What Erica Gilmore can learn from the Soviets

Nashville Councilwoman Erica Gilmore has resurrected a bill banning single-bottle sales of beer in a misguided attempt to curb drinking and littering. To understand the unintended consequences of hair-trigger paternalism, we turn to the Soviets.

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To curb alcohol and vagrancy, the Soviet Union tried everything from burning some of the oldest grape vines in Europe (fine wine is often the alcoholic's cheap fix) to banning sales of vodka in containers smaller than one liter. Since Ms. Gilmore has not yet suggested a torching of wine stocks, it is the latter experience that is instructive.

Vagrants of the social-drinker ilk would certainly consider a liter excessive, as three is the optimal number of people for splitting such a volume (really!). A simple social convention was born. The first thirsty citizen arriving at the store would stand outside with three extended fingers held against his chest. The symbol conveys an attempt to create a troika, or group of three held by the common interest of securing the appropriate measure of the beverage. A second would arrive and assume a similar loitering stance. Upon a third compatriot's arrival, a bottle would be purchased and shared.

Result: more loitering, more nuisance, more litter, and a slight uptick in violence, partly resolved by bringing a 1/3 liter measure.

Burning the grapes didn't do much, either, except hinder the economic growth of modern Moldova and Georgia.

Hat tip thinktrain, though one who asks "who really needs just one beer" has probably never heard of Trappist ales, imperial stouts, doppelbocks, barley wine, and, well, beer.

Life, liberty, and that other thing

A local recording studio is being confiscated by the city of Nashville to put it to a "higher valued use." Apparently, the music emanating from Music Row in Music City sounds sweeter from a high-tax-rate high-rise than from an historic, independent label. Joy Ford was unwilling to sell her business of thirty years to the Lionstone Development Group, the Houston-based buyer of "underdeveloped real estate assets." In response, City officials slipped under the covers with the developer to transfer the property from one private interest (its owner) to another—a Robin Hood in reverse.

I blame Karl Dean. I blame Phil Ryan. And yes, I blame (despite this being grounds for revocation of my UVA diploma) Thomas Jefferson. He should have foreseen the impact of his aspirational turning of the phrase. Sandra Day O'Connor did, but she was outvoted.

Let's review...

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A bit of history

John Locke's tripartite statement of natural rights, life, liberty, and estate made its way into the first resolution of the Declaration of Colonial Rights, encoding the principles of a new nation. Thomas Jefferson, also borrowing heavily from John Locke, saw the phrase as insufficiently wishy-washy, penning "pursuit of happiness" in the place of property as the third pillar of natural rights. This was partly rectified by the fifth amendment which allows property to be ceased only for "public use."

"Public use" becomes "whatever we want"

Since railroads prefer to run more or less straight, the taking of private property was originally construed as necessary for the establishment of public utilities. Soon, towns stumbled on a remarkable idea: if we "condemn" a building and hand it over to a developer who will build a more expensive building, doesn't that raise our tax base? Isn't a higher tax base in the public interest? Answer "yes" to both questions and you have found a way around the Fifth Amendment. Public use is whatever public officials want it to be.

The Supremes

This self-serving interpretation in the face of constitutional protections is ripe for a vehement smack-down by the Supreme Court Defenders of Liberty. Alas, no. In the 2005 Kelo decision, the five-person majority expanded government's "takings" power even when (i) no blight is present, (ii) the transfer is from one private party to another, and (iii) the land use will not be open to the public. The government need only identify monetary or even "aesthetic" benefits.

In her dissenting opinion, Justice O'Connor wrote

Any property may now be taken for the benefit of another private party, but the fallout from this decision will not be random. The beneficiaries are likely to be those citizens with disproportionate influence and power in the political process, including large corporations and development firms. As for the victims, the government now has license to transfer property from those with fewer resources to those with more. The Founders cannot have intended this perverse result.

Intended, certainly not. But TJ's transmutation of Locke's key word suggests that they didn't foresee it, either.

Justice Stevens, writing for the constitutionally-challenged majority (pun intended), explains that we need not worry as "legislative judgments" would carefully construe public use. Teach a man to fish...fine, but if you legalize tossing grenades into a fish-stocked pond, don't expect a hungry man to exercise "judgment." Perhaps Mr. Stevens should watch a Metro Council meeting.

Back to Music Row

And so Nashville's Metropolitan Development and Housing Agency (MDHA) (ironic motto: "We value integrity") has decided that Music Row needs more high rises, current property owners be (con)dæmned! The MDHA's authority to act as it pleases stems from a ten-year old City Council ordinance that found Music Row circa 1995 "detrimental to the safety, health, morals, or welfare of the community."

Several local bloggers have been following the story (since local purported journalist/advocate can't get off the dime):

• Kay Brooks goes on location and finds that Joy Ford's business is the only thing not blighted, with surrounding properties (already owned by the developer) looking a bit neglected.
• BlueCollarMuse provides adequate background in her two part series, and is not afraid to name names.
• We hear tones ranging from concern to outrage at eminent domain abuses from a local home inspector, real estate investor, professor of entrepreneurship, talk show host, and more. The action is opposed by at least one Metro Council member, State Representative, and local perennial candidate.

But none of those people run the MDHA, whose Director and Board of Commissioners play with a city-sized cookie jar of private-house treats.

Two years ago, MDHA Director Phil Ryan lamented that "public housing is not a priority" at the federal level. Nashville laments that private property is not a priority for Mr. Ryan.

Has Tennessee evolved since the Scopes trial?

While Dayton, Tennessee annually celebrates its conviction of the heretical teacher, John Scopes, one state legislator wants the fanfare expanded state-wide.

Tennessee State Senator Raymond Finney (R) proposed a bill that would require the state's Education Commissioner to answer questions, in flow-chart form, on the origins of the universe.

First, the Commissioner would be asked if a Supreme Being exists (presumably, in Jesus-form, rather than all of those heathen supreme beings). A "no" answer would, according to the legislation, earn the Education Commissioner "the General Assembly's admiration for being able to decide conclusively a question that has long perplexed and occupied the attention of scientists."

Creationism, biting sarcasm, and legislative power -- a unity made in heaven... or here on earth... depending on your view.

"There has never been any proof offered that Darwin's theory of evolution is correct," Senator Finney explained, presumably before taking listeners on an exotic voyage through circular-argument world.

Competition policy after several martinis

A brief two-question quiz on industrial organization:

QUESTION 1: A manufacturer sells his goods to a retailer. A law is passed that forbids the manufacturer from selling to the retailer. Instead, the manufacturer is required to sell to a middleman, who may then sell to a retailer. This helps:

• A.   The middleman
• B.   The retailer
• C.   The manufacturer
• D.   ALL OF THE ABOVE! and Children. And small businesses.

QUESTION 2: A new law would forbid manufacturers from talking to more than one middleman, so that each middleman is, by law, given the exclusive ability to connect a specific manufacturer to the retailers. Who would benefit from this law?

• A.   The middleman
• B.   The retailer
• C.   The manufacturer
• D.   ALL OF THE ABOVE!

If you answered D for both questions, you're right, according to the oldest member of the liquor distributors' cabal:

The three-tier system promotes a safe marketplace and environment for citizens by limiting the authorized channels through which alcohol enters our state ... It also allows for a level playing field for retailers of all sizes, increasing competition and supporting small business.

Tennessee is known as a franchise state, meaning that wholesalers have exclusive relationships with suppliers' brands. By having exclusive rights to distribution, wholesalers have a vested interest in helping build brands over a long period of time, affording better growth for the brand within the market.

The second paragraph is beguiling, containing a gram of truth. Downstream monopolization does imply greater brand-specific investment, but only because it leads to a greater capture of surplus. It is certainly not a net positive for anyone but the monopolist. The first paragraph is so deceitful as to be laughable, if not for venal state politicians who regularly parrot it.

UPDATE (11 October 2007): Fun with Google.

Presumably because of the above link, a search for the phrase liquor distributors' cabal now yields as the first result Lipman's somewhat questionable justification of the three-tier system. I wonder if unscrupulous cretins can catch on...

Tennessee legislator in search of TV remote

Tennessee State Senator Doug Jackson (D) proposed a ban on "Girls Gone Wild" commercials because, as he was intently watching one, he was unable to change the channel.

"This is being interjected right into our living room," Jackson said, presumably explaining how televisions work in general.

"People feel like, as they sit in their living rooms, they just have to surrender; there's nothing that can be done."

Unless, of course, your cable service offers multiple channels. Or an off button.

"You know, it's time to draw the line," he said, and immediately demanded that he be in charge of the Official First Amendment Line Drawing Institute.

But what if I’m easily annoyed?

Another gem from the Nashville Codes (6.72.400)

No taxicab driver shall solicit patronage in a loud or annoying tone of voice or in any manner annoy any person.

There’s a hard criterion to meet.

Soliciting for purported eleemosynary purposes

In deciding what are reasonable methods for businesses to solicit customers, Nashville makes exception for solicitations with a charitable purpose. How do we differentiate between these noble goals and the subaltern drive for the mighty dollar? Nashville codes (6.64.070) to the rescue:

"Charitable purpose" means any purpose which is benevolent, ..., philanthropic, ..., eleemosynary, either actual or purported.

Apparently, Council members are provided a thesaurus and are not afraid to use it. A dictionary, unfortunately, does not seem standard issue:

purport: To have or present the often false appearance of being or intending

We don't ask you to be charitable, but merely to feign concern.

UPDATE: I have been made aware that (i) many towns have this precise definition of charitable purpose (google search) and (ii) at least one member of Council has no idea what "eleemosynary" means.

Your type of auction theory ain’t welcome here

I decided to combine two activities that frequently occupy my day: study of auctions for my research, and perusal of the Nashville Codes for entertainment. The section of Nashville law on auctions and auctioneers (Chapter 6.84) defines an auction as:

The offering for sale or selling of such property by the method known as “down hill selling” by which is meant first offering any article at a higher price and then offering the same at successive lower prices until a bidder is secured.

So, the elegant Dutch Auction is legally permitted. I wonder who determined that this method is “known as down hill selling.” The Dutch have yet to discover a single elevation change in Holland that can in any way be construed a “hill.”

The definition continues:

“Selling at auction” also means the offering for sale or selling of such property to the highest bidder.

And there you have the exhaustive list of market mechanisms that the Metropolitan Government of Nashville and Davidson County considers an auction.

Preferential auctions, where I might care about who wins? Procurement auctions, where the lowest bidder should be selected? Take that crazy stuff out of state!

A premature celebration

The press has been quite jubilant about yesterday's Supreme Court ruling on direct shipment of wine ("Let those wine sales flow" claims USA Today) but we shouldn't pop the cork on that last bottle of bubbly since it may not get easier to acquire more.

All that the Court requires in its decision is that states adopt comparable winery-to-consumer shipping laws for out-of-state wineries as they do for in-state wineries. I applaud the decision on legal grounds, asserting that fair interstate commerce applies to alcohol sales, but expect it will make wine even harder to acquire.

We can classify states into three catgeories:

1. States that allow shipment from all wineries
2. States that allow shipment only from in-state wineries
3. States that allow no shipments at all (like Tennessee)

The case has no impact on the first and third category, since the decision requires only that policies for in-state and out-of-state wineries correspond. Additionally, it seems to apply to wineries only, not retailers, thus having no impact on Internet sales from cheaper retailers out of state.

But certainly there is good news for consumers in the few states with discriminatory policies? Perhaps not. What will states in the second category do when forced to set identical policies for out of state wineries. They either allow out of state wineries to ship or prohibit in-state wineries from doing so. Since the latter option is preferred by the well-funded distributor lobby, I'm guessing this is more likely

So, the Supreme Court decision is a victory for the principle of competition, but likely to reduce than create more competition, in practice.

Courts rule in favor of economic imagination

Economic theorists are often criticized for making assumptions that conflict with what practitioners haughtily term the "real world." Since these practitioners seem unmoved by simple, elegant models, I offer instead that the law is on our side.

First, the Honorable Irving Loeb Goldberg outlawed empirical work over thirty years ago, instead favoring sound theorists:

The expert ... need not be armed on the right hand with a slide rule, on the left hand with a computer. He is allowed some economic imagination so long as it does not become fantasy.¹

But how can we publish entirely contradictory theories, often by the same author, and occasionally in the same journal? Judge MacMahon channels F. Scott Fitzgerald,² ruling:

An expert's assumptions, if within the realm of reason, need not be the only possible set of assumptions based on the data.³

Even if my theories are at odds with the data, no less than the Supreme Court of these United States has forbidden you from challenging me:

Even assuming that any economic assumptions ... might be disproved in a specific case, we think it an unwarranted and counterproductive exercise to litigate a series of exceptions.⁴

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¹Terrell v. Household Goods Carriers' Bureau, 494 F.2d 16, at 25 (5th Cir. 1974)

²"The true test of a first-rate mind is the ability to hold two contradictory ideas at the same time."

³International Wood Processors v. Power Dry, Inc., 593 F. Supp. 710 (D.S.C. 1984)

⁴Kansas v. UtiliCorp United, Inc., 497 U.S. 199, at 217, 111 L. Ed. 2d 169, 110 S. Ct. 2807 (1990)

Opening your garage door now a felony

Not only does the Digital Millennium Copyright Act turn recording industry execs into cops and jurists, and empower them to place in jail those who develop reading technologies for the blind, and to stifle scientific debate through threats, but now declares competition in the garage door opener industry as unlawful circumvention (pdf link).

The judge found that making a universal garage door opener violates the DMCA.

The Skylink transmitter is designed to send a signal that mimics the Chamberlain resynchronization procedure and thereby circumvents Chamberlain's protective measure.

No word yet on when raids of homes using universal television remotes will begin...

Drink the booze in your trunk before you drive

Rank these alcohol-related activities by the level of criminal offense in Tennessee:

• Obtaining a third DUI conviction
• Piloting a commercial cruise line up the Mississippi while intoxicated
• After a couple of beers, shooting that dog that's been scaring your cow
• Driving from nearby St. Louis with six bottles of wine
• Purchasing alcohol for a child
• Member of the Alcohol Beverage Commission accepting a bribe

See the answers

After navigating the many blue laws of my new environs, I discovered at a Sunday morning brunch that my Bloody Mary will not be arriving until after noon, because, well, Sunday mornings are for sober reflections and, for the Lord. Talmudic debate about the appropriate day to celebrate the Sabbath aside, there is an exception: Titans stadium. Football! Hallelujah!

Here is the ranking, from lowest to highest offense, and the cite to the relevant section in the Tennessee Code:

• Not a crime:
• After a couple of beers, shooting that dog that's been scaring your cow
  Dogs shouldn't be scaring livestock anyway (44-17-203). Now, if the dog was minding its own business, then it rises to the level of a ...
• Misdemeanor:
• Member of the Alcohol Beverage Commission accepting a bribe
  A Class C Misdemeanor (57-1-109), the lowest punishment for alcohol-related offenses is reserved for the corruptible officials who oversee them.
• Purchasing alcohol for a child
  It is a class A misdemeanor, unless the child tells you he's 21, in which case you could be okay (39-15-404).
• Piloting a commercial cruise line up the Mississippi while intoxicated
  Having hundreds of passengers endangered is, in the view of Tennessee law, the same as buying an 18 year old a beer. And, they might take away your boating license (69-9-219).
• Obtaining a third DUI conviction
  Only your third DUI? (55-10-403) After all, people make mistakes, right? And mistakes. And mistakes. Now if you get convicted a fourth time of driving under the influence, only then have you committed a ...
• Felony:
• Driving from nearby St. Louis with six bottles of wine
  Yup, its a felony (57-3-401).

I think I finally made sense of this ordering. Buying booze for kids and driving or boating while intoxicated all require the purchase of alcohol. Only bringing a few wines from out of state bypasses the Tennessee wholesalers. Isn't taking money from their pockets the worst crime of all? Probably not. But that's why we have to keep the penalties for bribing public officials so low.

And if you have several bottles of out-of-state beer in your car, drink them before continuing on your way. The penalty is lower.