Coke. For the brave at heart, moonshine whiskey was plentiful and cheap.

To placate those who staunchly opposed the legalization of liquor, the state appointed itself the guardian of public morals and vowed to limit access to adults who would be ever so discreet in practicing their indiscretion. Package stores had to be separate facilities and could sell nothing buy alcoholic beverages and the bottles had to be snuck out of the store in brown bags. These establishments could not be located near schools or churches so that youngsters and churchgoers wouldn`t be exposed to the sin of alcohol.

All of these precautions seemed appropriate at the time, though history has proved them largely ineffective. Society can`t really condemn the use of a product that the state endorses, in fact, has a monopoly on the licensing, selection, sale and distribution. We can`t have it both ways. History teaches us that people who want to drink will find a source to satisfy their cravings, whether packaged in a brown bag or a Mason fruit jar.

In its role as purveyor of distilled spirits, the State Tax Commission`s Alcoholic Beverage Control Division has grown into an enormous bureaucracy that generates $66.7 million in tax revenue. From its command post in south Madison County, the division coordinates the buying, warehousing and distribution of all liquor products sold in Mississippi. It is also responsible for enforcing Mississippi`s liquor laws.

Has the time come to get the state out of the private sector and back into handling the business of the people that the people cannot handle for themselves? Some think so. A group of nine state senators attempted to dismantle the sale and distribution function of the ABC and turn it over the private industry. The bill failed to get much support; however, it could well be a harbinger of things to come.

Conventional wisdom holds that a bureaucracy will fight to the death to preserve itself without regard to the necessity for its existence. Dismantling ABC will require gargantuan effort and several legislative sessions if it can be done at all.

Would the people benefit from privatization of the liquor business in Mississippi? Yes indeed. In addition to the regular 7% sales tax, the wholesale price of liquor is marked-up 27.5% to subsidize the operation of the ABC. In addition to the cost factor, which is substantial, brand selection is limited and getting special orders of a preferred brand not on the state`s list is cumbersome. The system is somewhat similar to the old Soviet Union`s planned economy where the state made all consumer choices. That didn`t really work well for them and our system of distributing demon rum would be improved by turning business over to business.

The result would be lower cost for booze, more variety and fewer hassles with delivery. In short, the liquor industry would enjoy all the benefits of our free economy. Now isn`t that a novel idea.

Thought for the Moment – What can`t be cured must be endured.

– Clergyman and scholar Robert Burton (1577-1640)

Joe D. Jones, CPA, is publisher of the Mississippi Business Journal. Contact him at cpajones@msbusiness.com.

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