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Dear Systembolaget

ok, this is a long post, but the Swedish Government's attempt to mislead it's people and now Europe pisses me off...

In November 2005, the Systembolaget -- Sweden's government alcohol monopoly -- created a website to the president of the EU, which asked him to think about all of the alcoholic-related problems. What it was really doing was extolling the virtues of the Swedish concept of regulating alcohol, basically that:

  • high prices / taxation

  • limiting availability

...were good for people.

And it seems convincing, if not for the fact that it really stinks of government intervention because they do not trust their citizens to make the appropriate decisions.

So it is now interesting that there is this article on how simply raising prices across the board may not cut down on drinking as is widely believed

The problem with the Swedish model has been very carefully marketed over by the Swedish government, who hides behind the concept of wide selection, a knowledgable staff, and bargaining power. The government also hides behind the fact that the EU has validated it's monopoly theory in the application of pharmaceuticals. However, a lot of the argument is dubious.

First, in a monopoly, bargaining power is of course, absolute, as the seller has no other alternative.

Second, while credit can be had for having a wide selection, it is not very clear that the selection is significantly more than what can be found in a free-market distribution system. In a free-market dsitribution system, I might have to go to a speciality shop in wines, cognacs, or beer instead of to a centralised location, but no study suggests that a free-market aocohol economony has any less choice that a regulated one such as Sweden. And furthermore, I would be willing to bet that if the government adjusted its controls that so that effective competition -- not just the profit motive -- were the drivers -- that over time capable distribution networks and stores would pop up that would rival if not exceed the capabilities of the Systembolaget.

Third, whilst having personally experienced the staff as knowledgable and friendly, it's misleading to credit that ability with having a monopoly. Experienced staff is a benefit of an efficient and focused customer operation. Back in the 70s and 80s when airlines in practice operated as an oligopoly, the concern was not over the lack of experienced staff, and neither would it be in a government-sanctioned monopoly.

Finally, in acknowledging that the EU has affirmed the government-owned monopoly of the pharmacy industry, the Swedish goverment doesn't seem to acknowledge a key difference between alcohol and pharmaceuticals: basically that alcohol is more a commodity while pharamceutical companies are a highly-regulated industry whose span of influence and impact make it a better candidate to deal with government-based monopolies. The Swedish Government suggests it is somewhat irresponsible to treat a bottle of vodka with the same attitude as a rhubarb. But it is equally naive and disrespectful of people's intelligence to suggest that a class i narcotic substance used for medicinal purposes be treated with the same monopolistic attitude as a bacardi breezer.

The Swedish Government notes that Swedes go to Denmark, Danes go to Germany, and Germans go to Poland, etc, etc...to get cheaper booze. So Sweden, through it's government, rather than acknowledge the underlying fundamentals of what drives people from government-regulated industries and stores to more market-based ones, has decided in their wisdom that the problem is the REST OF THE WORLD.

Higher prices and a government grasp on alcohol while preaching in market-friendly adverts won't resolve alcohol-related problems. Rather, a mix of controls that encourage responsible drinking, market-based competition, and the availability of resources to help cope with the exceptions will deliver the solution that is really needed: an educated consumer that understands their person role and responsibilities in the communities they operate and to ensure that the system has appropriate levels of consequence for the actions taken.

But hey, I'm one of those stupid capitalists at heart.

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