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Adam Smith on how Government Regulation and Taxes might drive a Man to Drink (1766)

In a discussion of how taxes diminish a nation’s “opulence”, Smith has some interesting observations on the drinking habits of Europeans:

Man is an anxious animal and must have his care swept off by something that can exhilarate the spirits. It is alledged that this tax upon beer is an artificial security against drunkeness, but if we attend to it, we shall find that it by no means prevents it. In countries where strong liquors are cheap, as in France and Spain, the people are generally sober. But in northern countries, where they are dear, they do not get drunk with beer but with spirituous liquors. No body presses his friend to a glass of beer unless he choose it.

From the above we may observe that whatever police tends to raise the market price above the natural, tends to diminish public opulence. Dearness and scarceity are in effect the same thing. When commodities are in abundance, they can be sold to the inferiour ranks of people, who can afford to give less for them, but not if they are scarce. So far therefore as goods are a conveniencey to the society, the society lives less happy when only the few can possess them. Whatever therefore keeps goods above their natural price for a permanencey, diminishes nations opulence. Such are:

1st. All taxes upon industry, upon leather, and upon shoes, which people grudge most, upon salt, beer, or whatever is the strong drink of the country, for no country wants some kind of it. Man is an anxious animal and must have his care swept off by something that can exhilarate the spirits. It is alledged that this tax upon beer is an artificial security against drunkeness, but if we attend to it, that it by no means prevents it. In countries where strong liquors are cheap, as in France and Spain, the people are generally sober. But in northern countries, where they are dear, they do not get drunk with beer but with spirituous liquors. No body presses his friend to a glass of beer unless he choose it.

2dly. Monopolies also destroy public opulence. The price of the monopolized goods is raised above what is sufficient for encourageing the labour. When only a certain person or persons have the liberty of importing a commodity, there is less of it imported than would otherwise be: the price of it is therefore higher, and fewer people supported by it. It is the concurrence of different labourer[er]s which always brings down the price. In monopolies such as the Hudson’s Bay and East India companies | the people engaged in them make the price what they please.

3dly. Exclusive priviledges of corporations have the same effect. The butchers and bakers raise the price of their goods as they please, because none but their own corporation is allowed to sell in the market, and therefore their meat must be taken, whether good or not. On this account there is always required a magistrate to fix the prices. For any free commodity, such as broad cloth, there is no occasion for this, but it is necessary with bakers, who may agree among themselves to make the quantity and price what they please. Even a magistrate is not a good enough expedient for this, as he must always settle the price at the outside, else the remedy must be worse than the disease, for no body would apply to these businesses and a famine would ensue. On this account bakers and brewers have always profitable trades.

As what rises the market price above the natural one diminishes public opulence, so what brings it down below it has the same effect.

About this Quotation:

In our wanderings through the texts on the OLL website we have come across a surprising number of references to food and drink. Here is one by Adam Smith and we also have found a discussion by David Hume on turkeys (an obvious choice for a Thanksgiving Day quote) and Desiderius Erasmus on the importance of having Philosophers of the Kitchen. Now we have an Economist in the Bar.

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