You are free to do as I please.

Imagine that you live in Vermont and want to be a beer brewer. You don’t only want to be a brewer, you need to be a brewer. It is your calling. You find that there are a lot of options. You could apply for work at The Alchemist Brewing Company. You could apply for work at Hill Farmstead. Or Fiddlehead Brewing Company. Or Long Trail. You could seek work at any of the dozens of breweries in the state. Or you could start your own. To be sure, there are legal and logistical hurdles to starting a brewery. There are some licensing and regulatory issues. But in a state with more breweries per capita than any other, it can’t be too hard.

Now imagine that you live in Taiwan in the 1990’s and you want to be a beer brewer. You don’t only want to be a brewer, you need to be a brewer. You could apply for work at the Monopoly Bureau of the Taiwan Governor’s Office, makers of Taiwan’s only beer: the cleverly named “Taiwan Beer.” And if you did not get the job, you have to give up on your dream. Opening your own brewery is not an option. As the name clearly states: there is a state monopoly on beer production in Taiwan.

These two contrasting scenarios illustrate a necessary defect in centralized economies. Vermont, which is a relatively free market, produces some of the very best beers in the world and provides entrepreneurs with the opportunity to follow their dreams. The result is an excellent environment for both brewers and consumers. Taiwan, on the other hand, produces decidedly mediocre beer. And until 2002, the state run brewery was the only game in town. The result was a stifling of creativity for brewers and a lack of choice for consumers.

Dedicated socialist H. G. Wells wrote in his New World Order that collectivism requires a declaration of human rights. “The more socialisation proceeds and the more directive authority is concentrated, the more necessary is an efficient protection of individuals from the impatience of well-meaning or narrow-minded or ruthless officials and indeed from all the possible abuses of advantage that are inevitable under such circumstances to our still childishly wicked breed.” And he is certainly right that the more power the government has, the more dangerous it is to individuals. (Although his solution of “compose a declaration of rights” is, in my opinion, a poor second to the solution of “just don’t give that much power to the government.”)

Wells’ proposed declaration of rights includes economic freedom. “That he [anyone] may engage freely in any lawful occupation, earning such pay as the need for his work and the increment it makes to the common welfare may justify. That he is entitled to paid employment and to a free choice whenever there is any variety of employment open to him. He may suggest employment for himself and have his claim publicly considered, accepted or dismissed.”

But the Taiwan example shows how hollow this freedom is. In a totally centralized economy, there really is no space for the individual to suggest his own employment. The question of which occupations are “lawful” and “open to” the individual is totally loaded. It is the government itself that decides whether the occupations are lawful or open to any given person. Wells may as well have written “he may engage freely in any occupation that the government gives him permission to.” As long as the power is given to the government to make all economic decisions, there is no freedom at all.

Sip of Sunshine

Beer of the week: Sip of Sunshine IPA – Lawson’s Finest Liquids is yet another wonderful Vermont brewery. And Sip of Sunshine sure is a treat. This beer is honey-colored and has a decent head. The aroma is bright and fruity. The taste has lots of tropical fruit and citrus notes from the hops and the sweetness of the malt balances it all very nicely. There is a reason that this beer is very sought after; it is delicious.

Reading of the week: The New World Order by H.G. Wells, Chapter: 10 Declaration of the Rights of Men – I think that the above criticism of Wells is valid, if not original. However, this reading does include a number of very good ideas that cannot be as easily discounted.

Question of the week: Is there anywhere in the world that is better for beer right now than Vermont?


Discount Logic

Nearly every time I sit down at a bar, I ask the barkeep the same question: are there any beer specials on at the moment? Admittedly, the motivation behind this question is pinching pennies. But as Confucius said,“Waste begets self-will; thrift begets meanness: but better be mean than self-willed.” So I’d rather be thrifty than wasteful. And anyway, if I save a dollar per drink, that can quickly add up to another drink.

Another important feature of the question is its ability to narrow down my choices. There are so many beers out there, that I often appreciate the opportunity to rely on the daily specials to help me decide. I have sampled a great number of beers that I might otherwise have overlooked this way.

But discounts are more than they seem. Discounts can reveal a number of motivations. They can be implemented for the purpose of new customer acquisition. They can also be used to move inventory that is growing stale. But the main sale prices offered by bars are designed to drive sales, particularly at times when demand is low. Compare, for example, the deals that you can get Tuesday afternoon compared to Saturday night. The traditional notion is that the retailer will reduce the price to encourage a greater volume of sales. The increased number of sales hopefully offsets the decreased profit margin on each unit (and then some.)

But those Saturday night customers might have a gripe against the Tuesday happy hour crowd. Arguably, discounts are essentially subsidies paid by one group of patrons for the benefit of another. Everybody who drinks at the bar outside of happy hour is subsidizing the drinks of the happy hour drinkers. For the bar to remain profitable, base prices have to go up in order to cover the revenue lost due to discounts. So by accepting a discount, thrifty patrons are externalizing a portion of their tab and the rest of the customers share the cost in the form of higher prices later.

But there is nothing very novel about this notion. The idea has been around for a long time. A classic example is the expression “there’s no such thing as a free lunch.” The “free lunch” in question is the time-honored tradition/marketing scheme whereby public houses offer free food with purchase of a drink. (An arrangement that fed me and my friends more than a few times during our college years.) As more than a few people have observed, those who buy a single drink and eat well get a great bargain. While those who buy multiple drinks or eat little essentially subsidized the feeding of others.

Once this situation has been recognized, one must ask whether there is a moral imperative not to accept discounts on the grounds that doing so is to the disadvantage of those customers who do not receive a discount. The answer, I think, is no.

The bars that I frequent sell cans of PBR or Hamms for as much as $3 per can. And some people make the free choice to pay that price. After all, each and every transaction at the bar is made freely by both the bar owner and the customer. The bar owner is free to set his prices and if the customer finds the prices too high, he may return during happy hour or take his business elsewhere. What does it matter to me if the bar makes more money off of some other patron than he does off of me? If the bar owner is actually losing money on me, let him raise his prices or discontinue his discounts. In a free market, one has little right to complain that somebody else got a better deal.

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Beer of the week: Revolution Rosa – I have complained before about the fact that bars in Boston are prohibited from offering happy hour specials. Chicago no longer has such a prohibition. And this Chicago beer may now be seen at a discounted price, because summer beers are finished and autumn seasonals have hit the shelves. It is hard to tell from the photo, but this beer has a color unlike any other beer have ever seen. It is brewed with hibiscus, which gives the beer a distinctly floral taste and a pink hue. The aroma of the beer is very sweet and malty. The taste follows the smell closely: sweet, malty, flowery. I think that this beer is very good, but I would understand if anybody complained that there is not enough hops to balance all of the sweetness.

Reading of the week: The Sayings of Confucius – To be honest, I am not sure how to read Confucius. I have made a couple of attempts but not as seriously as I might. This section seems like a more or less random smattering, but it contains quite a few lovely thoughts. Of particular interest to me is the line “Were shouldering a whip a sure road to riches, I would turn carter: but since there is no sure road, I tread the path I love.”

Question of the week: Do discounts to some really disadvantage others? Is this a case of the workers in the vineyard?