Tom T. Hall said it in his popular country song: “I like beer." While I, too, like beer, I love economic freedom.
Economic freedom is defined by the Pacific Research Institute as “the right of individuals to pursue their interests through voluntary exchanges of private property under the rule of law." In plain, everyday language, economic freedom is free-market capitalism.
One of the reasons I love economic freedom is the high degree of correlation between the level of economic freedom and prosperity. Senate Bill 64 and House Bill 258 — both now moving through the 2011 legislative process — will further codify into law what is commonly called and actively promoted by its industry beneficiaries as “The Three Tier System” of beer distribution. It would make it illegal for producers of beer to have any ownership interest in a distributor. If enacted, this bill will deal a severe blow to economic freedom in Missouri.
How? Please allow me to introduce my explanation with a little illustration: No matter how you dress it up, if something still looks like a duck and still waddles like a duck and still quacks like a duck, it is probably a duck.
And, no matter how you dress up the quack economic theory of the beer distributors who claim that customer choice is maximized, that there are cost efficiencies enjoyed by the consumer and that monopolistic practices are prevented, all as a result of the quasi-monopolistic Three Tier System created with the force of law — it is still quack economic theory.
During scheduled committee hearings in the Missouri House and Senate, we can be expected to hear testimony by proponents of the Three Tier System who dress up the supposed benefits of the bill. Eye-catching websites of the industry have long propagandized this quackery. Even the purpose clause for Chapter 311, the Liquor Control Law, seemingly promotes this quack theory.
Section 311.015 states, in part, that the law's purpose is to “achieve other important state policy goals such as maintaining an orderly marketplace composed of state-licensed alcohol producers, importers, distributors, and retailers."
This purpose clause, adopted by an amendment to a 2007 Senate Bill that sought only to extend a deadline in the statute, was likely promoted by a group or association that seeks to benefit from the furtherance of the Three Tier System. This section of the statute is effectively a marketing arm of the beer distributors’ quack theory by the perpetuation of the myth that the Three Tier System provides great benefits to the public.
Should the public policy goal of this state be to maintain by the force of law “an orderly marketplace of producers, importers, distributors, and retailers” of beer? What about for soft drinks or water or bread or, for that matter, how about for all food? No, of course that is not the role of the state.
The marketplace is perfectly capable of deciding which system of beer distribution it prefers by making its purchase choice from among all that are offered by suppliers in the free market. So, while this purpose clause should be an insult to the common sense of everyone, the furtherance of the true objective of the wholesale beer distributors to protect their market “turf” by the force of law is more than an insult — it is a travesty. State government is charged with consumer protection and not the protection of an individual business or an entire industry from competition.
The proposed legislation is an outrageous intervention and disturbance of Missouri residents’ constitutionally protected right of “the enjoyment of the gains of their own industry” and the right of every person to earn a living.
While it is likely that an amendment or substitute bill might be offered to provide a partial solution to the anti-free-market quackery of the bill by extending a waiver for certain small brewers, I would suggest to the General Assembly that economic freedom should not be preserved for just small businesses; it should be preserved for all businesses.
Today’s microbrewery may be tomorrow’s Miller brewery. That is, unless competitors force it to stay small with the strong arm of the law.
Bruce Hillis is advocate for economic freedom and constitutional governance. He lives in Mexico, Missouri.