Open Markets Always Wins

I saw a report last night on French language news about competition coming to the SAQ (Quebec's state-run liquor board). Specifically, allowing "depanneurs" (convenient outlets) to sell alcohol.

Gee, golly gee. How nice of them! What could consumers be thinking? Competition over a monopoly, I mean, come on!

My friend and I were discussing this over the phone. We're amateur "wine" enthusiasts. He tends to toe the state line with stuff like "they offer good selection" without recognizing the fact that it's not market oriented.

In defending the SAQ, he talked about how it carried, for example, "high-end grappas" whereas it's not necessarily the case in private boutiques.

Two things. The beauty of an open and free market without artificial (bureaucratic) barriers to entry is that businesses reflect market demands particular to their area or demographics. So one place may have "high end grappas" and another "low-end" each fulfilling market demands.

Instead, currently there exists a "one-way" (communistic) system in which one entity decides which grappa consumers get. And who knows how the greasing works in order for suppliers to get their products on the shelves.

The other thing is cost. The SAQ workforce is absurdly unionized. Guess who is paying for the inflated wages?

But I don't want to get into that.

I'd rather focus on something else which is the point about how this situation is not good for an economy.

Let's get back to the grappa scenario and the fact the system prevents people from getting into business for themselves. While my friend (wrongly I argue) assumes that because the SAQ offers "high end" it's proof somehow that they're doing a good job, he unwittingly discounts the potential  of someone else going in for business for themselves to offer, for example, "low-end grappas" as a means to fill a market niche.

Suddenly, the government has a new source entity to tax. If the individual is dedicated and successful their potential is limitless and there's no way of knowing what kind of a positive impact this would have on the economy. They can choose to remain a one-man operation (as my father did who decided rather than expand to invest in properties) or expand and hire more people thus creating new tax sources for the state.

That side of the coin is generally forgotten.

In other words, it's better to have numerous private boutiques each reflecting a more accurate market demand in a more efficient manner than to leave it in the hands of a monopoly.

It's nice there's some talk to fix this problem with allowing other businesses to sell alcohol. However, we have a long way to go.

As Ronald Reagan put it, Mr. Gorbachev, tear down these walls!