If you live in New Hampshire and enjoy wine, there’s something you should know (besides how approach a tasting). Your own state government, which sells wine, wants to be your primary supplier. Really, it wants to be your only supplier, but the Legislature won’t allow that. So to satisfy its impulse to smash all enemies, it’s rigging the wine market to kneecap upstart competitors.
The New Hampshire Liquor Commission both sells — and regulates the sale of — alcohol. This blatant conflict of interest gives it the power and incentive to limit its competition. Naturally, it uses that power.
After Prohibition, the Liquor Commission was the state’s only alcohol retailer. In the decades that followed, it aggressively fought the private-sector sale of beer and wine, changes that were proposed and ultimately ordered by legislators, who have grocers and drinkers as constituents.
Today, the commission is fighting a new competitor — direct wine retailers. The Liquor Commission is this week acknowledged that it has been systematically banning the direct-to-consumer sale of wines that are also sold in state liquor outlets.
The National Association of Wine Retailers this week called the commission’s actions “gangster tactics.”
During Prohibition, gangsters controlled the production and distribution of alcohol and snuffed out competitors. Ironically, the Liquor Commission, which was created to control alcohol distribution after Prohibition ended, wound up operating like a more lawful version of La Cosa Nostra. It pursues competitors relentlessly and does what it can to eliminate, or at least handicap, them.
Using the word “gangster” to describe the behavior of New Hampshire officials might call to mind images from a Weird Al parody. But where the power to whack competitors exists, it’s used.
Occupational licensing laws often grant specific industries the power to restrict competition. Licensing boards, made up of practitioners of a particular trade, are empowered to both practice and regulate that trade. Not surprisingly, they tirelessly suppress competition and seek legislative authority to further restrict entry into their field.
Public schools succeeded sank an Education Savings Account bill that would have expanded the definition of what constitutes a public education. It would have allowed families to spend the state portion of their public education dollars at non-public schools (local dollars would remain with the local public school district).
Perceiving this as a competitive threat, public school administrators, some local school boards, the teachers’ unions, and their political allies fought hard to maintain their advantage. They successfully turned enough Republicans against the bill to kill it in the House.
Even preppy suburbanites do it. Municipal officials and voters regularly approve ordinances to limit new business and home construction, reducing competition and raising prices.
It’s not that institutions granted such power attract people with a lust for blood and conquest. It’s that the combination of incentives and opportunity leads inevitably to anticompetitive behaviors.
So if you wondered why you could no longer order your favorite wine online, wonder no more. The Liquor Commission’s been taking a lead pipe to the knees of your favorite winery.
This was originally published in our weekly email newsletter, for which you can sign up here.