What shall we do with the drunken nation? Volumen Dos

[This is the concluding half of my two-parter on combating alcohol abuse in Britain. The first half, focusing on the price policies the government can use can be read here.]

First of all, let me apologise for taking so long to finish off what I started three weeks ago. It all turned out for the best anyway since I can now start off this piece by saying how interesting it is that Alistair Darling has done exactly what my first half advised not to do: enforce punitively high excise duties. We’re just about to see a fascinating sociological experiment unfold: exactly how much damage unintended consequences can do and how much more underground smuggling and distribution will cost the government and the nation. Of course, those figures being undocumented it’ll be difficult to analyse exactly. There is a soon-to-be rolled out statistic which will interest us though, and that’s the crime count this weekend. The increase in tax will only take effect after Sunday, so rational drinkers would stock up on cheaper alcohol before it hits home.

I’d also like to put forward an alternate hypothesis taken from Gary Becker and Kevin Murphy’s study into rational addiction. Assuming addicts are rational (which they have already managed to prove in groundbreaking research), then they would pay more attention to price than light users. The evidence they give for this is that when a county raises taxes on alcohol, the local consumption decreases while the liver cirrhosis death rate decreases even more sharply. This comes out with a counter-intuitive conclusion: addictive goods may actually be price-elastic rather than price-inelastic. This laughs in the face of conventional wisdom and if proven true, we have a reason to start burning textbooks.

Okay, I promised last time that I’d air my thoughts about Jacqui Smith’s proposition to confiscate alcohol from under-18s. Despite the power rampage she’s been on lately, I (perhaps surprisingly) actually think this is a good thing. In fact, I’ve discussed this with some people and we were quite surprised that it wasn’t already in force! I believe the crux of the argument here to be consistency. Laws have to be backed up by credible threats and the government can’t expect the judge and jury to be effective without the executioner. If the punishments are too lax and the detection rate too low, even children will figure out that the threat is empty and will resort to rational crime. In fact, I think the measures should be even more stringent and be applied to suppliers too, possibly even with “mystery shopper” government agents (though that it legally and morally questionable. Under-age drinkers have to obtain their alcohol from somewhere and often the supplier is partly to blame for not checking IDs.

Recently there was another proposition put forward that forced/encouraged(don’t remember which) parents to ply their five year olds with alcohol at mealtimes. It’s not a novel idea by any means, and draws from the continental model where alcohol would be less seen as taboo and therefore less appealing to teenage rebels. I reserve my judgement on how effective this measure would be, since trying to predict the behaviour of teenage rebels would be as futile and fruitless as trying to save Northern Rock (I promise I will make no more Northern Rock jokes from now on).

In essence, alcohol abuse in Britain is an issue bigger than the simple categories of economic, cultural or social. Whether it even be solved at all is questionable, but we put aside that pessimism and try to tackle it through supply side policies such as welfare reform, changing perception and education. But those are all long-term solutions and nobody knows yet how effective they will be. A friend suggested cracking down on advertising to correct the information failure. Although it’s a distasteful measure too draconian for my classical liberal roots, I can see her argument. New Zealand’s record with drug abuse has been relatively successful due to its distance from the major drug producing countries, but even that is lessening due to cheaper transportation costs (and therefore more incentive for entrepreneurs to smuggle drugs across). I’d hate to think that we’d have to resort to geographical isolationism in order to cure this ailment.