RALEIGH — The State Senate Wednesday made a big show of passing legislation that would allow out-of-state wineries to sell their wares directly to North Carolina households — as long as they acquire the appropriate permit.
Actually, the bill is an embarrassing admission of past failure. The General Assembly had previously tried to interfere with consumer choice and the free market in blocking out-of-state wineries from selling to consumers in competition with in-state wineries. Protectionism is foolish economic policy — which doesn’t stop fools from continuing to advocate it — and is also unconstitutional. One of the few things that the Framers did empower the federal government to do was to “regulate interstate commerce.” They knew that the United States would not grow and prosper if each state could adopt its own trade policy vs. the others.
Instead, Mr. Madison, Mr. Morris, and their colleagues prohibited interstate trade barriers and formed what was at the time the largest and most extensive free-trade zone in the world.
State lawmakers have run afoul of the interstate commerce clause before. Back in the 1980s, they enacted discriminatory taxes on stocks and other intangible assets. The tax rate was higher for out-of-state company stock. Eventually, the courts took care of the problem. They did so, as well, with the General Assembly’s more recent handiwork, the winery ban.
I’ve got another point to make about this. The on-again, off-again regulations on out-of-state wineries are but a subset of a larger confusion about selling and consuming alcohol in North Carolina. We allow it, but we punitively tax beer and wine and forbid private firms to sell hard liquor to consumers, deferring instead to a government monopoly system of ABC stores. On mixed drinks, we let localities decide whether individuals have a right to buy them, and we regulate the types of establishents that are allowed to sell them. Now, the Senate wants to increase taxes on alcoholic beverages again to help close the latest budget deficit.
Politicians say they care about “regular people.” But many regular people drink. Moreover, while part of the government wants people to drink in order to collect taxes or generate revenue for local governments through ABC sales, other parts of government try to discourage drinking and warn of its deleterious effects on health and society.
The same confusion reigns in government policy towards tobacco, which is bad for us except when it is good for us (via tax revenues “for the children”).
For those of you who now want the state of North Carolina to create a state-run lottery, let this be a lesson to you: don’t let government into the vice business. It will inevitable generate the worst possible service — high-priced ABC liquors, high-priced domestic wines protected by artificial trade barriers, lottery games with horrible odds, etc. — and then charge you exorbitant taxes on the back end.
The proper course of action in a free society is for the government to tax commerce of any kind in a uniform manner, either through broad-based sales taxes or broad-based consumed-income taxes (which are economically indistinguishable). Rules and laws should be reserved for situations where forcible or fraudulent harm is involved — policies to combat drunk driving, for example, or rigged gambling operations.
Freedom isn’t a luxury good. It isn’t an unattainable ideal. It is a practical tool for maximizing human happiness — and keeping pathetic politicians from getting themselves into trouble.
Hood is president of the John Locke Foundation and publisher of Carolina Journal.