Reihan Salam makes the case for higher alcohol (and tobacco) taxes.
At some points, I would differ in emphasis. It’s hard to judge how much alcoholism is a cause of the rotten Russian polity and the decrepit Russian economy and society, and to what extent it is an effect, with people drinking because there’s nothing better to do. And I would weigh seriously the benefits of tobacco taxation in reducing smoking against their cost in impoverishing poor habitual smokers.
But overall we see eye to eye (and Reihan is overly generous in crediting me with work that is only partly mine; most of what I know about alcohol policy comes from Mark Moore and Phil Cook).Â
But, having agreed, we face the problem that the solutions we want, both with respect to alcohol and with respect to cannabis, lack both popular support and - more crucially - support from people and institutions with deep pockets. The political economy of vice regulation under a money-driven political system is always likely to lead to bad policies and bad outcomes.
On the other hand, excise taxes on alcohol and tobacco are pretty easy to collect, and less unpopular to the non- or light-using majority of voters than most alternatives. Budget guys will always like them. See Colbert on geese. Unfortunately this doesn't hold so well for marijuana, which is very easy to grow at acceptable quality. But the greatest danger comes from the prospect of large-scale commercial growing and marketing, which will look institutionally very like the legal vices.
One question I have, given the frequent comments on the drinking problem in England and the proposal to increase prices as a useful measure in the US (both of which make sense to me.)
What does alcohol cost in England? In the US, a decent cheap vodka/gin/bourbon costs about $20 for a 1.75 L bottle-which translates to (roughly) $30 per liter for alcohol; inexpensive beer is around the same price for alcohol unit.
You can find it in supermarkets for less than the price of bottled water. For a person to purchase the weekly recommended maximum of units in health guidelines costs less than a pound and a half.
Alcohol of what sort is less than bottled water? Is that beer, or gin?
If I'm doing all the translations right, a British unit (10 ml of ethanol) costs about $0.30 in the US-so five units would cost a pound, and a weeks recommendation (21 units, according to patient.co.uk) would cost 4 pounds. That means alcohol in the US costs 3x what it does in Great Britain, which seems off-everyone I've talked to talks about how expensive alcohol is in London.
Am I mis-calculating somewhere? What would a bottle of gin cost in London?
Tesco own brand vodka goes for £15.50 ($26) a litre. Keith must be buying very posh bottled water!
I live in Spain, where alcohol is ridiculously cheap. You can buy spirits for €10 a bottle, wine for €1.50 a litre carton. The good Mediterranean alcohol culture - social wine with meals - limits the damage. The young go in for “botellones”, street parties fuelled on cheap beer.
Vodka isn't the right comparison beverage. White cider is the preferred cheap, high strength product. http://www.theguardian.com/lifeandstyle/2011/apr/…
The Treasury is bats. From the link: "cider up to 7.5% in strength attracts a lower rate of duty at £35.87 per hectolitre (100 litres) than standard 4% beer or lager that attracts a duty of £74.28." So the tax per unit alcohol is a quarter of that on beer, all to protect a few apple growers. Why not raise the tax and give the growers a bag full of money? Ah, the great Common Agricultural Policy. Correction, the Treasury and the Commission are bats.
I'm not familiar with British packaging, but I'm assuming a "can" is a 500 ml. (If cans are smaller, my alcohol price is too low).
That gives me a price of $26/L for ethanol from cider-which is comparable to current US prices for beer and spirits, and to James Wimberly's prices from Spain.
If cider is by far the cheapest source of ethanol in Britain and is comparable to the US decent everyday spirits and beer in price, and vodka and lager cost about twice what they do in the US, that would make sense with the anecdotes I've heard.
But in that case, how much does a manageable rise in US prices-say an excise tax of $10/Liter of alcohol, a 33% increase in total price for moderately-priced alcohol (about doubling the current excise tax rate)-do to affect drinking? It seems Britain, with prices twice US prices, still has a significant problem.
A useful reference for US prices: here's the Virginia ABC price list. Virginia runs state stores,which are the only place to buy spirits in bottles (beer and wine can be sold in bottles elsewhere.) The prices are uniform statewide, and the state price list is updated quarterly.
http://www.abc.virginia.gov/Pricelist/price.html
Pretty pessimistic, Mark. Or maybe it's pretty realistic. I'd accept the bad outcome side as caused by the bad policy, so the question is then how to avoid the bad policies? "Always likely" doesn't mean inevitably. Do you have recommendations for how to get better policy in the current environment?
"And I would weigh seriously the benefits of tobacco taxation in reducing smoking against their cost in impoverishing poor habitual smokers."
It's one anecdote, not data, but when I was in Indonesia we talked to our tour guide about a number of things (including the strange on-going popularity of Blackberry in the country, long after the rest of the world has moved to iPhone or Android). He told us that he wished the government would raise the tobacco taxes to the levels of the West because he believed that would compel him to stop smoking, or at least cut down substantially, and while he wanted to do so, he didn't have the innate will power within him.
I point this out because to simply assume that "impoverishing poor habitual smokers" will be the ONLY outcome, and that letting these poor smokers continue smoking is what they WANT to happen is to go full Gary Becker on the problem, assuming that what each smoker does corresponds exactly to what they WANT to do do — after all they're rational, autonomous agents are they not? If one's doing the accounting, one at the very least needs to include both that some will quit or cut down AND that some will be grateful for the extra kick the government gave them in that direction.
The basic trade-off is that a tobacco tax is very good for poor people who want an extra reason to stop smoking. It's bad for poor people who want to continue smoking, or who aren't going to be able to quit despite the higher cost.
I support high tobacco taxes. I think in the end, it's a dangerous product, it imposes serious health costs, and it should be taxed. Same with alcohol. (I support high taxes on any addictive drugs that ever get legalized too, for much the same reason.)
But Mark is nonetheless right to note that the victims of these sorts of policies are the people who want to take the risk. And their interests do count. I think their interests count more with respect to the ultimate legalization of the substances, though. The desire of the public to drink was an excellent reason to repeal prohibition, and the desire of many people to smoke pot is a reasonable reason to legalize marijuana as well. But health costs are still health costs, and the reality is that all financial responsibility requirements hit poor people harder. Poor people have a harder time affording car insurance, but that doesn't mean that mandatory car insurance requirements are a bad idea.