The Volokh Conspiracy - WINE DIRECT SHIPMENT IN WSJ:

Article in today's Wall Street Journal discusses the wine cases, which will soon be argued in the Supreme Court. Not that much new in the article, except for the fact (which I hadn't seen previously) that former Christian Coalition executive director Ralph Reed is one of the paid lobbyists for the liquor wholesaler industry. The wholesalers, of course, are opposed to direct shipment because even though it is a trivial fraction of the market they still don't like any competition. Long ago, Bruce Yandle postulated the "Baptists and Bootleggers" theory of regulation, but until now it has been thought to be metaphorical, but with Ralph Reed on the wholesaler's payroll, it appears that it has become literal. Professor Yandle has written a recent restatement of the theory and it's application in the traditional metaphorical context in Regulation magazine. As Yandle writes:

The theory's name draws on colorful tales of states' efforts to regulate alcoholic beverages by banning Sunday sales at legal outlets. Baptists fervently endorsed such actions on moral grounds. Bootleggers tolerated the actions gleefully because their effect was to limit competition.

Little did Yandle probably recognize when he penned these words that he would soon see a partnership of Ralph Reed and the Wine & Spirits Wholesalers of America to prevent competition in wine sales!

The Wall Street Journal aritlce also mentions an unintentionally humorous website set up by the Wine & Spirits Wholesalers, at www.pointclickdrink.com which supposedly demonstrates the peril to America's youth from Internet access to expensive Merlot. A section of the website ironically labeled "Fact vs. Fiction" contains this whopper:

FICTION: Kids are not buying alcohol online and underage access to alcohol through the Internet is not a problem.

FACT: Ten percent of underage purchasers receive alcohol through the Internet or home deliveries and the increasing use of the Internet could increase that percentage, according to the National Academies of Sciences.

The "according to the National Academies of Sciences" they reference for this figure was a brief discussion in a large NAS report from a few years back. The NAS report does in fact mention one study of the effect of alcohol delivery on underage access to alcohol--a study of keg and alcohol delivery by traditional package stores. Unsurprisingly, the study found that underage youth stated that when package stores deliver beer kegs, this makes it easier for underage drinkers to get access to alcohol. The study mentions nothing about Internet delivery of wine, and if anything, would seem to be an indictment of the ease by which minors get access to alcohol through the traditional bricks and mortar alcohol system.

In contrast to this silly science, the FTC actually conducted real research, including asking alcohol enforcers in the states that have permitted direct shipping of wine whether underage access is a problem, and they generally said no. And, of course, even if the Wholesalers were correct, it still wouldn't explain why New York permits 190 in-state wineries to ship directly to consumers, but not out-of-state wineries.

I discuss the policy issues in more detail in my series of postings on the cases, which are collected into one document here.

	[Todd Zywicki, November 24, 2004 at 3:10pm] Trackbacks WINE DIRECT SHIPMENT IN WSJ: Article in today's Wall Street Journal discusses the wine cases, which will soon be argued in the Supreme Court. Not that much new in the article, except for the fact (which I hadn't seen previously) that former Christian Coalition executive director Ralph Reed is one of the paid lobbyists for the liquor wholesaler industry. The wholesalers, of course, are opposed to direct shipment because even though it is a trivial fraction of the market they still don't like any competition. Long ago, Bruce Yandle postulated the "Baptists and Bootleggers" theory of regulation, but until now it has been thought to be metaphorical, but with Ralph Reed on the wholesaler's payroll, it appears that it has become literal. Professor Yandle has written a recent restatement of the theory and it's application in the traditional metaphorical context in Regulation magazine. As Yandle writes: The theory's name draws on colorful tales of states' efforts to regulate alcoholic beverages by banning Sunday sales at legal outlets. Baptists fervently endorsed such actions on moral grounds. Bootleggers tolerated the actions gleefully because their effect was to limit competition. Little did Yandle probably recognize when he penned these words that he would soon see a partnership of Ralph Reed and the Wine & Spirits Wholesalers of America to prevent competition in wine sales! The Wall Street Journal aritlce also mentions an unintentionally humorous website set up by the Wine & Spirits Wholesalers, at www.pointclickdrink.com which supposedly demonstrates the peril to America's youth from Internet access to expensive Merlot. A section of the website ironically labeled "Fact vs. Fiction" contains this whopper: FICTION: Kids are not buying alcohol online and underage access to alcohol through the Internet is not a problem. FACT: Ten percent of underage purchasers receive alcohol through the Internet or home deliveries and the increasing use of the Internet could increase that percentage, according to the National Academies of Sciences. The "according to the National Academies of Sciences" they reference for this figure was a brief discussion in a large NAS report from a few years back. The NAS report does in fact mention one study of the effect of alcohol delivery on underage access to alcohol--a study of keg and alcohol delivery by traditional package stores. Unsurprisingly, the study found that underage youth stated that when package stores deliver beer kegs, this makes it easier for underage drinkers to get access to alcohol. The study mentions nothing about Internet delivery of wine, and if anything, would seem to be an indictment of the ease by which minors get access to alcohol through the traditional bricks and mortar alcohol system. In contrast to this silly science, the FTC actually conducted real research, including asking alcohol enforcers in the states that have permitted direct shipping of wine whether underage access is a problem, and they generally said no. And, of course, even if the Wholesalers were correct, it still wouldn't explain why New York permits 190 in-state wineries to ship directly to consumers, but not out-of-state wineries. I discuss the policy issues in more detail in my series of postings on the cases, which are collected into one document here.