Matt Yglesias returns to the subject of beer and the deregulation of the beer industry during the Carter industry. I’m going to take a bit of credit for the debate that was sparked around the subject last year. I’m glad to see it resurfacing since I think a lot about both the political and economic lessons of this deregulatory push and a lot of time drinking really tasty craft brews that weren’t available thirty years ago.
Matt links to Erik Loomis, who writes:
By 1979, most of these local brewers were no more. I remember a few from growing up in the Pacific Northwest–Henry Weinhard, Olympia, Rainier, Lucky. Friends of mine a bit older could remember beers like Great Falls Select. But most were gone. However, in that year, President Carter deregulated the beer industry, allowing the sale of malt, hops, and yeast to home brewers. Thus began the microbrew revolution. From the perspective of Miller executives, this sucks because they have to produce an ever-increasing number of beers to keep control of the market. I mean, if everyone just drank piss, we could make so much money!
From my perspective of course, this is an unadulterated good. Not only has it allowed the United States to become second only to Belgium in the production of quality beer (and I’ll take an argument that the US is #1), but it has opened the minds of even people who would normally be happy to drink crappy beer. I mean, Shock Top and Blue Moon are not good beers, but they are better than Bud Light.
Matt makes a smart follow up observation:
So here’s the thing. You may not like Miller or Bud Light, but Miller and Anheuser-Busch both run unionized breweries. And as Loomis notes, one consequence of the cartelization of the American beer brewing industry was to generate monopoly profits for the large breweries. This was good not just for “Miller executives” but for all the stakeholders in the enterprise. When a unionized firm is in a non-competitive marketplace, the union is in a strong position to force the firm to share some of the monopoly rents with the workforce. When the market becomes more competitive, not only does the unionized firm lose market share but the union in general loses leverage. The craft breweries are basically the charter schools (or foreign-built trains) of the beer world. Personally, I don’t think that’s a good reason to maintain a non-competitive market in beer any more than I oppose charter schools or imported trains. But I do hear a lot more from people who think of themselves as being “to my left,” who seem to me to spend a lot more time talking about the desirability of being more supportive of labor unions than they do talking about what concrete steps they want to take to achieve this mission. In a highly competitive market, there’s not much surplus for unions to get a share of.
Maybe this is just a sign that I’m privileged and I’ve got mine or something, but I wouldn’t trade the good craft brews of today for the piss beers of yesteryear (okay they still dominate the market somehow, but their grip is slipping) just to get the good union jobs back. Hell, I’d rather work at New Belgium than Coors. The New Belgium brewery, while not a union shop, is about as green as any brewery in the country, and I’m not sure but I think an environmentally friendly outfit that makes high quality, unique American beer somehow represents the liberal ethos better than mega-corporations who employ union workers.
Maybe there is a way to make unions and a highly fluid, highly competitive market work together. It just isn’t the old model of corporate or state-backed unionism we’ve become accustomed to for the past seventy years.