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Time For Canada to Shake its Prohibition Hangover

Posted: 06/01/2012 8:22 am

Eighty-five years ago today, prohibition was repealed in Ontario. The era of bootleggers and speakeasies was replaced with government-managed liquor distribution and gender-segregated bars. While Friday marks the formal repeal of prohibition, prohibitionary policies didn't disappear instantly. They waned over time but have not been completely eradicated. Ontario has plenty of quasi-prohibitionary policies still, and scarcely a month passes without proposals to move further toward prohibition. It shouldn't just worry drinkers: the nanny state seeks to limit fun in all of its forms.

Several vestiges of prohibition remain in Ontario. The most notable is the Liquor Control Board of Ontario (LCBO). Set up as a crown corporation to transition the province out of prohibition, the LCBO still has a monopoly on the distribution of liquor in Ontario.

The LCBO has a mandate to keep prices at "socially responsible" (read: high) levels, and it keeps extremely restrictive store hours. No LCBO location is open past 11 p.m. It means that Ontario has de facto prohibition for at least 77 hours per week (63 including bar sales). Contrast this with Saskatchewan, where it is possible to purchase alcohol at licensed hotels and brewpubs until 3 a.m., or New York State, where beer can be purchased at convenience stores 24 hours per day. It's unclear why we need a government liquor store to decide when we can't buy liquor.

The Beer Store is another prohibition-era hangover. It is owned and operated by Labatt and Molson (which are now owned by InBev and Interbrew), and has a monopoly on beer sales (excluding sales at the LCBO). Unlike the LCBO, the Beer Store does not have a mandate to keep prices high. But as a monopoly, it has no reason not to. It does abide by minimum price levels, which the government continually raises. The Beer Store monopoly is baffling. The justification for the LCBO is that it generates revenue for the government (albeit, less than would be generated under a private system). There is no reasonable justification offered for the continued monopoly of the now foreign-owned Beer Store.

Like most jurisdictions, Ontario has mandatory bar opening and closing times. Ontario bars are not permitted to serve alcohol before 11 a.m. and after 2 a.m. The justification for closing times is that if bars were allowed to stay open all night, chaos would reign in the streets. Productivity would sag since people would routinely be hung over, and perhaps start the day with a beverage.

Of course, this is pure nonsense. In some jurisdictions, such as parts of Australia, New Zealand, and Japan, there are no mandatory bar closing times, and they are very productive. A recent Boston Globe editorial cautioned that its city may even lose productivity, since young workers factor night life into their decision where to locate. Who wants to move to sleepy Boston (or Toronto) when they can move to New York with a 4 a.m. closing time? There is no good reason why Ontario bars should not be able to stay open at least that late -- as some Toronto bars can during Pride and TIFF.

Some governments are constantly exploring new ways to curtail drinking. The next frontier is a potential ban on drinks mixing alcohol and caffeine. New York State recently banned such drinks after deaths tied to consumption of one such drink, Four Loko. Unfortunately for the proponents of this approach, people are clever enough to have figured out that alcoholic and caffeinated beverages can be mixed at the point of consumption. Red Bull/vodka, Jagger-bombs, and coffee and Bailey's are all extremely popular. Since the government isn't going to ban caffeine any time soon, this approach will have no effect. But every new prohibitionary law emboldens social engineers.

Ontario's liquor prices are several times higher than some neighbouring jurisdictions. The selection of craft beer and wine is highly restricted. Its bars close earlier. Happy Hour is illegal. Even for those who rarely drink, it should be troubling. The nanny statists also seek to prevent people from indulging in some of their favourite foods, smoking in their own homes and vehicles, and exercising without specified protective gear. This creeping regulation of everyday life in the name of health and safety doesn't only threaten to make our lives less enjoyable. It will also require a dramatic expansion of our health and safety bureaucracy.

It's time to end the War on Fun. Curtailing quasi-prohibitionary liquor policies is the place to start.

 

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HUFFPOST SUPER USER
Mike Keohane
12:40 PM on 06/03/2012
Ontario is bankrupt. The politicians no longer have the financial pandering capacity to get elected by continually flushing funds down the toilet on hairbrained schemes that curry favour with the special interests. It would be reasonable to assume that we will see more nazinannism, not less, as the political elite seeks to legitimize its' existance and foster the illusion that they are doing something to justify their pensionable existance.
01:38 PM on 07/25/2012
OK, I'm not trying to be a smart aleck or anything, but "nazinannism?"

I'm not sure if that's a word and I just don't know it, a typo, or a term that you invented. (Which is totally cool, someone needs to invent new words, why not you?)

Anyway, if it's option 1 or 3, could you please define it for me?
02:17 PM on 06/02/2012
I get the feeling that this article is supposed to be a satire in some subtle way.

But in any case, I reject your argument that the regulation of alcohol consumption is the same thing as the prohibition of alcohol consumption. If you wish to argue otherwise, you might as well argue it is unjust to expect people to drive between the lines and obey other traffic laws, because to do otherwise would be some kind of wacky prohibition on driving.
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Steve Lafleur
03:06 PM on 06/02/2012
I get the feeling you don't understand the prefix "quasi."
03:47 PM on 06/02/2012
Instead of making snippy, quasi-intelligent comebacks, maybe you should focus on the underlying arguments, Mr. Big Shot Huffington Post blogger. I am sure there are plenty of other folks out there who would like your spot on the front page if you cannot rise to the challenge.
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11:13 PM on 06/03/2012
ya this doesn't make any sense
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11:01 AM on 06/02/2012
Don't forget the far more devastating and counter-productive prohibition of marijuana.
06:42 PM on 06/01/2012
Hoo boy did you ever hit the nail on the head!
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Patrick Flannery
Editor, nerd, dad.
05:00 PM on 06/01/2012
If I liked this blog just a little more, I would have it tattooed on my face.

Bravo, Steve Lafleur and bang on. Ontario is one of the worst places to drink in the world and it doesn't stop anyone from getting as drunk as they want, as much as they want. The regulations now serve two purposes: hoovering up cash for the province and acting as a political sop to cranky old ladies.
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Steve Lafleur
07:41 PM on 06/01/2012
Well that's got to be the biggest compliment I've ever got. Glad you enjoyed it!
01:32 PM on 06/11/2012
I could not agree more that we need to keep restrictions to the absolute minimum and end the monopoly.
04:52 PM on 06/01/2012
Not to mention that government liquor — the practice of government selling an addictive and dangerous substance to its citizens in the name of protecting them — is immoral.

And by the way, the headline to this story is inaccurate. Ontario needs to drag itself into the new millennium, not the rest of Canada. Many other provinces updated their ridiculous, immoral prohibition-era liquor laws decades ago.
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04:28 PM on 06/01/2012
"The justification for the LCBO is that it generates revenue for the government (albeit, less than would be generated under a private system)."

Uh, right. Except that this is totally false.

"The possible explanations for HIGHER REVENUES and LOWER PRICES under liquor control were suggested by Professor Julian L. Simon who observed many years ago that in the United States prices were on average more than 11% higher in 27 "private-license states" compared with 16 "monopoly states", and that the treasuries of the monopoly states collected more per capita revenue from alcohol sale than the private-license states [See: Simon (1966)].

The Ontario Committee on Taxation (1968) also found that the "private retailing system yields on the average a much lower return to the public treasury"; the Committee "had no doubt as to the superiority of public over private liquor outlets." (vol. 3, p.403).

(emph mine)

The same thing happened in Alberta after they gave up liquor control in 1994:

"What happened so far is that product prices are higher, product selection is smaller, warehousing and distribution costs are higher, and social costs are higher. These are the documented conclusions found in a study by the Canadian Wine Institute (1994)."

Their conclusion:

"10. Privatization of crown corporations should be decided on a case by case basis. LCBO privatization would be a mistake costly to the people and government of Ontario. "

http://www.yorku.ca/nuri/lcbo.htm
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Steve Lafleur
03:17 PM on 06/02/2012
With all due respect, you are cherry picking factoids here. Revenue went up, not down in Alberta post-privatization. That is a simple fact that cannot be spun. Yes, prices can go up in states/provinces post-privatization. That depends largely on the tax rates. New Hampshire has about the cheapest liquor on earth despite having government liquor stores because they have no liquor tax. Alberta has among the highest liquor taxes anywhere. And citing a study of the effects of privatization from 1994 doesn't make much sense. You don't reap all of the benefits of privatization immediately. There is a transition period. Alberta now has vastly more locations than before privatization, and by far the best variety of beer in Canada. A single store in Lethbridge has more variety than the entire province of Ontario.
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Doctor Nick
Hi, everybody!
02:52 PM on 06/01/2012
While I would love to have the lower prices and better selection that abolition of the LCBO and Beer Store would likely entail, I wish this article would actually provide information on what the government gets out of the LCBO. My - and most people's- suspicions are that the LCBO makes a lot of money for the provincial government, money that keeps taxes on other things lower (or gives us more spending).
Mr. Lafleur insinuates that this is not the case but provide no argument or evidence.
While there is no reason the province couldn't keep taxes and high and privatize, the LCBO also (a)benefits from some economies of scale in both distribution and purchasing, and (b)is "inefficient" in the way many government run entities are, by paying higher wages than the private sector.
I just find it hard to believe that eliminating the LCBO is a win-win for everyone, and I am also skeptical that all of the gains from the LCBO system are going to employees. In other words, there is no free lunch, and while I personally support cheaper and more widely available liquor there are some compelling public health reasons to tax alcohol over other goods (including labor) if we need revenue.
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Steve Lafleur
03:11 PM on 06/02/2012
I'd have liked to get into the economics of the LCBO, but didn't have the space. I was more concerned with the regulatory aspect in this case. I'll address the fiscal impact in the future.
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Doctor Nick
Hi, everybody!
04:58 PM on 06/03/2012
Thanks Steve. I understand that you have space constraints, but in spite of these your future columns should refrain from making assertions like the one below if you are not going to provide evidence or arguments:
"The justification for the LCBO is that it generates revenue for the government (albeit, less than would be generated under a private system)."

Beyond this I pretty much agree with your article and don't find the public health arguments for regulation compelling.
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Phatbiker
Dentalfloss tycoon
02:39 PM on 06/01/2012
It's like that across the country, here in BC they let MADD and ICBC write draconian DUI laws which knee-capped the hospitality industry (all the small town bars are shutting down). I'm not a heavy drinker, but I save up my fun money for when I go to Mexico where booze is a third the price and breathilizer road blocks are unheard of (down there you give a cop 500 pesos and he goes away happy).
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DirkNeptune
I love raspberry pie, damn it.
02:23 PM on 06/01/2012
I hope you plan to write a similar column about the "creeping regulation of everyday life" when Harper re-tries to ram through his warrantless spying bill.
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Steve Lafleur
02:36 PM on 06/01/2012
I also oppose that legislation. I imagine it is an issue that either myself, or another Frontier Centre analyst will have something to say about.
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Skookum1
truth can't be bought, but lies sure can be sold..
02:57 PM on 06/02/2012
well, a big thing missing from your article, given its title, is the prohibition on much less harmful drugs than alcohol...which is pretty nearly anything. Did you oppose the minimum sentences for marijuana part of the crime bill? Where are you on decriminalization or legalization?
01:54 PM on 06/01/2012
If you need to be able to buy alcohol 24 hours a day, you've got a problem.
02:28 PM on 06/01/2012
We live in a 24 hr society where people no longer work a standard 9 to 5 job. I recall years ago when I was working shift work, my work day did not end until 2 am and we found it frustrating that there was no place that we could go to after work to have a beer and relax.
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Patrick Flannery
Editor, nerd, dad.
05:01 PM on 06/01/2012
If you need to tell people when they can and cannot buy alcohol, you have a much bigger problem.
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01:24 PM on 06/01/2012
The only mildly leftist things to come out of the Liberals involve unneccessary social control. When I was a bartender it was actually illegal for me to serve my own husband a beer, because it was considered giving alcohol away for free since we share finances. SERIOUSLY. I got in trouble from the liquor inspector for it. ANd several of my coworkers had to submit to searches to the liquor inspector or he'd shut us down. If I had been there when that happened I would have quit on the spot out of principal. What a blatant violation of my rights from some glorfied party pooper!!
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Steve Lafleur
01:33 PM on 06/01/2012
I had no idea that regulation existed. Then again, there are so many odd restrictions that it's hard to keep track...
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Skookum1
truth can't be bought, but lies sure can be sold..
04:57 PM on 06/02/2012
How are you sure that that liquor inspector was a Liberal and not just anal?
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11:12 PM on 06/03/2012
I did not say the Liquor Inspector was Liberal, the comment about the liberals is unrelated to the liquor inspector.
The Liquor inspector was most likely on a power trip when he searched my coworkers, which is still very illegal, I don't think that is a part of his duties AT ALL.
It is true about me serving mymy husband though, we were told at our last county liquor liscensing meeting as well! It seems the LCBO has kind of a blank slate to do as it wishes with serving rules. I don't think the province even bother putting those laws through debate anymore, they're just imposed without our consent.
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Bytown
One way or the other!!
09:41 AM on 06/01/2012
Bravo.
09:04 AM on 06/01/2012
You are exactly right. Why do we allow government to regulate liquor at all? We gave it in exchange for being allowed to consume it legally. The time is way past to end prohibition and regulation of all things fun!
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Saidas
09:52 AM on 06/01/2012
Pre-Prohibition, there was no US income tax. Tax revenue was derived from alcohol sales which of course ended with Prohibition. The US gov had to do something to replace the lost revenue so the IRS was born.
10:44 AM on 06/01/2012
Actually, the IRS was created as a vehicle to repay the money we were soon to be borrowing from the brand new central bank, the Federal Reserve, both created in 1913. Every penny collected via the federal income tax goes to pay the interest on the loans we borrow every day... it's just a money making scheme for the banksters. None of it goes to run our government. That money is all borrowed from the fed. A nice sweet closed little circle.