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Thread: Minimum price for alcohol: yay or nay?

  1. #1
    Elephant CRSP's avatar
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    Default Minimum price for alcohol: yay or nay?

    The Scottish government's about to attempt to push through minimum pricing laws for alcoholic drinks in order to try to break the back of the drinking culture here. Currently, with special offers, and the like, in supermarkets and pubs, it's possible to buy enough alcohol to kill yourself for less than £10 (horrible White Lightning cider crap, and similar drinks, that serve no other purpose than providing as high an alcohol percentage as possible for as cheap as possible).

    On the one hand, there's a serious problem in Scotland, and the rest of the UK as a whole, stemming from the drinking culture, where whole areas of city centres are turned into no-go areas after dark. This obviously needs fixing, somehow.

    However, on the other hand, the British do not drink because alcohol is cheap. The British, along with other northern Europeans, have always been extremely heavy drinkers. Right now, rates of alcohol consumption aren't even at the same level as they were at the start of the twentieth century (rates dropped heavily around 1915 for obvious reasons, and have been climbing since).

    Further, why should other, more responsible drinkers, suffer because others can't handle their drink?

    Rather, wouldn't a better solution be to stamp down heavily on drunken behaviour?
    Les sanglots longs des violons de l'automne blessent mon coeur
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  2. #2
    Indifferent to bacon Julie's avatar
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    Default Re: Minimum price for alcohol: yay or nay?

    Nay. We have state minimum pricing on alcohol and its effect on drinking appears to be negligible, though I don't have any stats to back up that statement.

    The poor should have just as much right to get shellacked as the rich before going and sleeping under a bridge.

  3. #3
    Stegodon
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    Default Re: Minimum price for alcohol: yay or nay?

    The problem, at least in this area, is that if the poor can't afford booze, they just drink Lysol or hairspray. Basically all it does is drive people to drinking lesser quality beverages, IMHO.

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    Stegodon
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    Default Re: Minimum price for alcohol: yay or nay?

    Yes, by all means let's increase the temptation to distill at home, or buy illegal intoxicants instead.
    I must leave this planet, if only for an hour.

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    Default Re: Minimum price for alcohol: yay or nay?

    Let's get the technical crap out of the way first: it's more efficient to levy higher taxes on goods with inelastic demands (e.g. alcohol and cigarettes, heroin and whores) because the resulting "deadweight loss" is less. However, at sufficiently ridiculous levels of taxation, the strength of demand will be enough to create a black market for these goods. Bad tax policy creates organized crime. Same with outright prohibition, which is why the current "drug war" is such a spectacular blunder. Human behavior can't be legislated away.

    This isn't a matter of opinion. It's a simple cost/benefit analysis. Even so, the majority of people refuse to acknowledge the obvious facts because they're more comfortable right now living with the mirage of tough enforcement than they would be in a world where people with genuine addiction problems are treated humanely. And that, right there, is where the benefits of alcohol taxes come in.

    You will not significantly reduce the consumption of alcohol by taxing it more heavily. Again, it's inelastic. People will find a way to drink. However, at reasonable rates of taxation, you will be able to efficiently increase government revenues, which could fund rehabilitation programs. The people who are able to drink responsibly would be able to do so, while those suffering the effects of alcholism would have the resources available to them to help them sober up. This wouldn't be a panacea, but then again, there are no perfect solutions to human nature. It's just that this technique deals with people as people, without the regular delusions about crime and punishment. And it would improve the situation with respect not only to legal "vices" such as alcohol, but also the entirely misguided policies we have in place with prohibited materials.

  6. #6
    Indifferent to bacon Julie's avatar
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    Default Re: Minimum price for alcohol: yay or nay?

    I thought we were talking minimum pricing, not taxation.

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    Default Re: Minimum price for alcohol: yay or nay?

    Quote Originally posted by Julie
    I thought we were talking minimum pricing, not taxation.
    In a certain sense, it's all "taxation" in one form or another. Firms charge what they charge to maximize their profit, and it quite literally costs them money if their prices are too high, just the same as if their prices are too low. I kinda glided past that point because the government almost never discourages behavior without trying to profit from it.

    But if this is seriously a plan to put a price floor in place without even making any money from it, then that's even stupider. You raise the prices with, again, no significant decrease in alcohol consumption because of the inelasticity. And instead of gaining revenue from this price increase, you enter a false signal into the market that could cause overproduction. So you introduce even more inefficiency into the system, with nothing positive to show for it. No rehab funding, no education subsidies. Nothing.

    It is not possible to control human behavior like that. We have to keep in mind how people react to these situations. I'm not a staunch libertarian--I think reducing alcoholism is a valid goal for the government. But it won't happen just because we increase the price. This has been demonstrated time and time again. Something more has to be done, and if taxes are increased (within reason), that can fund programs that actually do some measure of good, if it's executed correctly.

  8. #8
    Indifferent to bacon Julie's avatar
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    Default Re: Minimum price for alcohol: yay or nay?

    Quote Originally posted by Hellestal
    But if this is seriously a plan to put a price floor in place without even making any money from it, then that's even stupider. You raise the prices with, again, no significant decrease in alcohol consumption because of the inelasticity. And instead of gaining revenue from this price increase, you enter a false signal into the market that could cause overproduction. So you introduce even more inefficiency into the system, with nothing positive to show for it. No rehab funding, no education subsidies. Nothing.
    As I said upthread, we have state minimum pricing in Ohio on alcohol. Here's a link to the law with the reasoning the state put forward. I think it's hooey, personally, but there ya go.

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    Default Re: Minimum price for alcohol: yay or nay?

    Quote Originally posted by Julie
    As I said upthread, we have state minimum pricing in Ohio on alcohol. Here's a link to the law with the reasoning the state put forward. I think it's hooey, personally, but there ya go.
    Basically, what I'm trying to get across here is that "hooey" isn't a strong enough term. This is objectively verifiable stuff. It's not just a matter of opinion.

    The primary effect of that law just isn't to decrease beer consumption. No way, no how. It's the normal case that certain retailers, like convenience stores, will have high mark-ups already. They can't make their money on scale, like Wally World does, so they have high margins for each sale. They attract their customers from the ease of purchase, like when somebody picks up a six-pack while they're filling their tank. So this enforced price increase isn't even intended to affect these retailers much, if at all, because their prices are already high.

    It's manufacturers and wholesalers who are being forced to mark up their prices to the same amount that retailers normally do. In other words, that law is specifically designed to prevent wholesalers from undercutting the retail market. Their idea about "orderly competition" is about deliberately removing one form of competition from the marketplace. I would bet you dollars to donuts, those specific provisions in the law were pushed hard by the retailers. Why compete, when you can just get the government to shut down your competition for you?

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