Wait, does the ABC Commission think it's stimulating the state's economy? | Eastern North Carolina Now

    Publisher's note: This post by Jon Sanders is published here courtesy of the John Locke Foundation.

    John Trump wrote in Carolina Journal this week an article titled "Control? For N.C. ABC, business is booming." Trump writes:

    Proponents of our ABC system make so much of the commission's power and propensity to "control" - rather than sell and market - spirits in North Carolina. Curbing alcohol consumption, keeping it out of the hands of minors, etc.

    The arguments have been the same since 1937, and there's little reason to think they might change.

    But, to me, the [ABC Commission's initial 2018 annual report] hints at another motive: Profit. ...

    In the report, the ABC boasts: "The fiscal year 2018 marks the [ABC commission's] third consecutive record setting year for 10-digit sales, where retail sales surged and sales to restaurants and other businesses with mixed beverage permits increased over the prior year. The billion-dollar ABC revenue resulted in an all-time high transfer of money into the General Fund for use by the N.C. General Assembly."

    I saw that report, and what stuck out to me about that paragraph was not just the boast, but the headline over that paragraph:

    "Stimulating the State Economy"? A government monopoly over a private enterprise?

    This isn't even the usual case of asserting a "stimulus" effect based on a questionable "economic impact" study. There's no study, just a flat assertion.

    This is like saying Venezuela's government has stimulated its economy by monopolizing wheat and seizing control of bread companies, and then selling a little bread.

    Turning a potentially competitive market into a government monopoly does several things, but serve as an economic stimulus it does not. It creates inefficiencies, prevents many economic transactions that otherwise would take place, and creates deadweight loss.