Decentralization: Good for Beer, Good for You

Using the force of government to implement laws in order to gain a leg up on the competition, or legal plunder, is a well established tradition that stands fundamentally opposed to a true laissez-faire free market system. It is a concept roundly accepted by the masses as business as usual and the beer industry in Europe has found itself caught up in the middle of it – care to take a drink of this swill?

Legal plunder serves to not only benefit one company over another, it always leads to an expansion of government, whether blatantly or hidden away in the details of legislation. Additionally, war-times present an easy avenue for unbridled and unchecked government expansions, which no doubt serve to benefit certain well connected industries while leaving others behind. The WW1 era ushered in broad expansions in a number of areas with the creation of the Federal Trade Commission, Selective Service, the Committee of Public Information (i.e. Propaganda), War Labor Board, War Trade Board, War Industries Board, Food Administration Agency, the Federal Reserve, and of course, Prohibition. These massive programs were created in broad daylight and promulgated under the guise of fear and necessity. Other times, however, government expansions occur quietly and unbeknownst to most. Recently, the European Patent Office has granted a patent to Heineken and Carlsberg for regularly bred barley. This may seem pretty base and boring, but this patent-granting has some serious implications, bear with me. 

With the patent, one company effectively owns the barley every step of the way from seed to beer, all courtesy of the force of government.

A recent article summed up the situation as such: “The scope of such patents is huge: in this case, it covers the barley, the brewing process and the beer itself. In addition, the patent covers all barley plants with the same traits, independently of how they were bred. This means that brewing company’s profit twice over – by selling the barley seeds to the farmers, buying the harvested barley from them and selling the beer to consumers. They have the control the entire way – from the field to the pub. At the same time, the patent gives them the right to prevent other breeders from breeding better barley and allows them to extend their market dominance – to the detriment of farmers, breeders, other breweries and consumers.” It’s bad enough to think of this government sponsored monopoly on a national level, but when extended across borders, it is a beast unleashed that will never be tamed.

Large companies love to stamp out competition and it is a much easier task when the hands of government are doing the dirty work. It is far easier for a large company to fight the legal battles associated with copyright infringement and it is also much easier to ramp up for the overhead costs associated with complying with any additional regulations that may be implemented via legislation. Quite often, onerous regulations are put in place at the behest of large corporations, for they know that, although costly, the regulations will present such a huge barrier to entry that no small company will be able to break into a market (think of fuel economy standards or crash test ratings for new vehicles), this is crony capitalism plain and simple.

It is worth revisiting the WWI era once again and the insanity that was Prohibition, since it provides great examples as to what can happen when you try to extend legislation from the local to the national level and this era provides us with actual, verifiable, results. From its inception, the massive system of National Prohibition was set up perfectly for crony capitalism, graft and dirty money. Think of the enforcement wing: prohibition officers, sheriffs and police forces, no doubt bought and paid off to look the other way (if you could afford it). Think about all the laws and regulations to be written and their associated fines: if you were in the know, you could find your way out on a technicality (or if you were a big time mobster, you could beat the rap since the government would hold out on lesser charges with the hope of getting you on a major charge). Think about the court systems and judges that had to interpret and rule on thousands upon thousands of people being prosecuted under myriad violations. As a result, the precursor to plea bargaining began in this era (referred to as Bargain Days), as an means to clear the books to alleviate prosecution system overload. How do you attempt to control internal abuses of a system like that on a nationwide level? It’s mind numbing to even think about.

Once booze went underground, the black market took over; that’s the easy and basic history. But, let’s take a closer look and think about the benefit to organized crime: the mafia came to the understanding that if they could operate the whole thing like a business they could become wildly successful. It was no longer just about being gangsters, it was about giving the people a good product (relatively speaking, concurrent with what you were willing to pay) and keeping the distribution system flowing. There was so much more money to be made in the long game. Forget about short term profits, the mafia took this system and expanded it to an empire, an empire that lasted close to seventy years. The mafia controlled the imports, controlled the distribution, controlled the sales and paid off the politicians and bureaucrats all along the way. Of course, many fall back on that old feel good mentality of, “this could never happen again – we have safeguards in place now,” and have convinced themselves that government will take care of everything and prevent evil monopolistic corporations from taking over. Perhaps unintentionally, Prohibition no doubt became a government sponsored monopoly for the mafia.

The regularly bred barley patent situation is the Prohibition concept in reverse. It starts with government granting a monopoly and then using its force to ensure profits for one large multinational company. In theory, government exists to prevent monopoly, the dirty little secret is quite the opposite. Looking at the big picture, Prohibition was bad for big brewers, but it was far worse for small brewers. The big brewers were able to weather the storm by modifying their factories to produce legal items, such as “near beer,” ice cream, malt extract (not for home brewing, of course), or converted to manufacturing military dinnerware items (to beef up their patriotic bona-fides). The small brewers were all but eliminated, in part because they were not able to make the economics work for producing any of the aforementioned products. Even after Prohibition was repealed, it has taken over eighty years for smaller, independent, breweries to match the number that were in existence when Prohibition was enacted, talk about a nice hand out from the government to big brewers! What happened with Prohibition is that you had an army of agents out hunting the little guys, your everyday beer drinkers, arresting anyone for even the most minor infractions, often times based on questionable evidence. The money was in the distribution system, not only of the “illegal product,” but in the distribution of “justice.”

Returning to the barley situation again: no doubt the state will have an army of agents seeking out the little guys on behalf of the big corporations. Ask yourself, in whose favor will the courts rule? In the Prohibition era, for instance, regardless of the Constitution (that cherished piece of paper), the Supreme Court opined that Prohibition Agents didn’t need a warrant to stop and search a car they believed to be carrying contraband liquor; so much for the Fourth Amendment! In this same era, again in opposition to the constitution, the Federal income tax was roundly approved by the Supreme Court. No surprise, of course, for how else to fill the government coffers for all the lost tax “revenue” that was eliminated with the implementation of Prohibition?

So what is the moral of the story? No government, no mafia? That may be a bit polemic, but it’s a very reasonable argument that without massive government programs, there is far less motivation to game the system. How do you plan on policing barley at the multi-national level? The State couldn’t prevent the local beat cop from lining his pocket in the Prohibition era, so what would change now? How do you prevent each level along the hierarchy from taking advantage of the system? You don’t, and you can’t. Hey you over there in anytown Europe, cease and desist with the barley growing – we own that!  What could go wrong with this modern day prohibition on barley?

Editor’s Note:

In a previous Denver Libertarian article, a local legislative effort which attempted to regulate beer availability in Colorado was discussed and its relationship a whole swath of liberty-related concepts: the un-reality of limiting government, government intervention into markets, personal liberty, crony capitalism, war, taxes, progressive “superiority” and  government “solving” problems that it created. That article was local and specific, but had far reaching implications. This article provides a current example of what can happen when legislation goes multinational and serves to expand upon the concepts of the un-reality of limiting government and crony capitalism.