Under the Influence: Center Analyst Exposes Impaired Judgment of Liquor Laws

Few Michigan residents realize that the distribution and sale of beer, wine and liquor is affected by a labyrinth of outdated, inequitable and anti-consumer state laws. The system has resulted in hereditary fiefdoms and policies that block competition in exchange for lavish and widespread campaign contributions to politicians. But Fiscal Policy Director Michael LaFaive has concocted a potent mix of research and public education that is giving headaches to the defenders of the status quo.

The Center’s recent analysis of the economics of these policies began with a Capitol Confidential essay on “Michigan’s Government-Mandated Beer Contracts: Harder to Escape than Marriage?” and a corresponding video by Kathy Hoekstra.

Since that time the Center has distributed six different essays and several blog posts to thousands of Capitol Confidential subscribers, posted additional blog entries on the Mackinac Center website and published an Op-Ed in the Detroit Free Press titled “Rethink Michigan’s Liquor Distribution System.” Much of this information has been included in your recent bi-monthly Mackinac Center mailings.

The wide-ranging work touches on the economics of restrictive laws and rules that unnecessarily raise prices for liquor, beer and wine. On the liquor side of the equation, those price hikes come in the form of a 65 percent mark-up for the state and an array of taxes. On the beer and wine side of the story, protectionist stipulations in state law limit competition among wholesalers and appear drive up prices.

The media response has been terrific. In addition to appearing in the Detroit Free Press, the Big Rapids Pioneer reprinted an essay by Michael LaFaive titled “Distilling the Truth,” and the Detroit News opined twice in favor of solid policy reforms while citing Mackinac Center research.

The issue is coming to a head at a critical time. Gov. Rick Snyder has appointed a 21-member liquor advisory committee to review state law and corresponding rules, and make recommendations for improving the system. The Center intends to ensure each member of the committee — which is meeting in private, closed sessions — is aware of our compelling and educational work on these topics.