Imagine if you had to wait weeks to get a new phone? Actually, that’s exactly how things were in the 1970s. Back in the day, when one corporation—AT&T—had a near-monopoly on phone services (roughly from the early 20th century until 1984), you’d often face a wait of weeks to get a new phone installed.
Since Ronald Reagan made the decision to break up the monopoly, there’s been fierce competition—and technological change—in telecommunications. So much so that we take it for granted you can walk into a store and get a new phone instantly.
The solution to the problem created by a monopoly seems so obvious, right? Get rid of the monopoly.
So why do so many Mississippi politicians have such a hard time understanding what needs to be done when it comes to the issues plaguing liquor and wine distribution in our state?
Just like with pre-1984 telecommunications, Mississippi’s government insists on maintaining a monopoly over the wholesale distribution of certain alcohol.
So, guess what? Like with phones back then, there are terrible delays and massive backlogs. Restaurants and retailers are unable to get their customers what they want when they want it. Right now, there is a backlog of something like 200,000 cases. Think how many small businesses must be impacted by this incompetence?
I’ve spent weeks listening to various politicians prattling on about how these delays are due to technical glitches, or an old conveyor belt system, or billing errors, or a company contracted to process orders that isn’t up to the task. Blah blah, yadda yadda.
When politicians get drawn into discussing the granular details of the distribution fiasco, they are missing the point spectacularly.
The state of Mississippi should not be in the business of funneling alcohol wholesale distribution through a Mississippi Office of Alcoholic Beverage Control in the first place.
No matter how much effort they put into ironing out the incompetence, having all products pass through a single warehouse before reaching private retailers will never be as efficient as allowing private retailers to handle their own distribution arrangements.
The justification for this insane system is the need to collect taxes. A moment’s reflection reveals how ridiculous that argument is. With digital technology, the idea that we need to physically assemble products in one spot in order to levy a tax is daft.
There are multiple ways in which Mississippi collects taxes without insisting that the thing being taxed pass through a single warehouse. How do you imagine sales taxes are collected every time someone in our state purchases something on Amazon?
No, the real reason for maintaining the system of state-controlled wholesale distribution is bureaucratic self-interest. Those who earn a living running the ABC system have a vested interest in maintaining it—even if that means hundreds of local small businesses in our state suffer from their incompetence.
The solution is not to “privatize” the process of wholesale alcohol distribution, but to eliminate the state-controlled process of wholesale distribution altogether.
Do that, and all those ancillary failures—the shambolic supply chain management, the unresponsive customer service—will take care of themselves. We don’t, after all, have politicians getting drawn into discussions about cell phone supply chains.
I have been very encouraged listening to various Mississippi commentators, like Richard Cross on SuperTalk, make the case for reform. Richard magnificently dissected the failures of the current system and explained how it is a “textbook” failure of state monopoly.
“Why,” Richard wanted to know, “is the state in the alcohol distribution business at all?” Well said.
One day the same logic needs to be applied to the government’s near-monopoly on education, too. That is a conversation for another day….
Mississippi Center for Public Policy President Douglas Carswell authored this post.
This post is a paid advertisement by MCPP.
13 comments:
The reason for the warehouse is not to protect state jobs. The intention was to “stamp” all bottles to show the booze had been taxed.
G - men would routinely go to liquor stores and zap a dealer with an unstamped bottle.
RMQ
ms government has been in the business of wholesaling all wine and liquor in the state since the 1960s.
it was one of the first times the ms legislature decided to the state needed to ''go into business''.
take look at what happened back about 2005 when the state decided to go into the beef business. remember that?
only in a third world place like mississippi could a monopoly over the wholesale distribution of wine and liquor survive for over sixty years.
It only takes 20 percent of a politician's time to perform the necessary service of his office. The other 80 percent of the time is spent thinking up new ways of injecting his/her role, and government's role, into the daily lives of regular people. That, of course, includes new ways to generate revenue and new methods of exercising control.
Imagine if they decide instead that in order to more efficiently collect tax on gasoline and diesel, it should all go through one holding area.
Trucks arrive, drop off gasoline in a giant tank, it sits until MS can decide it's ok to deliver to stations, other trucks arrive and pick up gas and deliver.
Pumps to offload or load fail due to .gov incompetence; just deal with it, we will get it fixed one day. Maybe.
MS invoicing system for taxes goes down for days/weeks/months? Just deal with that too, you will get gas eventually.
Granted gas is more critical than wine and liquor, but the same stupidity would get the same stupid but not unforseeable results.
I agree with the point that the state of Mississippi does not need to be in this business at all, but further reforms need to be made, no more protected ownership of liquor store licenses and retailers, let corporations own multiple locations, let grocery stores sale at least wine inside grocery store, they already sale craft beer that has alcohol content in excess of 5% per volume.
I think we need more legislators with the wisdom of Soggy Sweat. https://www.youtube.com/watch?v=Hrs0yY1nfPA
Google needs to be broken up.
Amen.
I completely agree the system has been broken for years. Every time the state builds a bigger warehouse, it is still too small for the demand. The issue is not collecting tax! The issue is, the state as the distributor makes 27% on every case. In the Jackson metro area, there are over 20,000 cases going out each week. Do the math. Mississippi is not going to give up that kind of money when they can not recoup it another way. The shipping company probably gets $5 per case, depending on fuel cost. They are not going to give up that kind of cash without a fight.
Yes!! MS needs to join the 21 century, but remember, during prohibition, the state collected an illegal liquor tax...once crooked, always crooked
If the state makes 27% taxed off the top when leaving the warehouse, why are we paying another (additional) 8% for the state when we purchase from the store?
Tate are you listening? (to taxpayers rather than liquor store owners)
The 27% is the markup, any wholesaler or distributor is going to charge in that range. Again, MS is the wholesaler/distributor. It's way to much money for them to give up.
Here in Ms. we have elected people who cannot even do the job they were elected to do. Why would they think thhey can handle anything else?
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