2022 Election, Ari Armstrong, Business/Economy, Exclusives, Uncategorized

Armstrong: Colorado voters swing between freedom and protectionism

At first glance these election results seem strange: Why would Colorado voters at the same time loosen restrictions on hallucinogenic mushrooms (Prop. 122) but leave in place restrictions on who can operate a liquor store (Prop. 124)?

We should not make the mistake of assuming that the majority of voters somehow speaks for everyone or indicates the general will or any such nonsense. The majority determines which ballot measures pass. Still, even though we’re talking about a fraction of voters who said yes on the first measure and no on the second, it’s worth asking why the outcomes were different.

CPR’s Andrew Kenney solicited comments about the related measures Prop. 125 (allowing wine in grocery stores) and Prop. 126 (allowing third-party delivery of alcoholic beverages). He asked, “Kroger, Safeway, Target, Whole Foods, DoorDash, and Instacart spent $13 million trying to convince Colorado voters to allow wine in grocery stores and alcohol delivery, with little opposition. Both measures [are] failing at the moment. [It looks like 125 ended up winning.] What drove your votes on this?” Many of the answers also pertain to 124.

Part of the explanation is that some voters are ignorant. This is not a surprise to anyone who has heard of such books as Ilya Somin’s “Democracy and Political Ignorance” and Bryan Caplan’s “The Myth of the Rational Voter.”

Consider this reply: “Spend local! Help stimulate the local economy. And all those stores you mention have been driving inflation.” All the stores in question are local. More to the point, current restrictions on competition help keep prices higher than they would be in a free market.

Mainly, though, the issue is that many voters self-consciously like protectionism, policies that intentionally restrict competition to advantage certain people over others. They probably don’t call it “protectionism,” but that’s what it is.

Here is one such remark: “People told me small liquor stores in Colorado are primarily family—owned small businesses, and that a lot are owned by people of color. That mattered to me—I don’t want to take away their livelihood just so I could buy liquor more conveniently.”

Another: “We have a great network of independent liquor stores in Colorado. Those are thriving small businesses which I feel absolutely no compulsion to displace in favor of some of the world’s largest companies.”

Such remarks indicate a willingness to impose one’s virtue-signalling on others by force of law. What about the many people—including people who own small business and people of color—who want to be able to shop at a wider variety of stores?

The fundamental issue is freedom of association, not someone’s convenience. People have a right to exchange with others by mutual consent. But current laws threaten to punish some people if they sell the “wrong” product without the government’s prior approval.

It is a matter of historical accident that the laws advantage certain liquor-store owners as opposed to, say, grocers or booksellers. If the law instead had long restricted which stores can sell groceries or books, then we would have only small-scale businesses offering such things. No King Soopers, Walmart, or Barnes and Noble. Certainly we couldn’t let grocery stores sell books too—Heaven forbid!

Then, if someone came along and said, “Hey, we should let anyone who wants to sell groceries and books do so,” the same protectionists would scream, “Think about the mom-and-pop grocers and book sellers!” But the law should treat all people equally, not discriminate against some because they do not have the “right” business model. Incidentally, liquor store owners also should be able to sell whatever other products they want too.

Some people are protectionists in favor of niche producers and snob consumers. Consider this remark: “Consolidation of sellers (more sales at Kroger, less sales at independents) means less brand variety. Kroger just will not stock the breadth and depth that the independents do. The Kroger beer shelves are, what, 80% Coors and AB InBev [Anheuser-Busch], and 20% Craft? That’s bad.”

My local King Soopers carries a robust selection of craft beers (which it is able to do thanks to previous changes in the law), and many independent liquor stores pile up the bland big sellers. I expect wine will be no different.

But even if it were the case that free markets resulted in some stores having a small selection, so what? By what standard is that “bad”? No one is forced to shop at a given store. If you don’t like the selection at one store, you are free to seek out another. What’s bad is forcibly preventing willing sellers and willing buyers from doing business. Such use of force is positively immoral.

I think what is behind the protectionism we’re seeing regarding the liquor laws mainly is a bias against larger-sized businesses. Some people carry a presumption that big business is necessarily bad business, and bigger is worse. If some people work for others for a salary or hourly paycheck, that is a sign that something is wrong (ignoring that such often is the case at small businesses too). If stock investors get involved, surely something nefarious is going on.

Yet in many cases larger-sized businesses reach economies of scale and keep prices lower and selection higher for consumers. Consumers endorse stores by willingly spending their money there. The problem is not bigness per se but the use of force. Using the guns of government to prevent larger stores from selling a given product harms consumers and is wrong.

Any time someone says we need to force people to do what’s allegedly good for them we should be suspicious. What we need in place of protectionism is the presumption that people deserve the freedom to consent to economic exchanges with others. Raise a glass to liberty.

Ari Armstrong writes regularly for Complete Colorado and is the author of books about Ayn Rand, Harry Potter, and classical liberalism. He can be reached at ari at ariarmstrong dot com.


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