Liquor

Ayn Rand, Rand Paul, And Paul Ryan Walk Into a Bar…

in Economics by
   

The age of social media has given rise to an increasingly large group of people who believe that a couple sentences, or even just a few words posted on a picture constitute an effective argument.  While in some ways, political and philosophical debate is healthier than ever before, the over reliance on simplistic arguments is creating a “meme world” where an asinine idea can be conveyed in few words and posted in mere seconds.  Proper refutation, however; takes more than a few words.

In the 140 character world of Twitter, these types of arguments exist almost exclusively.  This tweet from “Miss O’Kistic” has made its rounds in the online world:

“Ayn Rand, Rand Paul and Paul Ryan walk into a bar.  The bartender serves them tainted alcohol because there are no regulations.  They die.”

It’s the classic, “But if not for the state, how would we…” delusion.  People live in such fear over the possibility of government shrinking just one iota, that when confronted with radical reduction of government, or even (gasp!) complete elimination of government, they lose their minds.  The possibility to engage in rational discussion disappears, and they immediately jump to what they believe to be the only possible scenario, “We’d all die!!!”

For anyone even somewhat knowledgeable of free market economics, it is easy to address these concerns.  The market is more than capable of regulating itself, oftentimes much more effectively than is done by government; if something is demanded by the consumer it will be provided by the supplier.  Unfortunately, the economically ignorant often will not be satisfied with that explanation and will demand to know exactly how, in the absence of governmental regulations, people could be safe from dangers such as “tainted alcohol.”

Ok, fine.

To start, a bar or a liquor company would quickly lose customers and risk going out of business if it became known that they had served a bad product that caused illness.  Word of mouth is a powerful tool – especially in today’s digital age – and something like this would spread rapidly.  Businesses are in the game to make profits, so fear of losing customers and incurring losses provides a strong incentive for them to ensure that the products they serve are safe.

If they accept this premise, their next objection will be that this only addresses the problem after the fact – that there would be no way to make sure tainted alcohol didn’t become a problem in the first place.  Ignoring the fact that government regulations don’t prevent food or drink related illnesses, this objection is still unfounded because the free market would do a better job of that as well.

In any particular city, there are at least several bars that serve food and drink which all compete for customers.  With the absence of universal government regulations, one of them might choose to advertise a ‘guarantee of food & drink safety’ as a method of gaining a competitive advantage.  Their guarantee carries with it a promise to cover any and all medical costs associated with illness contracted by ingesting their products and is backed by an insurance company the bar has contracted with.

To receive the best possible insurance rates, the contract between the bar and the insurance company includes various stipulations.  In exchange for coverage of any potential liability, the insurance company requires the following:

  1. The bar will allow a preliminary inspection prior to execution of the contract, and periodically thereafter.  If the bar is found to be non-compliant of the insurance company’s standards, they will have a reasonable period of time to resolve the issue.  If the issue goes unresolved, the rate of insurance will increase.
  2. The bar will serve only food and drink that is supplied by vendors who are satisfactorily certified.  (The insurance company will provide a list of such vendors as well as contact information for food/drink certification firms that the bar’s current vendors can use if they are not already certified).
  3. The bar will display or otherwise make available to their customers a notice of disclosure with all relevant information pertaining to the contractual agreement between the bar and the insurance company.

Upon execution of the contract, the bar launches a marketing campaign to promote their new policy.  The move garners goodwill from the public, and the bar sees an immediate jump in both clientele and profits.

Other bars and restaurants see this and enter into similar insurance contracts so that they too can advertise safety guarantees.  Before long, such agreements are commonplace.  Competition between bars and restaurants drives up quality and safety standards while also driving down the cost of such insurance policies as the insurance companies compete for contracts.  The number of companies that certify food and drink vendors increase alongside the increasing demand for such services which results in similar quality increases and cost reductions.  Consumer confidence ratings soar.

How hard was that?  All it takes to see how regulation would naturally occur in the free market without government is a little imagination.

Jared graduated in 2009 from Rensselaer Polytechnic Institute with a Bachelors Degree in Mechanical Engineering. He is currently employed as an energy efficiency consultant in New Jersey, drives for Uber in his spare time, and is an aspiring entrepreneur. He came to the philosophy of liberty through the Ron Paul presidential campaigns, and has evolved into a voluntaryist anarchist through reading LewRockwell.com and listening to the Tom Woods Show.

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