Tory MP ignorant. We\’re surprised, right?

This really is cretinous stupidity.

The costs to our economy of productivity lost at work, together with the criminal justice and health bill, put the financial drain as high as £55bn. There is no such thing as a cheap drink; we are all paying a very heavy price.

Sigh. Leave aside that this is simply an invented number (only two years ago it was around £20 billion).

What is the benefit of booze? The pleasure that people get from boozing of course. How can we measure the value, in cold hard cash, of that benefit, that pleasure?

The amount that people spend on booze of course. No one who thinks that 50p in their pocket is more valuable than a pint of cheap cider will exchange the 50p for the pint of cheap cider. Thus the pint of cheap cider which people do exchange 50p for must be worth more to that person than 50p.

The value to, the pleasure gained from, the boozer of booze must be greater than the amount spent by the boozer on booze.

How much do we spend on booze? From memory it\’s around £55 billion a year actually.

So, actually, even by our idiot Tory MP\’s reasoning, we\’re not paying any price at all: we\’re getting at least as much benefit from boozing as it costs us. Excellent, fuck off then.

But it gets worse:

An alcohol strategy that would work should include the following: minimum pricing of 50p a unit,

The problem with this is that it just increases the profits of the booze industry. It\’s also, as far as I know, illegal under EU rules. But even if not, we\’re still just increasing profits. To which our idiot Tory MP says yes but:

To those who feel that minimum pricing would just hand greater profits to the drinks industry, there are many suggestions: varying VAT between on- and off-licensed premises to offset a rise in duty without penalising pubs or clubs, or a levy on unopened bottles of between 5p and 10p per unit.

Which is exactly the point that we\’re all trying to make. Vary the taxes you idiot, if you want to change the price. Don\’t just boost the industry profits, get more money for the Treasury!

Just if any politician should happen to pass by just let me explain the logic again here. Minimum prices are a bad idea because it just increases industry profits. If you want to raise the price of alcohol you should raise the taxes on alcohol, so that the Treasury gains the money, not the industry. The response \”well, we\’ll change taxes to deal with the problems of minimum prices\” doesn\’t work. Just change the taxes and forget the minimum prices.

25 comments on “Tory MP ignorant. We\’re surprised, right?

  1. I would rather poke out an eye than defend any of these f**kwits, but surely it is a mistake just to look at the benefit to the drinker? There may be an externality shifted on to the rest of the British community by heavy drinking, no?

    So a pint of cider might be worth 50 p to some slag with a Croydon Facelift who has come off some Council Estate, but the rest of us may have to pay for her medical bills, those of the guy she glassed for looking at her the wrong way, we will have to clean up the vomit from our own front door steps, not hers and so on.

  2. SMFS,

    Indeed. So that’s your £20, £55, hell £666 billion cost to society. And they’ve got more than £55 billion of pleasure (in many 50p packages).

    That, I think is Tim’s point – the cost to society needs to be considered alongside, not independent of, the benefit to the individual.

  3. Raise the duty and tax, but at some point the bootleggers and smugglers move in.

    SMFS, as for your comment about the cost to the NHS, etc, this is a worn out argument used ad infinitum by all the prohibitionists. The palin fact is that alcohol consumption per head per annum in the UK has been declining for quite some time. As for ‘binge drinking’, it has always been thus. Where I grew up 60 years ago, there were lots of places you couldn’t go on a Friday or Saturday night. But the police didn’t look on and send drunks to A&E, they locked them up.

  4. So, given the Pigou impact on the demand for booze, more general taxes can be reduced.

    On the other hand, it is potentially more appropriate that the benefit from (any) new law is accrues to the govt rather than, as would be the case with a minimum price, private sector interests.

  5. Chris – “this is a worn out argument used ad infinitum by all the prohibitionists”

    I am not defending them. I am pointing out that well worn or not, this is kind of true isn’t it?

  6. So, given the Pigou impact on the demand for booze, more general taxes can be reduced.

    You can summon a “Pigou impact” for any damned thing, it depends on your moral stance. Try asking the Georgists about the impact of land ownership on society in general for instance. There is no greater externality. If you agree with their ethical stance.

    And that is the point really. Pigovianism is subjective ethics, in a fake wrapper of objectivity.

    And, anyway. When did raising a “sin” tax ever lower other taxes? Have you spotted the low tax bonanza from punitive tobacco taxation? No, neither have I.

  7. So a pint of cider might be worth 50 p to some slag with a Croydon Facelift who has come off some Council Estate, but the rest of us may have to pay for her medical bills, those of the guy she glassed for looking at her the wrong way, we will have to clean up the vomit from our own front door steps, not hers and so on.

    And how much did “we” save in psychological medical care, and in lost productivity, and so on, because some lonely person could pop down the pub for some company and cheer themself up a bit? How do you measure that? You can’t.

  8. “Scotland has an even more serious issue with binge drinking than England, and has a compelling health case for action. It is a disgrace that the country’s efforts will be undermined by retailers already threatening to deliver low-cost internet orders from bases outside Scotland. “

    I’m sorry, when did the Tories morph into the anti-business-initiative party..?

  9. Does she even read her own columbn back to herself:

    “The point is that minimum pricing does not make most alcohol any more expensive…”

    Wha..?

  10. I’m sorry, when did the Tories morph into the anti-business-initiative party..?

    Oh, the Thatcherite neo-liberal Hayekian wing is very much the minority these days, really it is.

  11. Of course, tax is the way to do it. After all, the aim is not to reduce drinking.. for if it was they would either drive the price up to the stratosphere, or (crazy idea) consider looking into come of the underlying cultural reasons which lead to drinking, which really needn’t be a problem, being a problem.

    No, they just need to raise a bit of tax and maybe drive a few of those people who really are so poor that this would make a big difference on to lighter fluid.

    Compare, if you will, to the ‘workplace parking levy’ being introduced in Nottingham, where I sit. The roads are congested, which is a bad thing for us all, and so to ease this, and to save the dolphins (etc) there will be a levy on workplace parking in the city centre.

    All sensible. I actually quite like the principle (notwithstanding the TEENY issue that it does nothing to address the vast contribution to congestion made by the school run).. Except that the levy is considerably cheaper than even the cheapest buss pass. And the levy is applied to the number of parking spaces made available, not the number used, so once we’ve told the council how many spaces we have it makes fuck all difference whether or not we all start coming to work on hyrbrid-fueled houmous-skates anyway.

    So, except in all the PR fluff, the levy has absolutely no intention of putting anyone off driving into the city centre. It merely seeks to raise some tax. Much like nobody *really* wants to see a real decline in drinking of booze.

  12. As for ‘binge drinking’, it has always been thus. Where I grew up 60 years ago, there were lots of places you couldn’t go on a Friday or Saturday night. But the police didn’t look on and send drunks to A&E, they locked them up.

    60 years ago? Listen to the excellent Radio 4 dramatization of Pepys diary and you’ll hear plenty of entries about people drinking till they spew or become insensible. (You’ve only got till Saturday to do so though. I would; it’s very good).

  13. Can one suggest this is the old one-two solution to a problem?
    Firstly introduce minimum pricing resulting in increased profits to the booze industry. Good politically, the industry gets the blame for soaring prices. THEN a massive tax increase to ‘recover’ the ‘windfall profits’. Good politically the industry is punished for exploiting the consumer. Side benefit, the resultant rise in smuggling spawns a large increase in the enforcement industry. That’s more Revenue & Customs officers, court cases, lawyers, fines….

    Can’t see the downside here……if I was a politician

  14. Sarah Wollaston isn’t really a Tory though is she – she got surprisingly selected through an open primary.

    If the Scots can treat England as a separate market for Higher Education and charge English people to study there I don’t see what’s wrong with dropping excise duty to zero and utterly screwing their policy on booze.

  15. The thing to do is to make the external costs and benefits implicit in the price. To do this, we shouldn’t forget that we’re constantly told a glass of wine a day is good (this week, I think).

    So every drinker needs to apply for an oyster-style smart card. Every time they buy a drink, the price is adjusted according to the risk profile. For your first drink of the night, you get a subsidy on the base price. For the next two, you pay base price, then an exponential scale for further drinks. Once you hit your “weekly” allowance of 21 (or is it 28 nowadays?) units, all prices are trebled. Quardupled when you hit double, and so on.

    Sounds like a politicians dream – a bit like the sliding scale congestion charging idea, with which you wouldn’t find out what you were paying for each journey until you got the monthly bill.

    Of course, there is no prospect such a system would lead to people buying their daily ration every day and saving it for the weekend – like the old navy trick of saving up your two tins a day ration for the weekend.

  16. “Of course, there is no prospect such a system would lead to people buying their daily ration every day and saving it for the weekend – like the old navy trick of saving up your two tins a day ration for the weekend.”

    That’s easily remedied, just ensure they drink it then and there, like drug addicts when they collect their methadone from the chemists and…

    Damn. I’m probably giving them ideas, aren’t I?

  17. Ah, Dr. Wollaston. Yes, primaries are a nice idea and all that, but she was a doctor in her past life. As Sir Humphrey would say, she has spent all her career trying to save lives, so she’s bound to be biased.

    Now, if she was talking about applying excise duty to units rather than the rococo system the Treasury currently favours, I might be more inclined to listen. But that would combine her incomprehensible desire to tax units with mine to simplify taxes, and that would never do.

  18. I’ll have to have a deep think on this one over a fag and a subsidised pint in the Commons bar…

  19. No, the total benefit is at least as much as the buyer pays, but the net benefit – the surplus – is less.

    If you value your cider at 55p, and it costs 50p, your benefit is 5p because the cash has value.

    I mean I agree with you Tim, she should fuck off and all that, but this blog is about knocking down dodgy economic arguments. The 50p cost is an opportunity cost, and it’s generally better to leave it to Eoin to base arguments on ignoring opportunity costs. He’s so good at it.

    I suppose you could make an argument that the entire production chain, from producers to consumers, must benefit by at least the 50p. But your post didn’t read like that, and anyway producers have alternative uses for their inputs so they have opportunity costs too.

  20. I don’t think you can say anything about an activity’s total benefits (and therefore the negative externality it could cover) by looking at industry turnover. The benefits could be much greater – the water supply industry is probably an example.

    The benefits could also be much less than turnover. Suppose we have a £50bn industry that makes blue cars. And some idiot regulator decides to tax, regulate, generally obliviate the industry out of existence. Have we lost 50bn? No – consumers can buy red cars instead, and producers can switch to making red cars. There is a small loss of value in the first case, because those buying blue cars preferred blue, but it is much less than the price of the car. Similarly the producers’ additional cost is negligible.

    The opportunity cost of buying or making a blue car is not buying and not making a red car. Which is almost identical to the price of a blue car, so the surplus is tiny. So if making blue cars imposed a £10bn external cost (blue paint causes cancer), it would be quite appropriate to do something about that with a tax, and everyone would switch to red (or more likely producers would find a slightly more expensive non-carcinogenic blue paint). Just saying “people spend £50bn a year on these things, and that’s bigger than the externality, so it can’t be optimal to impose a tax”  is not correct.

    The booze industry undoubtedly has much bigger benefits than that. But you can’t demonstrate that by comparing turnover to externalities. Sorry.

    I’ll go and be pedantic somewhere else now…

  21. While I’m posting links to Radio $ programmes, everyone should go and listen to Kate Fox argue that “[o]ut… should go the approach which says alcohol causes bad behaviour free of responsibility, with a focus instead on taking responsibility and normalising alcohol”.

  22. I’m glad Tom posted the Kate Fox piece, it absolutely rules. The coffee analogy is golden.

    IanB: the reason why “getting more money for the Treasury” is a good idea is that – IN PRINCIPLE – tax revenue gained by Pigouvian taxes on things that have negative externalities is better than tax revenue gained by taxes on things that have positive externalities (most obviously, working). We want people to work more and glass fewer cunts.

    This is why – if you believe AGW is real, which I do and which Tim does for the purposes of this blog at least – the Australian government’s carbon tax scheme is better than nearly all such schemes. It’s designed to be revenue neutral by using the revenue received to cut tax rates for low-income-earners (thus reducing the benefit trap and ay’that, as well as diminishing the moral evil where people who earn not-very-much are still taxed on the not-very-much that they earn).

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