Ontario PC leader Tim Hudak mused on Monday that many Ontarians miss a buck a beer (I certainly miss it). Premier Dalton McGuinty dismissed any discussion of the government enforced price floor as a “distraction” from more urgent issues. There is also the suggestion that it would some how be irresponsible to allow people to buy a good at market price. I thought I would take a moment to address both of these points.
If his point is that beer prices shouldn’t be the main focus of the next provincial election, I agree with Mr. McGuinty. The focus should be his abysmal fiscal performance and the resulting economic mess that is the province of Ontario.
That being said, there is not reason why “Premier dad’s” growing interference in the lives of responsible adults should not be an important side issue of the election. The attitude of the current Ontario Liberal leadership seems to be that the entire population of Ontario is made up 15 year olds. I agree that a 15 year old should not be drinking 1$ beer (as slightly hypocritical as that position makes me) but there is no reason that an adult shouldn’t be allowed to buy beer at any price that he/she can negotiate.
Surely we can include this debate without “distracting” too much from Mr. McGuinty’s other failures.
There are those that would disagree with my claim that there is no reason adults shouldn’t be treated as adults when it comes to beer prices. That position is presented in this CBC article:
Juergen Rehm, the director of social and epidemiological research at CAMH in Toronto, which treats addiction and mental illness, said there’s a reason beer prices are higher.
“What [Hudak is] saying is actually contradicting all science about the consequences of such a move,” said Rehm.
“We know that if prices would actually be lowered, the death toll would increase. Of course there’s tremendous costs also with the non-fatal consequences of alcohol, all the hospital costs, all the costs in criminality, etc.”
I will ignore that he refers to sociology as a “science,” because my reflex is to simply tune out anyone who makes such an absurd and misguided claim. Instead I will look at core assumption of the above statement.
Mr. Rehm is assuming that alcohol is the cause of personal and social problems. For him, more access to alcohol means that there would be more criminals and binge drinking. Such a claim is completely unsubstantiated. Someone with a psychological dependency on alcohol and drinks in a destructive manner would be willing to pay a high price for beer. They have already thrown away their health and their lives so why wouldn’t they spend a few dollars more?
The people that are actually affected by a price floor in beer are the responsible drinkers. The drinkers that enjoy an odd beer here and there may decide to drink less if the cost is higher, but such drinkers are not the ones being cited by price floor proponents. The people that they want to help are not helped by price floors and everyone else is hurt by a higher cost or a less than optimal beer supply.
This is not a difficult case to make because most Ontarians intuitively know all of this. The average beer drinker knows that they are being hurt by price floors and they know that a drunk is a drunk regardless of the price. If Mr. Hudak sticks to his guns, this could easily become a winning issue for him.
Mr. Rehm is assuming that alcohol is the cause of personal and social problems. For him, more access to alcohol means that there would be more criminals and binge drinking. Such a claim is completely unsubstantiated.
There is volumes of data that substantiate this claim. You’d know that if you didn’t tune out people who are much more knowledgeable about this subject than you are.
Link me a study that you would consider conclusive. Everything I have read has merely shown that the idea is theoretical. In fact honest proponents admit that the connection is theoritical>
I don’t dismiss sociologists because they know more than me (I admit that many of them do). In fact I don’t dismiss sociologists at all. Yet any sociologist who believes that their work meets the vigorous requirements of an actual science is deluding himself/herself.
But if you do want to cite sociology studies how about thisone>
Sorry the first link doesn’t work properly try this: http://freedomnation.blogspot.com/2010/02/alcohol-debate-in-scotland.html
http://www.thelancet.com/journals/lancet/article/PIIS0140-6736(10)60058-X/fulltext
http://www.ias.org.uk/resources/factsheets/tax.pdf
http://www.questia.com/googleScholar.qst;jsessionid=3695F5E0BFD416F9EAEC224B11F422DF.inst3_1a?docId=5002486732
http://onlinelibrary.wiley.com/doi/10.1111/j.1530-0277.2003.tb04410.x/abstract
http://alcalc.oxfordjournals.org/content/45/4/387.abstract
http://books.google.co.uk/books?hl=en&lr=&id=aC0rAAAAYAAJ&oi=fnd&pg=PA255&dq=Do+alcohol+prices+affect+consumption+and+related+problems%3F&ots=uCN-SaUvWn&sig=d1ON-UdTCruo1p3ojJNm1ZrRrMk#v=onepage&q=Do%20alcohol%20prices%20affect%20consumption%20and%20related%20problems%3F&f=false
Or perhaps any of the million other scholarly articles and public health citations that a simple google search turns up.
Or I could provide you with anectodal evidence from my time living in the British Isles and on the European continent.
Or the personal fact that when I was younger, and even today, I drank/drink more when it’s cheaper.
Or perhaps the most basic of economic rules linking price to demand.
1. I will look at these articles when I have time.
2. I lived on the British Isles too. I can tell you plenty of stories where there was extraordinary drunkenness. This wouldn’t demonstrate that A. the drunkenness I encountered is the root of the problem. B. that a price floor would fix it.
3 and 4. This is basically the same argument so I will combine my response.
I drink more when it is cheaper too, but I also drink responsibly and I assume that you do too. A couple more beers or even a few more beers won’t create anymore of the “social harm” that people like Mr. Rehm complain about. The root of that problem is always something else.
In your characterization of the link between price and demand (or my interpretation of your characterization) you are only looking at the aggregate and not the individual.
Would the total amount of alcohol consumption go down with a price floor? I think it is reasonable to conclude that it would, but so what?
The individuals who would be drinking less would be responsible drinkers like you and me, but again we are not the problem that concerns people. It is the irresponsible drinkers that is of concern. It is the people who have a dependency on alcohol. Such people (to put it in economic terms) have a high utility for alcohol, they would thus be willing to pay a higher price then most people. As I commented in the post, they are already willing to pay with their health and livelihood, so what more would bother them? No price floor would prevent a drunk from getting drunk. All it would do is hurt the rest of us who want to have one or two extra beers.
Well then you’ll need to read these and other articles, there’s a proven correlation (and it would be hard to argue that there isn’t causation) between price level and criminal acts involving alcohol, especially pronounced for young people.
Shiner,
I’ve given your links a quick look at and here are my conclusions based on what I read. Most of the articles presented evidence that total alcohol consumption increased when prices fell. This was a point that I conceded to you earlier. The issue of contention is on if dependent drinkers or problem drinkers would reduce consumption. There is an awareness in some of these articles that there is not sufficient data to support one conclusion or the other.
The one link that claimed conclusively that price fixing would effect “problem drinkers” is the first link. This conclusion is based on a theoretical assumptions made by the researchers on the level of utility and rationality of problem drinkers. I find this study to be unconvincing.
The best case that you have is the example given in the second link. It seems that after a reduction of consumption tax in Finland there was a corresponding increase in deaths related to alcohol. I find this example interesting and I plan on looking more into it.
If the price goes down, demand goes up, no? Is it really that shocking that lowering the price of alcohol would increase consumption?
I know I’d consume more if it were cheaper.
Suppose with buck-a-beer there’d be a few additional deaths from alcohol poisoning each year. Is that a decisive reason against the policy?
Is there any way it couldn’t be!? I’m shocked at the question, though I’m sure one of you folks will defend your right to get slightly more buzzed at a slightly lower price despite the fact it might lead to some idiot dying from alcohol poisoning.
Shiner,
Put libertarianism aside for a moment. Do you really think we would (e.g.) spend a billion dollars putting in some kind of super improved crash barrier on the 401 if we predicted it would only save one additional life per year?
This is about trade offs and, indeed, utilitarian calculation.
So…some idiot dies of alcohol poisoning. So what? That’s worth the long arm of the state ripping me off at the liquor store for? That idiot is responsible for himself as I myself. Feel free to talk him into an AA program if you wish.
It doesn’t matter if lowering the floor price leads to negative public health outcomes. That is not the government’s business anyway. I am not here to ‘managed’ for your optimal society.
1) As long as we’re citing European experiences, why does nobody cite e.g. Germany or France, where liquor consumption is far higher than in North America. It’s also incredibly cheap, and yet alcoholism isn’t nearly as big a social issue as it is here.
Higher costs don’t necessarily decrease consumption – see e.g. how Luxembourg bests anyone in terms of per capita consumption, despite the fact that everything is expensive in Luxembourg. And everyone knows that when you think of Luxembourg, you think of major health problems and societal breakdown.
2) A major difference is how you drink it. The Brits and French drink about the same per person, but the French do it in the context of a couple of glasses of wine with dinner. The Brits do it by going out and getting *destroyed* on Fridays.
WARNING: Drunk Welsh people in the following link!
(http://www.dailymail.co.uk/news/article-1182373/Welcome-binge-Britain-Polish-photographer-documents-years-drunken-revelry-Cardiff.html)
I *never* saw that kind of thing in France, and that’s even after patronizing the odd shooter bar. You teach people alcohol is rebellious and dangerous, and they treat it as such – hence why I think students have a greater tendency to drink that way despite their disposable income being lower. In fact, I know they do, given the number of people out at affordable tuition protests who I then saw rack up $60 bar bills on an ordinary Thursday evening.
That students and young people drink a lot and do so irresponsibly isn’t because it’s affordable, it’s because that’s what you *do*. You’re also forgetting all the people who get others to boot for them. And boy howdy are there a lot. People below age are already willing to pay a premium to drink, and by and large it’s a combination of boredom and wanting to feel like an adult.
2) As long as we’re dictating social policy on paternalistic notions, I need not cite the multiple medical studies out there which have outright confirmed that moderate consumption of alcohol (no more than two drinks per day, most conclude) leads to long-term health benefits. Not just with red wine, but even with beer. Presumably the government should be buying me a couple of bottles of beaujolais nouveau every week as a preventative strategy. But not that swill from Niagara, of course, because as Mordechai Richler said, there’s only so much I’m prepared to drink for my country.
3) You’ve touched on this above, but I think it’s peculiar that the left-leaning people on the thread seem to support higher liquor taxes. It’s sort of like the analogy of the lottery being a regressive tax on the poor.
4) Comparing comparable drinking cultures (I’m too lazy to find it, but I know there’s a study out there comparing BC with Washington and/or Oregon State), they found that there was no greater incidence of alcoholism or alcohol-related problems notwithstanding that you can a) buy beer and whine in those states’ grocery stores, and b) it’s far more affordable down there.
5) Nobody touched on this, but the state doesn’t *actually* make that much from direct liquor revenues (or, for that matter, tobacco, but that’s another story). Using BC numbers, BC makes about $500 million a year from liquor, which looks like a lot until you consider that the provincial budget is $40 billion.
Considering how the restaurant industry is screaming bloody murder about the HST (I presume they are in Ontario as well), wouldn’t it be just wonderful to reduce liquor taxes to nothing or practically nothing?
Not only would it be a key encouragement to mostly small businesses which offer decent employment to unskilled workers and the less well off – independent restaurants and cafés, for instance, to say nothing of smaller brewers and vinters – but it might even could potentially trigger a respectable café culture.