“Lincoln” and Liquor License Reform

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Everybody’s saying what insights they think should be drawn from Lincoln for current policy debates, so I’ll join in and talk about liquor licensing and alcohol reform.

In both cases, you have a market that lots of people would like to change, but where any meaningful change will impose huge losses on powerful incumbents.

Abolitionists who wanted to ban chattel slavery were faced with a powerful argument that this would mean wiping out about a quarter of the nation’s private property wealth, and destroying the economy of the South.

People who want to end PA’s County Quota System and let any restaurant or bar sell alcohol are faced with a similarly powerful argument that this would mean wiping out the value of incumbent bar and restaurant owners’ licenses, which they’ve paid tens or even hundreds of thousands of dollars for.

In this kind of situation, the political strategy calls for side payments to compensate incumbents for their loss.

And Lincoln did try this. Early in the Civil War, Lincoln tried to end slavery in the border states by paying compensation to slaveowners. Predictably, nobody went along with it, just like tavern license owners in PA have rejected all attempts to make a deal that would compensate them for opening up six-pack sales to beer distributors and supermarkets.

The lesson for PA politicians to learn from Lincoln is that Lincoln didn’t stop trying to end slavery just because slaveowners rejected his offer to compensate them.

Instead of giving up, Lincoln built a political coalition to rout them anyway. The 13th amendment got passed and the slaveowners got nothing.

That’s the way it ought to go down with these big market reforms. Too often politicians let stakeholder opposition scare them into inaction, and get trapped thinking that compromise with stakeholders is the only viable solution. But compromise is only a useful tactic to achieve your desired ends, it shouldn’t be a goal in itself.

If compromise and side-payments get liquor license reform passed, that’s great, but if people don’t want to take the side-payments then you need to wipe them out, not give up.

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