Center for a Stateless Society
A Left Market Anarchist Think Tank & Media Center
Obama is No Friend of Beer Drinkers

It’s frustrating to hear US president Barack Obama receive kudos from the beer community simply because of his fondness for the beverage. Between his 2009 Beer Summit, his occasional beer in public, and his recent quip that he’s the first president to brew beer at the White House since George Washington, Obama has successfully cultivated a faux-cool image using beer as a prop.

A bit of advice to Obama: If you really want to be a hero to the beer community, use your platform to remedy the government-caused shortage of beer variety. Use your office to shine a light on how government regulation of alcohol restricts consumer choice and drives up the price of beer. And for God’s sake, stop drinking Bud Light!

After the 21st Amendment ended Prohibition, regulation of alcohol was left to the states. Currently, every state except Washington uses the “three-tier system.” Like all other government regulation, it is convoluted, harmful to consumers, and propped up by large corporate interests, all in the name of public safety and order. The three-tier system mandates that manufacture and sale of alcohol flow through a specific chain of production. Producers sell to distributors who in turn sell to retailers. You, the consumer, may only purchase alcohol from retailers.

Though minor deviations from the strict system (such as permitting breweries to create and sell beer on-site) are occasionally allowed, it remains largely intact today nationwide. Try to brew your own beer and sell it at a local farmer’s market and you’ll learn firsthand about the three-tier system, and a host of other government licensing and permitting laws you’ve also broken.

Proponents of the system claim that these controls over manufacture and sale of alcohol prevent substance abuse and promote accountability among producers and consumers alike. Perhaps the most ridiculous argument of all: Three-tier’s supporters warn that large manufacturers might obtain monopolies in less-regulated marketplaces. Like other paternalistic government rubbish, this assumption sees consumers as dupes, incapable of developing their own tastes for small, local craft products. The Anheuser-Busch store that would inevitably appear on every street corner would be too overwhelming for beer drinkers to resist.

To the contrary, the three-tier system has itself created virtual monopolies whereby small manufacturers are denied entry into marketplaces by large manufacturers who can afford to buy exclusive deals with distributors and retailers. Because small producers are forbidden to retail their own products, they are de facto barred unless they can “pay to play.”

This sad and infuriating story is detailed in the 2009 documentary Beer Wars, which points out that voters are hard pressed to find a single state, local or federal political officeholder who does not receive contributions from the Big Beer lobby. While Beer Wars doesn’t provide much hope for legislative change, it does encourage beer enthusiasts to avoid supporting the beer industry’s Big Three (Busch, MillerCoors, and InBev — now, due to mergers and acquisitions, the Big Two, Anheuser-Busch InBev and SABMiller) in favor of small local brewers. And there is some indication that the Big Two’s profits are declining.

The Big Two’s support for an inefficient and costly three-tier regime is reminiscent of another rotten government-business partnership: Philip Morris’s and R.J. Reynolds’s support for a mandatory, industry-wide excise tax on cigarettes as a means to squelch their smaller competitors. As detailed by Timothy Carney in The Big Ripoff, large tobacco companies ended up partnering with state attorneys general after the 1998 Master Settlement Agreement. Each realized that its own financial well-being depended on the others’. The excise tax became so beneficial to states that anything harmful to the big tobacco companies jeopardized the state’s coffers. An expansion of the excise tax to ensnare smaller tobacco companies not involved in previous litigation logically followed, at the behest of the larger companies. Yet another example of government and big business feeding off one another at the expense of consumers.

The way government alcohol regulation has played out over time, one wonders how heavily bureaucratized marijuana will become once pot prohibition has finally seen its end. Maybe black market pot, with all its risks, is actually preferable.

Citations to this article:

Markets Not Capitalism
Organization Theory
Conscience of an Anarchist