Tag Archives: bruce yandle

Regulation of the Day 204: How to Buy Liquor

UPDATE: Welcome, Reason Hit & Run readers! More Regulations of the Day are here.

Self-checkout lanes have been popping up in grocery stores across the country over the last several years. Some people worry that without the adult supervision of a cashier, underage kids might be able to illegally buy alcohol at these self-checkout lanes. California state Rep. Fiona Ma even introduced a bill that took effect on January 1 that prohibits Californians of any age from using self-checkout lanes to purchase alcoholic beverages.

Has this been a huge problem in the past? Two independent studies have been done to find out. A 2009 UCLA study, cited by Rep. Ma to support her bill, found that underagers failed in 80.5 percent of their attempts. A separate study done by researchers at San Diego State, found that young hooligans had a 90.6 percent failure rate.

So yes, kids can buy booze at self-checkout lanes. But it’s probably less successful than other methods. As Joe Eskenazi put it in SF Weekly’s blog, “The best way to get alcohol remains to rely on a fake ID, theft, or someone’s skeezy 23-year-old cousin.”

Of course, there is another factor in play here, and likely Rep. Ma’s real motivation. That factor is rent-seeking. Many grocery cashier jobs are unionized. The more people use self-checkout lanes, the less they use the cashiers. Unions don’t appreciate the competition, so they work with lawmakers like Rep. Ma to legislate their preferences over consumers’.

According to Maplight.org, labor interests donated $150,450 to Rep. Ma’s campaign fund in 2009-10. They are by far her largest contributors.

This is an example of what economist Bruce Yandle calls a Baptist-and-bootlegger problem. Back in the old days, many Baptist preachers favored Prohibition because they believed drinking was morally wrong. Bootleggers favored Prohibition, too. Black market profits are far higher than in legal markets. So the bootleggers would manipulate the Baptists into favoring a bad policy by using the language of morality.

Fast-forward to today. Almost nobody wants increased underage drinking. And unions don’t want competition. So the bootleggers make up a story about how automated checkout lanes are causing runaway underage drinking. Social conservatives jump on board, wanting to strike a blow for morality. The bill gets passed, the Baptists feel good, and the bootleggers financially benefit. So do legislators.

Consumers, of course, are left out of this coalition.

Health Insurance and Campaign Contributions

Congressional Democrats are thinking of revoking the health insurance industry’s antitrust exemption; some insurers have spent as much as $20,000,000 opposing the current legislation.

Of course, insurers also gave $20,175,303 to President Obama’s 2008 campaign, roughly triple what McCain netted.

On one hand, this might look like the dog biting the hand that feeds. But really, it isn’t.

If the health care legislation passes, there is a good chance that every American would be required to purchase health insurance.

Suppose that happens. $40 million and change plus some antitrust troubles is a really small price to pay for a legal guarantee of vastly increased business, forever, plus looking like you didn’t want the favor.

As my friend Jeremy Lott is so quick to remind, it’s a wonder that politicians can be bought off so cheaply, given what they could charge for their services.

It is just as surprising that insurers would spend $20 million opposing legislation that would yield many times that in profit. As economist Bruce Yandle notes, “industry support of regulation is not rare at all; indeed, it is the norm. And in the United States it is as American as apple pie.”