Swedish Alcohol Restrictions Lose Again at the EU
- posted by Jim Leitzel @ 10:45 PM

It took a week for the news to reach Vice Squad, but once again, the Swedish prohibition on personal imports of alcohol ordered over the internet and received via the mail has been found to violate the free trade provisions of the EU. The European Court of Justice decision was a near-replay of a similar case from June, so the result was not surprising. The CEO of Sweden's state retail monopoly claims not to be worried, because internet sales currently are tiny (whereas personally bringing alcohol from abroad is a major alcohol source in Sweden). But now that mail-order alcohol deliveries to homes can no longer be confiscated -- assuming that the high Swedish excise taxes are remitted -- I wouldn't be surprised to see increased popularity for that channel of alcohol distribution.

In an unrelated but unusually upbeat alcohol story, a man was restored to health in Australia a couple months ago, it has just been reported, in part by feeding him vodka via a nasal drip at a rate of 3 drinks per hour. Alcohol was needed to combat a poison, and the hospital ran out of pharmaceutical ethanol, so staff members bought a case of vodka. Finally, a small upside to the suppression of the Russian press -- if this story got out in Russia, there's no telling the mischief that could result.

Labels: alcohol, Australia, EU, free trade, Sweden

 
How Laws are Made, Ohio Version
- posted by Jim Leitzel @ 10:16 PM

In mid-2005, when the Supreme Court ruled that states could not discriminate against out-of-state wine producers in setting their rules for direct shipments to consumers, Vice Squad member Michael noted that the required unification might not lead to liberalization of direct shipment laws -- states could unify their rules (that is, end discrimination against out-of-state producers) by attaching to in-state producers the same burdens they had previously imposed only upon the out-of-state vintners. Ohio has taken a different tack, however, one that makes an end run around the law. Only small vineyards are allowed to make direct shipments to consumers. Why lo and behold, what do you know, all of Ohio's in-state wine makers are small enough to qualify to make direct shipments! Too bad that those big California wineries don't make the grade, but hey, this is evenhanded legislation.

I think that this law will have a hard time surviving judicial review. The fig leaf covering the unconstitutionality is that Ohio's definition of a small winery used a production quota that wasn't just any arbitrary number that protected all of the in-state producers. Rather, Ohio pulled the quota from the federal tax code, from a provision that offers a tax break to small vineyards. But the intent of this Ohio law is so obviously discriminatory -- the protective intent is admitted by one of the supporters, who says it was viewed as a 'jobs bill' -- that a federal court should have little trouble seeing through or around the fig leaf.

Details of how such a bill could become a law -- not for the squeamish -- are here. Thanks to Jonathan Adler of the Volokh Conspiracy for commentary and the pointer.

Labels: alcohol, federalism, free trade, licensing, Supreme Court

 
Swedish Alcohol Imports
- posted by Jim Leitzel @ 11:03 AM

Sweden's restrictive alcohol policies and the European Union's import policies repeatedly have come into conflict. One source of tension has been Sweden's state-owned retail alcohol monopolist, Systembolaget. If a Swedish resident travels to another EU country and brings back alcohol intended for personal use (which includes serving it to friends and family at a party, for instance), then EU law requires that such an import be legal. But Sweden does not allow individuals to have alcohol for personal use sent to their home from foreign suppliers (perhaps contacted via the internet); rather, any such acquisitions must come through Systembolaget. You can carry the alcohol yourself when returning from abroad, but you can't have it delivered.

Or at least that was the rule. A group of Swedish wine enthusiasts had been ordering wine from abroad over the internet. After having some of their wine confiscated, one of the group's members brought a court case. The Swedish Supreme Court put the case on hold until the EU's Court of Justice could rule on the legality of the import rules. (Somehow I find it hard to imagine the US Supreme Court doing this sort of thing, but maybe I am unimaginative.) In November, a preliminary recommendation sided with Systembolaget; last week, however, the EU court ruled against the import monopoly, according to this article:

...Tuesday's ruling said Sweden's prohibition of imports "is less a method of limiting alcohol consumption generally than a means of favoring Systembolaget as a channel for the distribution of alcoholic beverages."

It said such bans "cannot be justified on grounds of protection of the life and health of humans."

So it is likely that Sweden will soon make provision for individuals to import booze directly. Such a liberalization does not mean that the high Swedish alcohol taxes can be (legally) avoided: mail order personal alcohol imports will be subject to Swedish excises, though those imports that are carried personally are exempt. Whether the new provision will allow easy means of (illegal) evasion of Swedish alcohol taxes remains to be seen.

Labels: alcohol, EU, free trade, Sweden, taxes

 
Swedish Internet Poker
- posted by Jim Leitzel @ 10:40 PM

While the US does what it can to keep its citizens from gambling on the internet, other nations have taken a different approach. In March, 2006, Sweden's state-owned lottery, sports betting, and casino company, Svenska Spel, opened an internet poker facility, available only to Swedish adults. The story of its founding and first year or so of operation is recounted in an article in the April 2007 Gaming Law Review.

To help realize its goal of promoting responsible gaming, the Swedish internet poker game makes generous use of partial and full self-exclusion options. From Svenska Spel's English-language webpage comes this description:

To minimize the risks for gaming addiction each poker player at svenskaspel.se has to set individual limits per session, per day, per week, per month as well as maximum duration of the day, week or month. Furthermore the player may exclude himself.

That is, the imposition of limits is not voluntary: if you want to gamble at the Swedish poker site, you must specify a series of time and value betting limits. You can set them as high as you like, but you must set them, and you cannot raise the ceilings before the end of a waiting period. (Alteration rules are asymmetric: you can lower your gambling limits at any time.) The site itself enforces an overall limit on the size of a bet in a single poker hand, but it is huge by most people's standards, over $10,000.

The article in the Gaming Law Review also discusses another Vice Squad obsession, the possibility that Swedish laws providing legal gambling monopolies (besides Svenska Spel, there is another one for horse racing) might conflict with European Union requirements. For a while it looked as if the Swedish government was going to end the gambling monopolies, but the situation is currently in flux.

Labels: EU, free trade, gambling, internet, poker, self-exclusion, Sweden

 
Trading Vice and Income Taxes
- posted by Jim Leitzel @ 12:06 AM

Estonia has elected to increase its taxes on alcohol and tobacco (and fuel), while decreasing the income tax rate from 22 to 18 percent. Given the low levels of vice taxes that already exist in Estonia, and the high likelihood that the alcohol tax, in particular, does not fully account for external costs, this sounds like a good trade-off to me. Even if the externalities were accounted for, the "welfare costs" of taxing income (and thereby dissuading work in the official sector) might well be higher than the inefficiencies brought about by taxing alcohol, when it comes to raising a fixed amount of revenue.*

In any event, the tax hike comes as good news to Finland, which reluctantly felt compelled to lower its own alcohol tax upon the impending accession of Estonia to the European Union; since then, alcohol-related problems in Finland have increased. The prospect of higher alcohol prices in Estonia has the Finns thinking of re-raising domestic alcohol taxes.

*For an argument along these lines, see Larry G. Sgontz, “Optimal Taxation: The Mix of Alcohol and Other Taxes.” Public Finance Quarterly 21(3): 260-275, July 1993.

Labels: alcohol, Estonia, EU, Finland, free trade, taxes

 
Free Trade and Vice
- posted by Jim Leitzel @ 11:06 PM

Dani Rodrik, Tyler Cowen, and others, have been debating the merits of trade controls. (Economists tend to support most movements towards freer trade, so to non-economists the debate might sound a bit like arguments among various Trotskyite factions.) But their debate presents another opportunity to talk about the intersection between trade policy and vice policy. (Here’s one of the more recent harpings on this issue, from December 3, 2006.) The bottom line, for me, is that for the traditional vices, I am very chary of allowing commitments to free trade to override domestic vice controls.

The fact that alcohol, tobacco, gambling, drugs, and other traditional vices have been problematic for hundreds of years is strong evidence that these are not ordinary commodities. Any standard liberal policy orientation, whether it be towards free trade, free speech (advertising), or free competition (antitrust), comes under significant pressure when faced with these troubling habit-forming goods. To insist on one-size-fits-all policies, applicable to ketchup and alcohol alike, is apt to produce outcomes that are sufficiently undesirable that liberalism in general (including free trade) might be discredited, or motivate a policy shift to strikingly illiberal policies (such as prohibition) targeted specifically at the vicious goods or activities. Vice should operate as an exception – a limited exception, but a clear one – from many of our more general policy doctrines.

Unfettered trade typically serves the interests of domestic consumers, while lowering the relative prices of imported goods. When it is vice goods that are among the imports, however, we are much less certain that consumers, as well as society more generally, are made better off. The lower prices will lead to more consumption, and if that consumption is both “rational” and does not have significant externalities attached, then the usual presumption that domestic consumers are made better off should apply. But vice goods are sufficiently marked by both potential departures from rational consumption and by externalities that there is good reason to question the standard presumption. The laudable ends that generally are served by commitments to free trade (and free competition and free speech) are not similarly served in their application to vice.

So I believe in vice policy exceptionalism. In practice the question often will amount to whether the exception is made by banning the vice good (and its advertising and trade, of course), or by allowing the vice while controlling competition, trade, and advertising. That is, vice policy exceptionalism is all but inevitable: the only issue is what form it will take. I prefer that vice constitute a differently treated legal activity, while prohibitonists prefer to make vice goods exceptional via illegality. Allowing free trade to trump domestic vice policies will tend to bolster the hand of the prohibitionists, perhaps leading to more constraints upon trade than my version of vice policy exceptionalism. But this is dangerously close to the sort of political argument at which economists have no expertise!

Much more can be said along these lines, especially concerning the possibility that allowing a vice policy exception will result in an expanded definition of vice, one that covers all goods and services that meet with official displeasure -- thereby hollowing out our overall commitments to free speech, trade, and competition. But that discussion is for another day.

The current manifestations of this debate have been a Vice Squad staple. They include the US-Antigua internet gambling case (March 31, 2007), EU alcohol rules (February 19, 2007), and snus (February 7, 2006).

Labels: free trade, Rodrik

 
Be careful what you wish for
- posted by Michael @ 1:40 PM

In an earlier brief post, I suggested that the Supreme Court decision (links to opinions are here; see also Jim's earlier post) that prohibited discrimination between in-state and out-of-state wineries with respect to direct shipments of wine was good news for wine drinkers. Alas, I was wrong. Perhaps I underestimated the power of the state wholesalers lobbies. There are, of course, two ways to eliminate disparities in the treatment of in-state and out-of-state wineries. One is to let everybody ship the stuff directly, the other is to prohibit direct shipments altogether. It appears that at least some of the states are taking the latter route. Things are moving in that direction in Michigan and, as I learned this morning, they have already arrived there in Indiana (see this column by Mike Leonard; paid subscription required).

Apparetnly, on May 20, the Indiana Alcohol and Tobacco Commission (ATC) issued a letter stating that in-state direct shipments of wine are considered to be Class A misdemeanor. ATC Chairman, David Heath, seems to have taken a line from Casablanca by appearing to be shocked by the discovery that gambling, ooops.. sorry, direct wine shipments have been taking place in Indiana. His letter to the wineries begins in this way, "It has come to our attention that wineries in Indiana may be engaged in selling wine by taking orders via Internet, mail, and/or telephone and directly shipping to the consumer's address." Of course, these shipments have been going on in Indiana for only 30 years. In fact, the initial lawsuit contained evidence about direct wine shipments in Indiana obtained from the official state website that describes Indiana wineries.

Incidentally, the legality of changing the rules by an ATC letter without going through a formal admninistrative process is questionable. So, perhaps this letter will be challenged and ATC will be forced to jump through some bureaucratic hoops first. But now I am not sure if it is such a good idea to press ATC to follow the rules. God knows what the regulators will come up with during the formal administrative process of revising their interpretation of the current Indiana law.

Labels: alcohol, free trade, Supreme Court

 
The Internet Wine Case
- posted by Jim Leitzel @ 1:29 PM

I finally got around to reading the opinions (available here) in the internet wine case. It was a close call. My untutored view is that the closest cases to this one, which occurred both pre-Prohibition and in the immediate aftermath of Prohibition, suggest that the discriminatory New York and Michigan laws should have been upheld. But the more recent cases that touched on the 21st Amendment, though by and large not as directly on-point as the earlier cases, suggest that the non-discrimination principle should apply despite the 21st Amendment. It was close for a reason.

At any rate, having read the opinions, I am not discouraged by the result. (I suppose I could have managed to think this through without reading the opinions, but somehow, I wasn't able to.) My general concern is that when other fundamental principles -- principles that I generally support, like free speech and free trade -- are allowed to trump vice policy, that we will end up with both an erosion of those principles and poor vice policy. But here, the overall alcohol regulatory policy of a state is not really at stake. The Court, by overturning controls that discriminate against producers in other states, does not (at least directly -- who knows what the future ramifications might be? --) limit the restrictiveness of any state's alcohol policy. The dormant Commerce Clause has here trumped some alcohol controls, but not an alcohol policy. That's fine by me -- not that anyone asked!

Labels: alcohol, free trade, internet, Supreme Court

 
Alcohol Treatments Spreading Like...
- posted by Jim Leitzel @ 7:27 PM

...Kudzu. Yes, by taking a concentrated kudzu extract, heavy drinkers cut back their consumption, relative to those who took the placebo. They still drank, but somewhat less: "Study author Dr. Scott E. Lukas of McLean Hospital and Harvard Medical Center in Massachusetts explained that during the experiment, people drank their first beer right away, but were less likely to want more beer if they had taken kudzu the previous week."

I was mildly surprised at today's Supreme Court decision in the Internet Wine case. Probably not happily surprised -- even though I think that mail-order sales of wine direct to households should be legal -- as I am concerned about the eventual impact upon free trade or interstate commerce when these principles are used to trump the vice policy of individual states. But first I'll read the opinions, available here.

Labels: alcohol, free trade, Supreme Court, treatment

 
Good news for wine drinkers
- posted by Michael @ 11:00 AM

The Supreme Court ruled earlier today that the states cannot prohibit or severely limit direct wine shipmewnts from out-of-state wineries while permitting direct shipments from in-state establishments. I am certainly going to raise a glass of something made outside my homestate of Indiana tonight to celebrate. Cheers.

Labels: alcohol, free trade, Supreme Court

 
The EU Pressure on Swedish Alcohol Controls
- posted by Jim Leitzel @ 6:42 PM

One of Vice Squad's favorite topics is how the EU's commitment to free trade is making it hard for EU member nations to maintain strict alcohol policies. The possibility of purchasing massive quantities of cheap alcohol abroad and importing it to some degree undermines a high-tax regime, for instance -- as Sweden is learning. The linked article also points out that EU trade policy has liberalized Sweden's alcohol advertising regulations:

Also last year, the EU ordered Sweden to lift its ban on alcohol advertising, which was deemed an unfair barrier to market entry. Before the ban was lifted, even Absolut Vodka, which is made in Sweden, was barred from placing its catchy ads in Swedish magazines.

Vice Squad likes to claim that allowing free trade, free speech, or antitrust policy to trump vice policy sows the seeds for undermining trade, speech, and antitrust, while simultaneously engendering less-than-optimal vice policies.

Labels: alcohol, EU, free trade, marketing, Sweden, tax

 
Only Scylla Left to Negotiate
- posted by Jim Leitzel @ 6:19 PM

A would-be responsible alcohol retailer can face a dilemma. If its rivals compete on the basis of price, our responsible seller might have to, too, by running happy hours or other price promotions. Such marketing might incur the wrath of those concerned with binge drinking. But if our responsible seller attempts to join with its rivals in preventing price discounting, then it may violate the antitrust laws. Such a violation was alleged against alcohol sellers in Madison, Wisconsin, last March.

Today we learn from Walter Olson at Overlawyered that a judge threw out the private lawsuit, on the grounds that the collusion was foisted upon Madison's bar owners. So in this case, vice policy trumps anti-trust. Along with the WTO internet gambling ruling, in which vice policy trumped free trade, perhaps we are seeing a trend towards increased autonomy for vice policy. If so, California medical marijuana patients will have reason to celebrate, even as California winemakers should become increasingly concerned.

Labels: alcohol, free trade, litigation, marketing

 
US Makes a Comeback In WTO E-Gambling Case
- posted by Jim Leitzel @ 4:20 PM

There for a while it looked like the World Trade Organization was going to come down on the side of Antigua and Barbuda in its trade dispute with the US over internet gambling. But the final ruling largely went the US way, with the WTO accepting that the US can keep its federal restrictions on sports betting. Horse racing is another matter, however, since some states allow internet betting on racing. The WTO's non-discrimination orientation suggests that if a service is legal for domestic suppliers, foreign suppliers cannot be prohibited.

It isn't easy to tell exactly what is going on in the ruling, which takes the form of a 138-page document (in the English-language version) released on April 8. (The document can eventually be found from this page; scroll down to DS285, from March, 2003.) But it seems as if the major finding is that the US federal gambling statutes at issue (the Wire Act, the Travel Act, and the Illegal Gambling Business Act) are measures that fall under the exception of being necessary to protect public morals or to maintain public order. So in this case, the commitment to free trade is not allowed to trump domestic vice regulation.

Labels: Antigua, free trade, gambling, internet, WTO

 
The WTO and Marijuana
- posted by Jim Leitzel @ 10:04 AM

Back to Chicago and blogging, both one day later than planned. I can't possibly catch up with blogospheric activity, but I will try to note today a couple of items that registered particularly deeply. First, this St. Patrick's Day offering from Slate, suggesting that the WTO's commitment to free trade might one day provide a lever to marijuana legalization in the US. Among the reasons offered is the course of the internet gambling case between the US and Antigua and Barbuda. I think that the internet gambling case will not prove to be a relevant precedent (at least for a loooong time), because both the production and consumption of internet gambling is legal in much of the world, while marijuana is prohibited globally -- even in the Netherlands, despite the official toleration of coffee shops. And I find overstated the observation that "Local marijuana-growing enjoys quasi-legal status in the United States...", as would, I think, just about anyone who tried to openly and notoriously engage in such growing for recreational use, or if not part of a state-sponsored medical marijuana program.

Though I am opposed to drug prohibition, I am also quite leery of using free trade principles to drive vice policy. I believe that such a route ultimately will undermine the (always rather tepid) political commitment to free trade (witness the reaction of some Congressmen to the WTO decision) and also lead to undesirable vice policies. But I also expect that it is the social view of the vice at issue that chiefly determines the extent to which free trade is enlisted into the service of vice policy regulation. On free trade (and probably also on harm reduction) grounds, the European Union should embrace snus, which is a form of a legal product, tobacco. But instead it bans it, outside of Sweden. The EU also hectors the Netherlands on cannabis policy, requiring the Dutch to show that their relatively liberal approach does not undermine the more restrictive regimes of neighboring countries. Meanwhile, as Vice Squad frequently points out, EU policies, this time under the banner of free trade, have rendered unsustainable strict alcohol control regimes in Denmark, Finland, and Sweden.

Labels: Antigua, free trade, gambling, internet, marijuana, WTO

 
Swedish Alcohol Tax Cut Must Wait
- posted by Jim Leitzel @ 11:23 PM

European Union alcohol rules and EU expansion have made it harder and harder for strict alcohol control countries in the EU to maintain their relatively stringent policies. As a result, both Denmark and Finland have cut their alcohol taxes significantly in the past year or so. Sweden has been holding out, but for some time now has been signalling a 40 percent cut in taxes on spirits (as opposed to wine and beer). In November we learned that the tax cut would be put off until at least the spring, and today we learn that any such move will be postponed until this fall.

Vice Squad (or at least my part of it) is not opposed on principle to high taxes of "vicious" goods; I have also signaled my concern that it is not necessarily a good idea to let international trade policy trump national vice policies: that is, neither a good idea for the long-run prospects of free trade, nor for promoting desirable vice policies.

Labels: alcohol, EU, free trade, Sweden, taxes

 
Avoiding Alcohol Restrictions in Sweden...
- posted by Jim Leitzel @ 2:41 PM

...by buying your alcohol abroad and bringing it with you back into Sweden. Sweden has tried to maintain its system of high taxes and tight regulation, even as the availability of cheaper foreign booze has increased due to lower taxes in neighboring states and liberalized EU rules on alcohol imports for personal use. The Swedish state alcohol retailer is generally described as a monopoly, but the fringe competition is taking a heavy toll: "...only 33 percent of the alcohol consumed in Sweden was bought through the retail monopoly Systembolaget, down from 44 percent a year earlier, after the EU forced Sweden to eliminate restrictions on private alcohol imports a year ago." According to the linked article, Swedish per-capita drinking has risen by more than a third since 1995, but remains below the EU average.

The Swedish state monopoly retailer recently has seen a significant increase in its sales of non-alcoholic beverages, however, despite not having a monopoly in that area.

Labels: alcohol, EU, free trade, Sweden

 
Old Snus News: EU Ban Upheld
- posted by Jim Leitzel @ 1:57 PM

Wouldn't you know it, the European Court of Justice waits until I am away from Chicago to issue its ruling that the EU ban (outside of Sweden) on the smokeless tobacco "snus" can remain in place. So I get the snus news nearly a month late, though to be honest, the mid-December ruling wasn't unexpected. While I believe that snus should be legal and that the EU policy should be liberalised, I generally am wary of using free trade commitments to trump vice policy.

A Swedish researcher commented on the decision in a more timely fashion. Here's an excerpt:

The ban on snus is in stark contrast with the rest of the EU's tobacco policy. Forms of smokeless tobacco that are more harmful than snus are allowed to be sold in the EU. But, as mentioned above, the ban against snus was made before Sweden joined the union in 1995. Thus it seemed as the perfect progressive anti-tobacco policy, banning a product that was not used in the union, but still not antagonizing anyone.

About 300,000 tonnes of tobacco is produced in France, Italy, Spain and Greece taken together. Around 80,000 farmers, mostly in poor regions of Greece and Italy, get about €7,000 per hectare from European taxpayers to grow tobacco. That is 20 times the subsidy paid to grain farmers!

Labels: free trade, snus, Sweden, tobacco

 
The US, Behind, to Continue Its Battle With...
- posted by Jim Leitzel @ 10:50 PM

...Antigua and Barbuda. The World Trade Organization found in November that the US ban on betting with offshore firms violates its trade commitments. (Enforcement of an offshore betting ban is something else entirely -- in most states, it seems, casual bettors are unlikely to face any enforcement action, though those who establish internet betting sites, even abroad, have more to worry about in terms of legal jeopardy from the US. But I am not a lawyer, so please do not rely on that information, which could be mistaken.) But the US will not take this ruling lying down; rather, the nearly 70,000 residents of Antigua and Barbuda will be subjected to...an appeal of the WTO decision.

As Vice Squad's ad nauseum discussion of EU alcohol policy indicates, I worry that allowing free trade agreements to trump a nation's vice regulations poses a threat both to desirable vice policies and to free trade.

Labels: Antigua, free trade, gambling, internet, WTO

 
Off Topic: Is Protectionism Immoral?
- posted by Jim Leitzel @ 5:27 PM

Like many, probably most economists, I generally do not support protectionist measures. But I don't share economist Steven Landsburg's take on protectionist policies, which he presented in Slate in support of his decision to vote for President Bush next week. Here's an excerpt:

If George Bush had chosen the racist David Duke as a running mate, I'd have voted against him, almost without regard to any other issue. Instead, John Kerry chose the xenophobe John Edwards as a running mate. I will therefore vote against John Kerry.

Duke thinks it's imperative to protect white jobs from black competition. Edwards thinks it's imperative to protect American jobs from foreign competition. There's not a dime's worth of moral difference there. While Duke would discriminate on the arbitrary basis of skin color, Edwards would discriminate on the arbitrary basis of birthplace. Either way, bigotry is bigotry, and appeals to base instincts should always be repudiated.

Would one be a bigot to discriminate in favor of one's own children versus strangers? One's neighbors? When is discrimination arbitrary, and when is it not arbitrary?

Adam Smith, of course, addresses these issues, in Part VI of Theory of Moral Sentiments. Chapter 1 of Section 2 of Part VI (whew) is entitled "Of the Order in which Individuals are recommended by Nature to our care and attention," and Chapter 2 is entitled "Of the order in which Societies are by nature recommended to our Beneficence." Smith notes that it is only natural that we prefer ourselves and our relations to strangers. A man's family consists of those who "are naturally and usually the persons upon whose happiness or misery his conduct must have the greatest influence." Further, our own, and our family and friends', happiness is tied to our country -- and it is within our country where our conduct has the greatest influence. The interests of our country, therefore, are near to us both from self-interest and our "private benevolent affections." And this is fine. "That wisdom which contrived the system of human affections, as well as that of every other part of nature, seems to have judged that the interest of the great society of mankind would be best promoted by directing the principal attention of each individual to that particular portion of it, which was most within the sphere both of his abilities and of his understanding."

Anyway, like Smith, I am generally against protectionism. But I don't think that it is immoral to prefer the interests of people in your own country to those of people elsewhere -- even though, like Smith, I would hope to be generous towards all people, and not envy improvements in the well-being of foreign nations.

[Update: Professor Landsburg is guest-blogging at Marginal Revolution this week and reprises his comments there. The Agitator took favorable (?) notice of Professor Landsburg's sentiments.]

Labels: free trade, Smith

 
Swedish Alcohol Developments
- posted by Jim Leitzel @ 5:38 PM

Vice Squad has been tracking the possibility that Sweden will drastically cut its alcohol taxes, in the face of previous tax cuts in neighboring countries and EU rules that make importing for personal use easy. But not that easy: here's a story of a couple of fellows who ended up in jail when they couldn't explain the 2000 litres of alcohol that they were bringing into Sweden. It would be OK if it clearly were for personal use, or if they had other evidence that they were having a big party. But according to the article, "... it isn't acceptable to tell customs that "you're stocking up your reserves" or that it's been bought "for a large party"..." without supporting evidence.

The Swedish alcohol monopoly, enmeshed in a corruption scandal, is selling less because of the increased border trade -- another factor in making reduced taxes likely:

In September the Swedish Alcohol Retailing Monopoly recorded a 14.2 per cent drop in year-on-year sales. Sales of wine fell by 3.3 per cent, of beer by 4.7 per cent and of cider by 12.2 per cent. The drop in sales is most noticeable in Norrbotten and Skåne where consumers have the opportunity to buy cheap spirits in Finland and Denmark respectively.

Sweden is joining other countries (Finland, Norway, Iceland and Denmark) that have generally had tough alcohol policies and high taxes for negotiations with the European Union and the World Health Organization. Tight regulations do seem to work in terms of limiting consumption:

Norway, Sweden and Iceland, who charge the highest prices for alcohol, are also among the five nations in Europe with the lowest annual consumption of pure alcohol per person.

According to the WHO, people in Iceland annually consume just 4.41 litres of pure alcohol per person.

By contrast, Luxembourgers have the highest consumption with 14.47 litres per year per person, according to the WHO.

Norway, which is not a member of the EU, has the highest alcohol prices in Europe. But after Sweden lowers its taxes, Norway might feel pressure to follow suit, as the prospect of convenient, cheap imports will allow for avoidance of the high taxes.

Finally, the European Commission is coming after Sweden for taxing wine too highly, relative to beer. Why is the Commission sticking its nose into this business? Because most of the beer is locally produced, while most of the wine is imported, so the tax differentials might really be disguised protectionism -- which the Commission is tasked with fighting -- as opposed to a legitimate alcohol control strategy.

Labels: alcohol, EU, free trade, Norway, Sweden, taxes, WHO