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CONSUMER SAFETY

Policy debates at the state and federal levels too often digress into oversimplified rhetorical clashes for “more” or “less” regulation.  Citizens for Florida’s Future promotes “smart” regulation measured not in words but by its impact on the safety, security and quality of life for all Floridians.  Virtually every aspect of our society2 is regulated, from banks to food, medicine, cars and other consumer products.  Although the government generally implements regulation designed to protect us, it can overstep its bounds in constructing this regulatory safety net and interfere with the efficient functioning of markets.  When this happens, the government can needlessly drive small businesses into bankruptcy and destroy jobs.  At other times, when government is too slow to act, it unnecessarily endangers the physical or financial security of citizens, as it did with the recent financial crisis.  Citizens for Florida’s Future is mindful of the fact that government is made up of human beings and is therefore highly fallible.  We strive to assist policymakers in finding the appropriate balance between too much and too little regulation, a constant search for equilibrium.

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SICKLY REGUATION AND DEADLY VODKA

Vodka

In 2006, Russia declared a state of emergency in regions where hospitals were struggling with rising alcohol poisonings.  The radio station Ekho Moskvy reported that more than 1,000 people had been treated in hospitals during a two-month period.  At least 50 people died while television showed yellowing victims in hospital beds.

Officials identified aftershave and perfume in many of the vodka poisonings. The deadly potions were given pleasant sounding brand names such as “Ray of Light” and put in fancy bottles with attractive labels.  As Russia desperately seeks a solution to the crisis, 42,000 people continue to die annually from such poisonings and the average life expectancy of a Russian man has fallen to 59 years.

The Russian example proves why we tolerate regulation in our society. History demonstrates that if bad actors like the Russian criminals are left to their own devices, they will corrupt markets. While those markets will eventually correct themselves, they do so through severe measures, exacting a heavy burden on families. 

Consider how the decade-long weakening of the financial regulatory structure in the United States has resulted in bank failures, government takeovers, corporate bailouts, and diving financial markets.  The good news is that we can fix what is broken in the financial markets.  It’s also not too late to avert a similar disaster in the public health sector if special interests and well-meaning lawmakers, judges and regulators will stop tinkering with 75 years of efficient alcohol regulation.

The three-tiered system of alcohol distribution in the United States is heavily, and appropriately, regulated by requiring bright lines of independence between brewers, distributors and retailers.  Combined with another layer of complex state regulation, this system helps to prevent outrages such as the deaths in Russia.  The efficiency of this system was demonstrated in a recent recall of Samuel Adams beer.

Due to a manufacturing problem in 2008, small bits of glass were breaking off bottles of Samuel Adams beer.  The Boston Beer Company, brewer of Samuel Adams, issued an immediate recall of the beer from stores across the U.S.  Thanks to a properly regulated market, Sam Adams was able to track each bottle through independent community distributors.  These distributors immediately sent drivers to remove the dangerous bottles from shelves and prevent serious injuries.

In spite of such success, the current alcohol regulatory regime in the U.S. is under attack.  Companies like COSTCO and lobbying groups like the Specialty Wine Retail Institute (SWRA) want unlimited direct shipping of alcohol to retail outlets and consumers.  They are attempting to use the Federal Trade Commission, the courts and state legislatures to gut safeguards that have served our society since the repeal of prohibition.  The bottom line is that alcohol is a unique and potentially deadly product.  It would be reckless to increase underage access or to open gaps in the supply chain of beer, wine and spirits.

Considering society’s intolerance for prohibition, we can come to only one conclusion:  the sale and distribution of alcohol must be managed and how we accomplish such a task is important.  If we neglect warning signs as we did in the financial markets, COSTCO and SWRA could become the alcohol industry’s version of the poorly-regulated Fannie Mae and Lehman Brothers, bringing the Russian counterfeit alcohol nightmare to homes across America.

By August of this year, the Russian problem had begun to impact the United Kingdom, where counterfeit Spar-brand Imperial vodka was discovered.  Other reports of counterfeit booze were published recently in India, Paraguay and Nicaragua.  Policy makers who support deregulation of the alcohol industry must stop to consider the epidemic in Russia and the financial crisis in the United States.  The need for common sense regulation applies across the board to mortgage markets, stock markets, and yes, even to alcohol markets.  Our nation now has a unique opportunity to re-learn important lessons about the benefits of reasonable regulation to society.  Let’s not blow it this time.

 
WEBSITE LINKS
 
www.poolsafety.gov
www.cpsc.gov
www.recalls.gov
www.safercar.gov
www.fda.gov
www.usda.gov
www.epa.gov
www.usa.gov
ARTICLE LINKS
 
NYT - China
U.S. China Agreement