For more on the Supreme Court’s hearing of oral arguments in the interstate wine shipment case, please see Todd Zywicki’s handicapping of how the Justices are likely to vote, and Dahlia Lithwick’s Slate column that offers a spirited and heady summary of yesterday’s arguments.
The one that really chaps my shorts is this little exchange:
Justice David Souter asks how state authorities can audit wine producers if they cannot “drop in and monitor” them, suggesting “it’s one thing to do that in-state, but another across the country.” Bolick responds that the state’s elaborate three-tier regulatory system for out-of-state wineries doesn’t allow for auditors to just drop in and monitor sales, either. …
Michigan says it needs these different sets of rules to protect minors, “but that is belied by the fact that they allow 40 Michigan wineries to ship directly to the homes of residents.” Not that anyone really thinks minors order their wine on the Internet. They get it at the Chevron, like I do. Sullivan [Kathleen Sullivan, arguing for the interstate commerce team] adds that out-of-state audits are hardly impossible; in order for out-of-state wineries to be licensed, they must agree to submit to state jurisdiction. She tells Souter that in his “home state of New Hampshire” wineries are asked to “submit monthly records and samples.”
“But maybe you’re getting ripped off,” replies Souter.
We then later hear that New York wants to reserve the right to perform such audits on out-of-state wineries, even though they don’t bother to perform such audits on the in-state wineries over which they currently have such jurisdiction! If that’s not a red herring for protectionism, I don’t know what is. Oh, wait, yes I do … it’s the minors buying Screaming Eagle Cab over the Internet! And the auditing is typically counting the numbers of bottles and ensuring that those numbers correspond to reported numbers. Sounds like a customs/tax audit, not one that has anything to do with the well-being of consumers directly.
But what really chaps my shorts about this exchange is Justice Souter’s presumption that the mission of the regulation of alcohol in New York State (and, by extension, the Court, if they agree to uphold the interstate barriers to shipment) is to protect consumers from getting ripped off. We can all go on the Internet and research most of the wines that are produced in this country, and the world for that matter. We have access to vast quantities of evaluations of wines from the wineries themselves, from wine publications, from wine blogs published by wine lovers, sommeliers, wine shops, random economists who love wine, etc. If we combine all of these sources with the fact that enabling Internet purchases extends the market in such a way that competition would minimize the probability that we would get ripped off, where the heck does Justice Souter get off saying that we need some regulatory agency at the state level to protect us from being ripped off? Are we so incompetent, so unable to understand our own preferences and the choices available to us that we need the paternalistic protection of some set of bureaucratic functionaries to mediate them for us?
My response to that is this: with all due respect, sir, bite me.
How dare he be so condescending and paternalistic! Of course, that mentality is one of the three legs of the stool on which the protectionist rents sit (the other two legs are the 21st Amendment and the power dynamic between wholesalers and state regulators) that the wholesalers currently enjoy and are striving to maintain.
I hope that his voice is not decisive, and that the ultimate decision reflects the power and self-knowledge that consumers acquire through participating in competitive interstate markets.