Fight for the Right to Party

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A couple of years ago, bars in Madison, Wisconsin, agreed to curtail weekend drink specials. The University of Wisconsin and the Madison City Council had urged them to do so, arguing that cheap booze was an invitation to alcohol abuse. The effort was part of the federally funded PACE (Policy, Alternatives, Community and Education) project, which encourages cooperation between campuses and surrounding communities to control student drinking.

I don't much like the idea of charging everyone more to discourage abuse by a minority (which is also the rationale for alcohol taxes). But the bar owners presumably were following what they took to be the path of least resistance, trying to avoid trouble by making a gesture of social responsibilty. If they had been regular readers of Wally Olson's Overlawyered.com, they might have guessed what would happen next. As Olson notes, the bars are now facing a class action lawsuit brought by students accusing them of price fixing.

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  1. Not one bar continued to offer specials?

  2. I’d have been tempted to view the bar owners’ decision to terminate drink specials as a government-enforced cartel: In any cartel agreement there’s an incentive to cheat. Sure, if everybody charges a lot then (depending on the elasticity of demand) then the suppliers might be better off than if they all charge less. But there’s always an incentive for one person to cheat. If everybody else keeps high prices, then even in the case of inelastic demand there’s a very strong incentive to charge less, and rake in all the clients (if search costs are low).

    Perhaps the bar owners saw an opportunity to enforce a cartel and get higher prices all around, while appearing to be “socially responsible.”

    In that case, it’s hard for me to say “Poor bar owners, the gov’t intimidated them into revoking their drink specials”, because they basically got the gov’t to enforce a cartel agreement and suspend the competitive forces that generally benefit consumers rather than suppliers.

    However, I still think it’s ridiculous to sue the bars over this without also including the feds (i.e. the cartel enforcers) as defendants.

  3. It’s naive to think that UW and the city of Madison, which has nasty traffic problems even when all its drivers are sober, needed a push from Washington to look for ways to reduce student drinking.

    I actually don’t have a problem with an effort to stigmatize the consumption of large quantities of mass market beer and cheap liquor as boorish, lower class behavior. Personally I’d prefer to address the issue with stiffer and more often enforced penalties for public intoxication, combined perhaps with wine education classes to teach students to enjoy alcohol like civilized people.

  4. If I lived in Madison, I’d open a bar called The Bored Lawyer.

  5. Figures…another good example of reactionary policy as opposed to allowing people to be responsible for their own actions.

    So now we make changes that affect a large number of people to address the concerns and misbehaviors of a few…

    Brent
    BRL, Inc.

  6. To be controlled in our economic pursuits means to be controlled in everything. — Friedrich August Hayek

    The prestige of government has undoubtedly been lowered considerably by the Prohibition law. For nothing is more destructive of respect for the government and the law of the land than passing laws which cannot be enforced. It is an open secret that the dangerous increase of crime in this country is closely connected with this. — Albert Einstein, My First Impression of the U.S.A., 1921

    I think what Al is really trying to say is “These students are just going to get drunk at frat parties now.”

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