A Win for Cheap Alcohol, a Loss for Democracy

In a 7-2 decision last month, the Supreme Court delivered a significant defeat for democratic governance of the marketplace. In Tennessee Wine and Spirits Retailers Association v. Thomas, the majority struck down Tennessee’s residency requirements for alcohol retailers. The Court reasoned that, in practice, such a policy “means that no corporation whose stock is publicly traded may operate a liquor store in the State.” Following the decision, large retailers will have much greater freedom to sell beer, wine, and spirits across the country, and this may well make drinking booze cheaper and more convenient. But before celebrating, we should reflect on the implications for democratic decision-making and society.

Alcohol occupies a unique place in our governing document. In 1919, Americans amended the Constitution to make alcohol illegal everywhere. After witnessing the failures of national prohibition in the 1920s, Americans amended the Constitution again in 1933 with the 21st Amendment, granting the states broad authority to regulate alcohol markets within their borders, up to and including the right to remain “dry.” Now, with its decision in Tennessee Wine and Spirits, the Supreme Court has usurped the states’ constitutional role in alcohol market control. Unelected federal judges now have expansive power to strike down state rules they dislike and let Amazon, Costco, Total Wine, and other powerful retailers overrun the market for beer, wine, and spirits.

While “free markets” are often invoked to defend existing economic arrangements, no market can operate without rules. Indeed, markets cannot even exist without government involvement. Government, at different levels, creates and defines the scope of property, contracts, trademark, money, and consumer rights, among other things. Rules are foundational to a market economy.

In the United States today, Congress, state legislatures, the Federal Reserve, and federal courts make market rules. As these examples indicate, some market governors are more democratic and popularly accountable than others. And in the absence of public rules, private corporations set the standards for markets in their own interests. The question is not whether we have rules but who sets the rules that govern a market.

Read the full article on The American Prospect here.