The alcohol industry makes its money off the backs of addicts, and higher alcohol taxes could help. That’s the takeaway from a recent segment on MSNBC’s show All In With Chris Hayes. Hayes’s guest was Dr. Phillip Cook, a professor of public policy at Duke’s Sanford School of Public Policy and an expert on American alcohol policy. Cook wrote a book in 2007 on American alcohol consumption, Paying the Tab, which belatedly began to make the rounds on the web this week thanks to a piece highlighing his research in the Washington Post‘s Wonkblog.The piece notes that 30 percent of Americans don’t drink at all, while another 30 percent drink, on average, less than one drink per week. Thus only 40 percent of the American population really supports the alcohol industry. But within that 40 percent, it’s actually the top 10 percent of regular drinkers—those who consume on average ten drinks per day—that makes the most difference:
If you consume 10+ drinks per day, for instance, you almost certainly have a drinking problem. But the beverage industry is heavily dependent on you for their profits.“One consequence is that the heaviest drinkers are of greatly disproportionate importance to the sales and profitability of the alcoholic-beverage industry,” he writes writes. “If the top decile somehow could be induced to curb their consumption level to that of the next lower group (the ninth decile), then total ethanol sales would fall by 60 percent.”
As Cook points out in the segment, this dynamic characterizes most industries, where 20 percent of the customers make up 80 percent of sales. But the medical, relational, and societal costs of that distribution for alcohol consumption are obviously much greater and more grave than for other industries. And it’s not just alcohol, either—the first report on marijuana use to come out of Colorado’s new pot paradise shows the same pattern of a minority of heavier uses far outstripping profits generated by casual use.
In the segment, Cook explicitly makes the case that these numbers mean we should raise alcohol taxes, and we agree that this seems like a good idea. Historically, excise taxes on alcohol were a mainstay of federal budget, so much so that the income tax amendment was passed to clear the way for Prohibition. Without the income tax, prohibition was fiscally impossible. Higher taxes would also put a dent into at least some of the heavy use Cook identifies. Call it “Prohibition Lite,” which we’ve previously discussed here, pivoting off a column by Reihan Salam that advocated for higher excise taxes. (From the American Interest archives, Mark Kleiman is also worth reading on this).
For all drugs, legalization helps ameliorate some societal problems—and for that reason we support winding down the drug war. But legalization also brings many costs of its own. With all drugs, including alcohol, the users should pay as much of the full social cost of the drug as possible. Drinking or drugging responsibly has a social meaning as well as an individual one. It means both paying the true social cost of the freedom that lets you partake of your favorite mood enhancer as well as being moderate and limited in your personal use.