January 2012

Awaiting NY Supermarket Wine Sales

by Angela Logomasini on April 9, 2010

in Odds & Ends

Dr. Vino has a an excellent post today updating consumers on legislation in New York State to allow some grocery stores to sell wine. Currently, in New York State you can only buy wine from liquor stores. The state also bans retailers from owning more than one store/license. Allowing grocery stores to sell wine and allowing all retailers to obtain multiple licenses could dramatically change the quality and selection of wine available to consumers in the state.

Liquor stores may be adequate in some areas, but as a former Long Islander, who visits family there often, I can attest to the horrible selection under the current system. Out on the eastern part of the Island, there is a dearth of good wine shops and the local ones near where my family lives contain uninteresting selections of dusty, stored in poor conditions. I have to travel about 10 miles to find a halfway decent wine selection!

It is very odd that Virginia supermarkets have far better selections than New York shops specializing in wine and spirits! And Dr. Vino notes that New York has 2,400 retail licenses, while smaller Virginia has more than 6,000 retail licenses for shops of various kinds–including drug stores, gourmet shops, supermarkets, convenience stores, and gift shops–to sell both beer and wine for consumption off premises. That does not include wineries, hotels, restaurants, concessions, and places selling only beer. With all this competition, it is not surprising that wine retail shops in Virginia are fantastic with lots of high-quality, unique wines. They also contain knowledgeable and helpful staff, and host tasting events. In fact, even Harris Teeter’s supermarkets have knowledgeable staff at hand to help consumers select wine.

What explains there difference? Competition fostered by fewer barriers of entry. With supermarkets, Costco, Trader Joe’s, and even Walmart and Target selling wine, retailers all need to compete. The result is a wonderful selection with many different niches being served. Instead of liquor stores, we have boutique wine shops often with wine bars and tastings. Unfortunately, we do have to go to a separate, government-owned ABC store to buy liquor–but that’s another issue.

I would welcome such competition in New York with glee. Unfortunately, change in New York may prove sluggish, as Dr. Vino reports from intelligence he found on Twitter, posted by Dainel Posner, owner of Grapes The Wine Company. Posner is apparently one of the few enlightened retailers in the state, offering a more unique retail experience that could compete with in an open market. Dr. Vino notes that the proposals create a transition period, obviously to get at least some existing liquor stores on board by delaying liberalization and giving them the chance to expand first. Dr. Vino explains:

According to Posner, the new proposal would offer existing retailers two “medallions,” requisite to maintain or obtain a license for wine retailing. The first medallion would be for their existing store. Shop owners could do what they wish with the second, including use it to obtain a license on a second store as the current ban on owning multiple licenses would be lifted. They could also sell it to another party, including a supermarket, to apply for a wine retail license.

This would effectively cap the number of new licenses to only double the amount of existing stores, currently 2,400 in the state. This medallion period would be a transition of three years before the market was further liberalized, phasing out the medallions.

Existing retailers will continue to lobby for such protection as long as they can. But in the end, competition would be good for many of them too. They could become part of a robust and growing market like the one we have in Virginia. I suspect that some might go out of business but many will change their strategies to provide a better product and others are likely to spring up to fill new niches, such as the boutique wine shops here. In fact, if wine is sold in supermarkets more consumers will likely try it, and there will be a growing wine appreciation market as a result. Those consumers are then likely to try other wines and eventually seek out the boutique ones as well.

Rather than fear competition, New York retailers should learn to embrace it. The ones that do, will be the ones that survive and thrive, and maybe even expand to owning several shops rather than just one. New York retailers should also read another blog post by Dr. Vino highlighting wine shops in other states and how they compete with supermarkets. It shows that competition could be a winner for the shops that are willing to offer consumers lots of options and services–which is certainly a huge win for consumers.

A deal too good to be legal

by Michelle Minton on April 9, 2010 · 1 comment

in Odds & Ends

As of April 6th any pub owner offering free drink specials, all you can drink deals, or drinking games could lose their liquor license, end up 20,000 pounds lighter or in jail for 6 months.

Other deals that are made unlawful are “dentists’ chairs” where drink is poured directly into the mouths of customers making it impossible for them to control the amount they are drinking.

The purpose of this new ordinance is to cut down on drink-related crime, or the “scourge of binge drinking” as Home Office minister Alan Campbell put it. The belief is that binge drinking is the result of cheaply available liquor.

uk-drinker-telegraphA few years back, leaders in the UK believed that forcing pubs to close at certain times was a contributing factor to binge drinking (people getting in those last rounds before last call) and pouring into the streets with nothing else to do but brawl. But in 2005 the licensing laws in the UK changed.  “at last grown-ups will be treated like grown-ups.” forcing The licensing minister of the time declared. But only 5 years later it seems grownups don’t have the ability to say no to a good deal. While leaders in the UK hope that keeping prices high will slow peoples’ drinking, it will most likely just result in bigger tabs. As pubs continue to struggle and close thanks to the increasing liquor taxes, they might not be too angry about their patrons spending more money, of course without the specials pubs may find their patron numbers drying up.

Tax Freedom Day

by Ryan Young on April 9, 2010 · 1 comment

in Deregulate to Stimulate, Economy, Regulation

Today, April 9, is Tax Freedom Day. The good folks at the Tax Foundation calculated how much money local, state, and federal governments harvested last year from taxpayers ($3,469,000,000,000), and compared that to national income ($12,901,000,000,000). At 26.89 percent of national income, you basically work until April 9 just to pay off your taxes.

April 9 is the national average; different states have different tax burdens, so Tax Freedom Day actually varies from state to state. If you live in Alaska, you already celebrated Tax Freedom Day on March 26. But if you live in Connecticut, you have to keep the champagne on ice until April 27.

That isn’t the whole picture, though. The federal government spends far more than it taxes. $1,414,000,000,000 more, last year alone. The burden of federal deficit spending adds another 40 days. Not even counting state and local deficit spending, that puts us out to May 19 by my calculations (May 17 by the Tax Foundation’s).

Even that’s not all. The hidden tax of federal regulation cost businesses and consumers an additional $1,187,000,000,000 last year, according to Wayne Crews’ soon-to-be-released 2010 edition of Ten Thousand Commandments (previous editions are online here). None of that extra trillion-plus actually shows up in the federal budget. Regulation eats up an additional 9.2 percent of national income, or 8.3 percent of GDP. So you have to work an additional 34 days until you pay off the federal regulatory burden.

It’s tempting to brush off regulatory costs, since most of them are borne by businesses. But remember, businesses pass on their costs to consumers. You pay for the regulatory state. Its costs are real.

Adding together total taxes, plus federal deficit spending, plus federal regulations pushes us out to June 22 by calculations, or June 20 by the Tax Foundation’s.

And remember, that’s leaving out state and local deficit spending. Nor does it count state and local regulations. I don’t have the data handy for that. But if they add up to at least $460,000,000,000 then we’re past the half-way mark of the year. Just to pay for government.

Even using the larger number of GDP ($14,253,000,000,000 in 2009), and leaving state and local deficit spending and regulation, we’re still talking 42.9 percent of the economy going to pay for government. That’s 157 days out of the year. You’re not free until June 6 even by that generous measure.

I’d argue that government has grown too big, but the data have already done that for me.

The Rich are Society’s White Mice

by Fred Smith on April 9, 2010

in Culture, Odds & Ends, Zeitgeist

Egalitarians are often upset that technological breakthroughs, whether new cancer drugs or computers, are first only available to the wealthy while the masses must wait until they’re more affordable. 

This concern neglects the fact that new products are not only costly but risky.  Moreover, many experimental drugs and devices initially appear hopeful but fall flat in practice.  New technologies often entail higher than expected maintenance costs or simply prove too erratic for success.  In a market economy, those risks are (thankfully) borne by the wealthy.  They can afford the high cost and low quality associated with breakthrough products.  Central heating and air conditioners; radios, televisions, and DVD players; GPS, anti-lock brakes, and now automatic braking systems; even experimental medical procedures -all initially costly and “clunky” products. 

By supporting the initial market, wealthy consumers encourage producers to invest in product enhancements and production efficiencies that – if the product proves useful – make the breakthrough available to all.  The rich buy expensive, complex and low quality products – and, in so doing, make it possible for us to obtain a simpler, more affordable, high-quality product.

In experimental biology, we use white mice to test the unknown.  In capitalism, the rich voluntarily accept this role.  Many are upset over income inequalities, but if one reflects, we need these “white mice.”  What would life be like without them!

Kyrgyz Daze

by William Yeatman on April 9, 2010

in Odds & Ends

The Kyrgyz Republic is again in turmoil. President Kurmanbek Bakiyev fled on Wednesday after violence claimed scores of lives. Like the “Tulip” revolution that toppled President Askar Akeyev in 2005, this one started in Talas, the northwestern most state, and then spread to Bishkek, the country capitol. In 2005, Akeyev avoided the mob by a hair. It seems as if a similar thing happened to Bakiyev.

For an American, I share a rare intimacy with the Kyrgyz Republic. From September 2004 to November 2006, I was one 7 of foreigners (and three Americans) living in Talas City, the capitol of Talas, where I worked as a PeaceCorps volunteer. I socialized with all the politically active young people–they helped forge my love for cheap vodka in 50 gram increments–so there’s a high probability I know many of the primary participants. According to news reports, many members of the “opposition” in Talas City were detained. I pray for my friends. People get boiled in that part of the world.

I use quotation marks around “opposition” because a singular grouping is misleading. Talas, where these revolutions started, and Bishkek, where they finished, are like apples and oranges. The people of Talas are stereotyped as prideful. We say, “don’t mess with Texas”; the Kyrgyz say, “never fight a guy from Talas.” They are also stereotyped as backwards, because Talas is largely rural and isolated by steep mountains on all sides. Bishkek , on the other hand, is just like every other capitol mega-city in the developing world: bloated with immigration from the countryside, and riddled with crime.

The distinction is important because these revolutions easily change for the worse as they cross the mountains from Talas to the capitol. Shortly after the February 2005 parliamentary elections, the men of Talas started gathering in front of the local executive office building, and they waited. I could see them from my bedroom window. They were non violent. Many of them were my friends. It was an altogether different vibe in Bishkek. There, the proceedings were organized by regional crime bosses. They bussed in thousands.  A lot of alcohol was consumed, and looting was widespread, although there were few casualties. I hope the impetus wasn’t similarly corrupted this time around, but I suspect it was.

In any case, the prognosis is bleak. In the Kyrgyz Republic, the state is just one more player in the black market, so it doesn’t matter who’s in charge. Everyone knows it: There is even a saying, to the effect of “corruption is a way of life.” One of my most enduring memories, unfortunately, is the languid flip of the wrist with which cops beckoned motorists to the side of the road for a bribe. What struck me was the sense of routine. You slipped your money into your passport, handed it over, received the passport, and drove on. Rinse, wash, repeat.

When it isn’t outright extortion, it’s the soft corruption of nepotism and prejudice. Generally speaking, the magnitude of the abuse increases in lockstep with the legal power accorded to the perpetrator by the state.

If only the Brits had won the Great Game! In India, the British Empire left democracy. In the Kyrgyz Republic, the Soviet Union left a corruptocracy.

Fannie and Freddie finally called to Crisis Commission

by John Berlau on April 9, 2010 · 1 comment

in Bailout Watch, International, Legal, Nanny State, Personal Liberty, Politics as Usual, Sanctimony, Stimulus to Nowhere, Zeitgeist

It is good that the commission, after several months, is finally visiting the role of Government-Sponsored Enterprises, but the setup of today’s hearing is still providing a far from adequate investigation. Former CEO Daniel Mudd came late in the game from 2005 to 2008, and the commission must call Mudd’s predecessor, Franklin Raines, to give testimony about his tenure as CEO in which so many expansions were made and policies were put in place that contributed significantly to the crisis. Having Mudd testify without Raines, would be like hearing only from Ben Bernanke but not Alan Greenspan about the activities at the Federal Reserve.

Still, because of the facts brought forth in Greenspan’s testimony on Wednesday, and the diligent questioning of commissioners< Peter Wallison and Keith Hennessey some revealing facts came out that demonstrate that Fannie and Freddie played an even more significant role in the financial crisis than previously known. These findings could not have come at a better time, as both Obama and lawmakers like House and Senate Banking Committee Chairmen Barney Frank and Chris Dodd want to sweep the GSE’s problems under the rug.

Amazingly, they have no immediate plans to rein in Fannie and Freddie, despite their admonitions of how urgent it is to ram through “financial reform” that would hit a broad swath of financial and nonfinancial companies. And the Obama administration’s “Christmas bailout” of the GSE’s – the December 24 order removing the caps of $200 billion dollars that the Treasury was authorized to spend on each of the two mortgage underwriters – exposes the American taxpayer to unlimited liability for the entities and their potential new missteps.

One of the most important moments of the hearing came in a little-notice moment on Wednesday, during the second panel after the much-discussed testimony of Greenspan. This was when Commissioner Wallison asked Patricia Lindsey, former Vice President of Corporate Risk for now-bankrupt subprime mortgage originator New Century Financial Corporation, about her firm’s dealing with Fannie.

Lindsey confirmed that Fannie directly bought many of New Century’s bad mortgages all through the last decade. This is one more piece of evidence that directly refutes the notion that Fannie and Freddie were late to the subprime party, and pushed there by private sector competitor. One the contrary, it shows that the GSEs were important drivers of the subprime party. (This part of the hearing can be viewed here — http://www.c-span.org/Watch/Media/2010/04/07/HP/R/31521/Financial+Crisis+Inquiry+Cmsn+Public+Hearing.aspx – and occurs at about the 50-minute mark.)

Greenspan himself provided facts that whatever one may think of his other actions – and I think he does bear significant blame for keeping interest rates too low for too long – no one has refuted. He pointed out that the firms purchased 40 percent of all private-label subprime mortgage securities during 2003 and 2004. “To purchase these mortgage-backed securities, Fannie and Freddie paid whatever price was necessary to reach their affordable housing goals,” he said. And Greenspan also noted that “the enormous size of purchases” by the GSEs during this time was not revealed until Fannie reclassified in September 2009 a large part of its prime mortgage portfolio as subprime.

Indeed, According to housing expert Edward Pinto, Fannie’s former chief credit officer who has presented his findings before Congress and should himself be asked to testify before the commission, millions of mortgages to borrowers with credit scores of less than 660 – considered by prominent researchers to be the dividing line for subprime loans — had been labeled by Fannie and Freddie as prime going back as early as 1993. In his writings for the American Enterprise Institute, Commissioner Wallison noted that this misrepresentation by the government-backed mortgage giants could have itself been a major factor in inflating the housing bubble. “Market observers, rating agencies and investors were unaware of the number of subprime and Alt-A mortgages infecting the financial system in late 2006 and early 2007,” he wrote.

Competitive Enterprise Institute President Fred Smith had long warned about the systemic risk Fannie and Freddie posed to the financial system, warning as early as 2000 that their implosion could cause a taxpayer bailout of as much as $200 billion. That turned out to have greatly underestimated the $400 billion the bailout has already cost taxpayers and the possibly hundreds of billions more it will cost them, since the Obama administration removed the cap on Treasury Department assistance.

But at the time, Smith’s was a voice in the wilderness as members of Congress pooh-poohed the notion of Fannie and Freddie ever slipping up. In 2003, Rep. Barney Frank, D-Mass., now chairman of the House Financial Services Committee, even publicly called for the mortgage entities to “roll the dice” on less credit worthy borrowers.

The Bush administration also pushed policies that tilted incentives toward home ownership, and the mistakes of politicians of both parties should be examined in thorough hearings. Unfortunately, it still looks as though politicians are still giving a pass to the fat cats from Washington. But hopefully the rallying cry after these hearings will be “Fix Fannie and Freddie First.”

Rent Seekers Keep it Phony

by Angela Logomasini on April 8, 2010 · 1 comment

in Environment, Nanny State

Why does industry sometimes (all too often) support government regulation? You would think they would prize their freedom. But think again. Many businesses are willing to use the government to get a competitive advantage, an activity economists call rent seeking. And, unfortunately, some will even work in tandem with unscrupulous activists to spread misinformation about a competitor’s product and then call for government bans.

Consider the the website “Keep it Organic.” Its stated purpose is to “provide you with important facts about organic foods and beverages, information about current trends in the organic industry and we hope, an objective look at the organic market as it relates to consumer interests.” The posts on the site all attack the use of bisphenol A in food packaging, claiming it taints food and deprives it of the label “organic.” Headlines include: “Plastic Chemicals Make their Way from Oceans to Food Chain to Humans,” “‘TIME’ reports on ‘The Perils of Plastic,’” and “Chemicals Found in Water Can Make you Fat.” Yes, it sounds like the same old hype we get from many green activists.

But “Keep it Organic” is an industry website. If you scroll down to the bottom it reads: “Copyright © 2006 GPI.” Follow the link to GPI and it brings you to the Glass Packaging Institute. Wow. They didn’t simply employ activists to sully their competitors–aluminum and steel can producers whose containers are lined with BPA–they were willing to get their own hands dirty. But their apparent ownership of the Keep it Organic site is oh, so subtle. They even list themselves under the “Recommended Links” section along with a bunch of outside groups that include environmental activists.

The GPI website is just the tip of the iceberg when it comes to phony campaigns and claims about BPA. My colleagues Iain Murray and Michael Fumento have highlighted other political forces that are moving this issue, despite science to the contrary. A study on the topic published by Jon Entine at the American Enterprise Institute does a wonderful job documenting the crazy extent that activists–including some scientist-activists who were recently awarded federal grants to do research for NIH–have gone to push forward BPA bans. It is a must read for anyone with an interest in this topic.

Unfortunately, such hype is having considerable influence on policymakers. Senator Diane Feinstein (D-Calif.) has a bill that may come to the senate floor next week–S. 593–that could ban BPA uses for food containers. This is a dangerous policy because BPA resins line steel and aluminum cans to protect our food supply from deadly pathogens. True, we could switch many products to glass packaging, as GPI wants–but breakage and resulting food waste is an obvious drawback. The smarter approach is to stick with the science, and the science weighs heavily in BPA’s favor as a safe and effective product for use in food packaging, as documented in our CEI-Casscade Policy Institute study.

The Story of Leftist Propaganda in Schools

by Ivan Osorio on April 8, 2010

in Culture, Environment, Natural Resources

At BigHollywood.com, Anne McIlhinney critiques the anti-industrial environmental propaganda film, The Story of Stuff. The film’s narrator, Annie Leonard, argues that modern civilization uses too many resources to produce too many things. The film is so idiotic (I’ve seen part of it) that it ordinarily wouldn’t merit a response–except for the fact that it’s being shown in schools around the United States.

Problem is when children see Leonard’s film in the classroom they don’t get to hear about all the good things stuff does. Stuff gave my Dad a hip replacement at 91; I think that’s good. Hospitals use loads of stuff so people don’t die really young like they do in places where there’s very little stuff. Your bicycle is made of stuff and your computer is made of loads of stuff not to mention your car. Artists use lots of stuff to make other stuff that they hope someone might like, like jewelry or movies or sculpture or paintings. Lots of stuff allows us to travel much further than our bicycle will take us, it allowed 45,000 people to travel from all over the world to Copenhagen in December 2009 to campaign against other people traveling across the world.

Stuff builds homes so people are protected from the elements and don’t die just because it rained for a week. And stuff is nice to eat. I like sushi and chicken pie and avocado, not necessarily together. People who don’t have access to enough stuff die all the time in places like Africa and that is really not good. Stuff brings water to places that would never ever, ever get water otherwise and that’s good because you can’t live without water.

Making stuff, even silly stuff gives someone somewhere a job that didn’t exist before and that allows his kids go to school and people to get all the other stuff that makes life lovely.

Well put.

My colleague Lee Doren offers a point-by-point rebuttal of Leonoard’s silly film below (in four parts).

A salute to coal mining

by Fran Smith on April 8, 2010

in Energy, Natural Resources

In today’s Investor’s Business Daily, CEI’s Iain Murray tells about his first-hand experience with coal-mining and salutes the miners and the mine owners for the brave and necessary work that they do.  As Iain notes:

“Coal mining is a difficult job, just as it was in my grandfather’s time. The conditions are harsh and danger is ever present, which is why the wages for coal miners are often the best-paying jobs in many regions. Because of the remoteness of many mines, coal mining is central to most mining communities, rather than just one industry among many. Close the mines abruptly and those communities die.”

“Indeed, God bless the people of Montcoal, W.Va., and similar communities around the world. The perilous work they do underpins the work the rest of us do, and makes our nation richer, safer and freer. For that they should be remembered not as victims, but heroes.”

Read the whole article here.

PETA’s meat lust defense to murder

by Michael Fumento on April 8, 2010

in Odds & Ends

Terrence Jones, 20, of Washington, D.C. is on trial for the murder of Tanganika Stanton, whom he shot through the heart two years ago.  Stanton, 18, was sitting outside her apartment building eating a hamburger that her mother had fixed for her. Jones saw her, said he wanted one, and asked both women to make it for him. The mother and daughter said no.

So Jones left, returned with a gun, and fired what a witness called a “large volley of gunfire.” He hit Stanton’s mother in the foot, while another round passed through Stanton’s left shoulder and pierced her heart. Jones is charged with second-degree murder while armed.

Obviously there’s utterly no excuse for his actions. Except . . .

In proof yet again that satire is dead (Yes, I know I’ve repeatedly used that expression, but that’s because we keep getting proof yet again that satire is dead)  PETA sent a letter to the head of the D.C. Department of Corrections urging him to place Jones on an all-vegetarian diet.”The only way to stop his involvement in senseless killings is to provide him with exclusively vegetarian meals,” wrote the organization’s executive vice president Tracy Reiman.

Forget that since he’s in custody you could probably force-feed him beef, pork, and kidney pie and he would no longer be involved in senseless killings. Sadly, if you live in the D.C. area you hear about all sorts of “senseless killings” that add real meaning to the term, such as murdering somebody for his jacket and in the process ruining it with bullet holes.

Apparently it never occurred to PETA that a man who is so lacking in having his own heart that he’s willing to shoot another person who does have a heart for a hamburger would also do the same for a tofu burger. Jones isn’t the only one here who’s deranged.

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