There could be no more perfect example of why government should be kept entirely out of regulating the marketplace than a bill currently under consideration in Lansing.
HB-4959 was created at the behest of the Michigan Beer and Wine Wholesalers Association shortly after the US Supreme Court struck down laws – including Michigan’s – that prohibited direct shipment to consumers by out-of-state wineries, but not their in-state competitors.
Now, the opportunity to do business by catalog or website was of no great moment to Ernest and Julio. Their large volume means many, eager, wholesale distributors. But direct sales are vital to the very survival of smaller, specialty vintners. That is precisely why Michigan’s own emerging wine industry was specifically exempted from the erstwhile shipping restrictions.
But once the court ruled that the constitution’s Interstate Commerce clause barred this kind of favoritism, the MBWWA popped into action faster than a cork from a well-shaken bottle of warm champagne.
Since the ruling merely required equal treatment it’s pretty easy to guess that the lobby thought it preferable to ban, rather than permit, all shipments that didn’t pass through their middleman hands.
And the special interest PAC was well situated to get its wish. The group spread around nearly $700,000 in the 2004 election cycle, making it the 10th biggest purchaser of politicians in the state.
MBWWA largess included contributions to six of the nine members of the Regulatory Reform committee – charged with considering this type of legislation – of between $4,350 and the $5,000 legal limit. (Of the remaining three one got a measly $1,000 and the other two were teetotally snubbed.)
Of course, when buying politicians the wise investor will corner the market. And the combined resources of even the relative handful of individuals and businesses with a vested interest in maintaining their lucrative monopoly in beer and wine wholesaling goes a long way. As a result HB-4959 was introduced with 58 cosponsors – already more than half of the 110 member state house.
Obviously, the bill couldn’t be promoted merely on the basis of the financial windfall it would bestow on a few businesses at the expense of millions of consumers.
So proponents fell back on the tried-and-true “for the children” rationale, warning that there is simply no way to insure that thirsty (and, apparently, discriminating) high-schoolers won’t order and take delivery of elite label wines.
But the naked greed of the distribution cartel isn’t covered by this grape leaf of a justification.
Not only did the US Supreme Court all but openly ridicule this argument in it’s ruling, MBWWA lobbyists (and their neo-prohibitionist allies on the Religious Right) couldn’t produce so much as a single instance of such an occurrence in the entire 35-year history of direct consumer shipment by Michigan wineries. Presumably, the underage oenophiles were merely biding their time until they could get the really good stuff from New York and California.
So proponents subsequently set up a sting operation to manufacture some support for their claim.
Given that the bill had more than half the members of the House as cosponsors, it seemed to be too late to put a cork in it there. But due to the outrage (not to mention panic) of Michigan wineries, and the negative publicity over the fact that the wholesalers and politicians are so obviously in one another’s pockets, the legislation was revised.
A recent substitute would allow direct shipment to consumers, but simultaneously ban the (currently legal) practice of direct shipment to retail stores and restaurants — a shrewd fallback in as much as it simultaneously protects politicians by placating the larger voting block and delivers to wholesalers the larger volume buyers.
It will be amusing to see what rationale is publicly proffered by the middleman cartel in support of this “compromise.” Could there really be that many underage retailers and restaurateurs?
We may never know. Recent rumors are that the senate will produce a more palatable bill, and that HB-4959 will be left to wither on the vine.
Regardless of the outcome, one thing this whole sorry spectacle should make clear is that it was an enormous mistake to have ever allowed the government to interfere in the economy in the first place.
Such authority will inevitably be used by the already rich and powerful to strangle any upstarts who might cut into market share and profits. For as humorist P.J. O’Rourke once observed: “When legislators regulate everything that is bought and sold, the first thing that will be bought and sold is legislators.”
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More on economic regulation:
- Throwing our money down a rabbit hole
- Government as venture capitalist
- Time to give workers the right
- Michigan’s titanic business climate
- Downtown disaster areas
- Prescription for controlling drug costs
- Brave new diversity
