Bootleggers and Baptists: Normatively Ambiguous

I think the Bootleggers and Baptists theory of regulation is incredibly helpful in explaining policy choice. I also think the normative view we should take of organizations putting forward public interest arguments to advance their financial interests is far from straightforward.

Often, the arguments are very bad (as in the classic bootleggers and baptists story). At other times, the arguments are very good. While we should be suspicious of arguments put forward by anyone with a vested interest, we should not reject them out of hand. Lobbying efforts by concentrated interests will often improve policy, since they are the ones with the strongest incentive to defend their right to do business. Federated Farmers’ support for free trade is about the best example I can think of, especially when compared to the protectionism of American and European farmers.

With that in mind, this press release from the Hospitality Association of New Zealand on alcohol regulation is very interesting. On the one hand, they rightly oppose efforts to reduce the availability of alcohol (in other words, reducing convenience).

The Hospitality Association has told the Justice and Electoral Select Committee considering the Sale and Supply of Liquor and Liquor Enforcement Bill that the Bill, despite talking about reducing harm, would not deliver on that outcome.

Bruce Robertson, the Association’s Chief Executive, said that the underlying assumption throughout the Bill is that by reducing availability of alcohol, consumption will be reduced, so reducing harm.  He said that the reality and the evidence, and indeed New Zealand’s own experience, is contrary to that assumption.

Over the last 20 years the number of liquor outlets has almost trebled and liquor advertising has been permitted on television, yet if anything the per head consumption of alcohol has declined.

Reducing alcohol availability is bad for consumers, and bad for the hospitality industry. Yay for lobbying! Then, a few paragraphs later, they endorse a state-enforced price-fixing arrangement:

[T]he Association believes that alcohol is not a product in which the industry should compete on price, and that by removing the ability to advertise the price of alcohol products the incentive to use alcohol as a loss leader will be removed.

This would be very good for the industry(at least, good for existing players), but very bad for consumers. Boo for lobbying!

I found it amusing to see these two arguments in the same press release.

One Response

  1. “alcohol is not a product in which the industry should compete on price”

    And why not can I ask? Apart from the fact that this will raise the price of alcohol and profits of Hospitality Association members.

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