A Case Study in Regulatory Failure
Over on the home page, I have a little piece on a bill in the New York State Assembly that would turn over control of the state’s wine market to its wholesalers, ostensibly to fight counterfeiting. But the justifications for the bill don’t stand up to scrutiny, and there seem to be other interests at play.
The bill itself isn’t huge, but it stands out as an ideal example and microcosm of more general regulatory pathology. It’s like “the devilish thought-experiment of a public-choice economist.” Here’s an excerpt:
Nobody would counterfeit your typical $18 bottle of Sauvignon Blanc — the wine most of us buy is not expensive enough to tempt prospective counterfeiters to take the risk of prosecution. Bainbridge notes that “the limited extent to which there is a counterfeit-wine problem tends to be in very old, very rare, expensive collectible wines.” The demographic that consumes these wines is a narrow slice of the electorate and one that most New York voters would think, if they ever thought about it, does not require the Assembly’s special solicitude.
But even so, does this market require regulation and surveillance? It surely does. But that surveillance is done within the market — by connoisseurs who take steps to make sure they don’t get conned on a four-figure purchase, and auctioneers and collectors who carefully guard their reputations.
The rest here.