A Brewing Battle: Loosening liquor laws worry experts

Published: Saturday, Jan. 14 2012 1:00 p.m. MST

But it is not the first. Last February, a task force led by Fielding, and comprised of prominent independent researchers appointed by the U.S. Centers for Disease Control, released its study of alcohol privatization in Finland, Sweden, Canada, and the United States. They found that consumption of newly privatized beverages increased an average of 48 percent, while beverages that remained under state control actually dipped 2 percent. Their peer-reviewed report will be published in the American Journal of Preventive Medicine in April.

The task force found that when total usage goes up, "consumption changes across the board, but mostly among those who drink excessively" and concluded that "government control of off-premise sale of alcoholic beverages is one of many effective strategies to prevent or reduce excessive consumption, which is one of the leading causes of preventable death and disability." Public health experts interviewed for this article were in strong agreement on two key principles. First, they agreed that alcohol consumption responds robustly to changes in price and availability. In other words, alcohol outlets competing and advertising on price means more consumption. They also agreed that 90 percent of the alcohol consumed in the U.S. is drunk by 30 percent of the users, meaning that even a small increase in average consumption reflects significantly higher abuse among problem drinkers.

If these researchers are right, Washington should see lower prices with privatization, but the boon to the alcohol consumer will likely be canceled by losses to taxpayers and crime victims. Phillip J. Cook, a professor of public policy, economics, and sociology at Duke University, has studied alcohol economics for over 30 years. He finds robust data showing that "from highway fatalities to liver cirrhosis" price increases result in lower levels of alcohol abuse and fewer negative consequences.

But it's not just the increased risk to public safety that worries Cook when it comes to liberalization. Over the years, Cook has watched with frustration as inflation has steadily eroded tax deterrents. Federal alcohol taxes, Cook says, are framed in pennies—so many cents per gallon—rather than percents, and have been rarely updated for inflation. Most states fall into this same trap. California, for example, has seen its liquor taxes erode by one third since they were last updated in 1991.

Even as taxes erode as a limiting force, pressure to privatize distribution grows. In Pennsylvania, the move is championed by State Rep. Mike Turzai, whose plan would dump state control in favor of licensing and oversight. Turzai is sensitive to the public health arguments, and cites new safeguards in his bill to protect safety. But if Fielding's task force is correct, Turzai's bill would increase consumption, and do so disproportionately among problem drinkers.

In both Virginia and Pennsylvania, think tanks have plunged into the fray, issuing studies that back privatization policy. The difficulty with such reports, says Mark Price, an economist with the Keystone Research Center in Pennsylvania, is that they "take a fling at complex data with lots of variables, a loose analysis without peer review."

Price and his team did a reanalysis of one widely-cited study by the Commonwealth Foundation in Pennsylvania, which seemed to support the safety of privatization. The reanalysis found that the study had failed to control for two key variables on a study of auto fatalities and liquor control. When they added the missing variables, the results reversed.

The dominant thread underlying privatization efforts is a libertarian impulse to treat alcohol as a legal product with untrammeled market access. Critics respond that alcohol's externalities, or costs imposed on bystanders, are out of all proportion to any other legal product, and these costs are borne by society at large, not just by the drinker. Hence, the title of Philip Cook's 2007 book, "Paying the Tab," published by Princeton University Press.

Pat Bird, who oversees prevention programs for the Utah County Department of Drug and Alcohol Prevention and Treatment, suspects moderate drinkers see themselves as typical users, relying on intuitive impressions rather than statistics. Because they are their own model, he says, they don't realize that "a small fraction of the drinkers consume the vast majority of the alcohol, and that increased availability means greater consumption disproportionately among problem drinkers, which then impose costly externalities on society, including health costs, fatal accidents, domestic violence, and crime."

Richard Nance, Pat Bird's supervisor at Utah County, agrees. Although he does not himself belong to the state's predominant faith, Nance thinks Utah should be proud of its uniqueness. "We must be doing something right," Nance says: "Our people are healthier, our DUI rates are lower, teen binge drinking is lower, quality of life is higher, and Forbes just named us the best state for doing business in the country. Some of that is the state's unique culture, but our policies reflect and enhance that culture, and vice versa."

Email: eric@a13.org

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