Liquor rules reflect a state drunk on power, greed and arrogance
By Michael Fridjhon - May 25th 2017, 09:42
The regulation of the sale of liquor has long been a feature of government policy pretty much everywhere. In Anglo-Saxon countries, it generally comes with more than a whiff of self-righteous fervour as those who draft the laws feed on the indignation of those who deal with the social consequences of drunken behaviour. The revenue value of sin taxes makes it clear there is no moral basis for this impost: to the extent that the state taxes liquor, it enjoys the wages of sin.
In SA, the question of liquor regulation is fraught with historical baggage. In a paper entitled Randlords and Rotgut, published in the 1970s, Charles van Onselen showed how the Witwatersrand mine owners used the supply of liquor to drive rural blacks into the urban cash economy. This strategy came to an end when it ceased to be productive: progressively, and over several decades, black prohibition became the law of the land. However, it didn’t take the government long to recognise this was a revenue opportunity. From the 1930s, state-run beer halls (where only low-alcohol sorghum beer could be consumed) were doing a roaring trade – though only because there were no legal alternatives.
Patrons found them cold and unfriendly, preferring illegal shebeens or outdoor sites from which they could easily see the approach of the liquor squad. By 1960, the Malan Commission Report recommended an end to the futility of trying to prohibit the sale of liquor to blacks. Once again, the apartheid government leapt at the revenue opportunity, creating state-owned liquor boards with a monopoly on the sale of township liquor. By 1976, these outlets were as much a target of black anger as many of the other issues.
Since liquor remains such a divisive issue across large swathes of the population, all of the provincial legislatures are happy to use it to garner votes. They do so by drafting laws and regulations that are essentially repressive, trading on the assumption that "controlling" the sale of liquor sets them on the moral high ground. The moment this strategy is challenged, they trot out evidence of the social evils associated with liquor (absenteeism, domestic violence, road carnage) together with the thumbsuck estimates of what this costs the economy.
The implicit message is that but for the liberal distribution of alcohol, all these problems would vanish and the fiscus would save (a much-regurgitated but never substantiated amount of) R37bn — a small trade-off for the R22bn to R25bn in lost taxes.
This approach is not limited to the ANC: the DA-led Western Cape government has its own set of bizarre regulations including one that limits the amount of liquor you can store in your own home without a special licence or transport at any time in your car. The Eastern Cape has already put an end to grocers’ wine licences, thus ending the sale of wine in food stores, and KwaZulu-Natal is to follow suit.
The draft national liquor bill is even more fantastical. Among its various proposals is a prohibition on the sale of liquor within 500m of a school, place of worship, bus route and garage. It wants to make licensees vicariously responsible for the damage caused by the abuse of alcohol. It intends to close down shebeens (which perhaps, alongside spaza shops, is the most black-empowered industry in the country, with an estimated 200,000 sole traders) while at the same time withholding licence renewals of legal traders that are not compliant with black economic empowerment.
The state’s position assumes that "liquor is a potentially dangerous substance and must be subject to sales controls". This is a convenient myth to justify police and state intervention in a place where officials can make a very limited contribution, but where they can take out a lot of money. Cars and kitchen knives are potentially equally dangerous and they aren’t subject to the same kind of legislation.
There is already a regulatory environment in place for the issues used to motivate specialised liquor legislation. For example, matters of quality control are covered by producer and importer regulations, revenue collection by the tax and excise acts, drunk driving by traffic regulations, workplace inebriation by employment law and riotous behaviour by regulations governing noise pollution.
Preventing the sale of alcohol to minors would only require a prohibition along the lines that govern the sale of tobacco products.
Incidentally, the frequently mentioned concern about liquor outlets and their proximity to places of worship reveals exactly which lobbies the legislators aim to appease: despite the fact that in a secular state, religious institutions should have no special rights or privileges, the government knows where to pick up votes.
We know why the state persists in adding layer upon layer to its already failing liquor legislation. It enjoys being a gatekeeper and has no desire to take down the fences. It justifies this by "managing the sale of a dangerous substance", regulating something that should be traded openly. Liquor licences only have value because they represent an artificially imposed restriction to trade. The Uber wars — especially in Paris and New York (where the value of a cab licence before the arrival of Uber was $500,000 and $1m, respectively) — show what this can be worth to the gatekeepers and their cronies.
But there is another cost lurking in an environment that tilts increasingly in the direction of unrealistically restrictive laws that can never be properly policed. Here, the 13 years of Prohibition in the US provides a salutary example. While the Volstead Act was in force, there were more illegal "speakeasies" than there had been licensed establishments before it became law. About 95% of all the smuggled liquor reached consumers, yet 500,000 ordinary Americans nevertheless landed up in jail. Those who couldn’t obtain properly distilled products bought toxic substances (an estimated 50,000 to 80,000 died from contaminated drinks).
Most important, however, the rule of law in the US was irreparably damaged. Imbibers simply became criminals and no longer regarded breaking the law as a crime. Bootleggers became the drinker’s "friend" – giving the Mafia a veneer of social respectability. After Prohibition was repealed, organised crime moved into protection rackets, prostitution, gambling, and drugs. Respect for the police evaporated (a consequence we can hardly afford given the already low estimation in which they are held in SA).
The lessons of history, together with a good dollop of common sense, suggest the sale of liquor should be deregulated and existing legislation governing its abuse strictly applied. Sadly, there’s more chance of the Guptas giving Optimum back to Glencore after delivering the coal paid for in advance by Eskom. © BusinessLIVE MMXVII
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