Sunday, February 14, 2010

Government interfering with the market place causes distortions that hurt small business when those distortions are removed

Currently in the land mass I live on called Colorado, there is a bill moving through the legislator to allow grocery stores and convenience stores to sell full strength beer (six point as the kids call it). Right now only liquor stores are allowed to sell it and now the convenience stores are upset because they have seen a dramatic decrease in beer sales since the liquor stores were legally allowed to open on Sundays. So the main opposition to this is the liquor stores, they are up in arms and claim it will mean that they will not be able to stay open.

I feel sorry for everyone involved because they designed their business models based on the reality of an unnaturally distorted market place. However, the government has no role in distorting the market place through protectionist measures. They should have never interfered in the first place. To remove the barriers is to normalize conditions to the most desired outcome based on the needs of the consumer. The reason the liquor store owners do not want this bill is that they know that most consumers would prefer the convenience of being able to buy the beer they want along with other items they are already buying. I understand this, however I also understand that the government used threats to prevent other store owners from selling the products their consumers are demanding.

There should be no restrictions on what products stores are allowed to sell. Would this mean fewer liquor stores if other types of stores were allowed to sell full strength beer and liquor? Probably. I used to live in Nevada where liquor and beer was sold everywhere, there were still liquor stores, but fewer of them than we have in Colorado where they are given a government enforced monopoly on the sale of full strength beer and liquor. This may even mean fewer jobs in the liquor business, but all sales of consumable goods should be about the consumer and not those selling those goods. In the long run the consumer should come first. The competition is likely to lead to lower prices, more selection and more convenience for the consumer. The consumer benefits the most at the place where price, convenience and customer service merge. This place can never be reached if the government interferes in the marketplace.

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