Distilling the Truth

The president’s letter in the January-February edition of the Michigan Beer and Wine Wholesalers newsletter suggests that association members are not primarily motivated by economic self-interest, but are merely active supporters of public safety. He then offered to sell the Mackinac Bridge to potential buyers at an excellent price.

OK, just kidding about the bridge. But the absurdity of the “disinterestedness” suggestion was indirectly revealed in the president’s letter, writing on a state of Washington effort to privatize the state’s liquor control regime and reform beer and wine distribution by repealing that state’s distributor monopoly. Reportedly, the initiative was financially supported by Costco and other retailers. Costco also allowed petitioners to gather ballot-access petition signatures on its properties.

The Michigan Beer and Wine Wholesalers president wrote, “As is often the case lately, beer and wine distributors stood shoulder to shoulder with state regulators and public safety officials to help defeat this glaring example of corporate greed.”

That’s rich coming from the head of an organization that exists only because the state has assured its members lucrative distribution monopolies that cost consumers and taxpayer millions of dollars.

According to Meininger’s Wine Business International, in 2007 Costco Wholesale Corp. was the world’s largest seller of fine wines. It earned that status by purchasing high quality goods in volume and passing the savings on to customers. In contrast, Michigan’s beer and wine wholesalers acquire much of their profits by getting the government to prohibit potential competitors.

Those monopoly profits come at the expense of consumers, and yes, also at the expense of retailers, who might add to their bottom line if the beer and wine distribution monopoly was broken. Or maybe not: Unlike monopolists, they operate in a competitive environment, and the store down the street might promote a “Broke the Monopoly” sale, forcing outfits like Costco to lower their own prices.

That’s the kind of thing that makes a free people prefer competition to monopoly, and makes voters irritated when legislators take those benefits away by preserving archaic laws that grant monopoly favors to politically active special interests. Especially special interests that add insult to injury with pious remarks about standing “shoulder to shoulder” with government officials  in the name of "public safety."

Like every other special interest that seeks riches in the political arena rather than providing value in competitive markets, the beer and wine wholesalers in Michigan and in other states with similar monopolies don’t check their self-interest at the state capitol door.  Indeed, there’s a reason why the families that own these distributorships are called “The Millionaires Club.”

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.