Editor's Insight: Alcohol and the myths of minimum pricing

Economists will tell you that letting politicians near any figures is a dangerous thing indeed.

Take minimum pricing of alcohol, with the Labour party urging the measure of a standard drink (10g of pure alcohol) be set at $2 to stop binge drinking.

Labour’s intentions are no doubt sincere but they are no better informed than the prime minister, who told the NZ Herald that minimum pricing could force people to drink poorer quality liquor instead of drinking less.

“What typically happens is people move down the quality curve and still get access to alcohol,” he said.

He couldn’t be more wrong. In StatsChat’s brilliant daily skewering of journalistic bloopers, University of Auckland Biostatistics Professor Thomas Lumley says this is the opposite point of minimum unit pricing, as opposed to increased excise rates.

“The idea is that there is a minimum retail price for a quantity of alcohol: the proposal here was $1.50 per standard drink; in the law recently passed in Scotland it is 50p, and in the Canadian province of Saskatchewan it is $2.25. If the price of your currently-preferred adult beverage is raised by the law, everything ‘down the quality curve’ will also have its price raised to exactly the same level.”

That’s why Labour proposal of $2 makes nonsense of its supposed voting base, if it is mainly mid-to-lower income adults who are moderate drinkers.

Instead of paying $15 or less for a bottle of wine, there will no longer be any bargains because the cheapest will cost as much as $16, well above what the vast amount of wine is sold for in supermarkets.

Wine prices above this level will not change, which is why John Key is wrong: low quality wine will just cost a lot more – double, in fact, allegedly to stop binge drinking.

All this explained in detail by Eric Cramption in his Offsetting Behaviour blog. It’s a bit like figuring the difference between an ETS and a carbon tax, both of which are aimed at changing behaviour. In most cases it won’t, except that everyone will pay more, which is probably the only bit that politicians really understand.

As for whether minimum pricing will do what it’s intended to do – that’s not absolutely proven, though overall higher prices will reduce the amount of wine and other beverages sold.

An AUT study, reported in its magazine Insight, says price rises as high as 25% had little effect of buying behaviour among students sampled in both Australia and New Zealand.

“These findings therefore contradict government emphasis on fiscal and regulatory approaches to modifying purchasing choices,” the article says.

Instead, AUT business school Associate Professor Andrew Parsons says,

“more programmatic approaches like those used in anti-smoking have been shown to be more effective social interventions. The influence of perceived social norms on consumer behaviour around drinking far outweighs the influence of price and alcohol content variations.”

A new love match
China’s plan for world conquest has forced it into some unusual relationships. The latest is Israel, which has also recently hosted Russia’s Vladimir Putin – but that’s another story.

Barry Rubin says both countries share many parallel interests and, in contrast to Israel’s Middle East neighbourhood, China lacks prejudice toward Jews and prejudgment that has become such a huge obstacle for Israel’s dealing with the West.

“China’s policy of dealing with all other countries has another side, since it will not let its relationships with Israel be interfered with by any possible Arab or Iranian demands. Indeed, if China decides to become the main customer for Israeli natural gas and oil exports, the Jerusalem-Beijing relationship may be Israel’s most important link, second only to the one with the United States.”

Israeli business paper Globes reports that China will build a railway from the Mediterranean ports in Ashdod and Haifa with the Eilat port in the Gulf of Aqaba. There are also plans to extend the line to Jordan's Aqaba port. The estimated cost of the line is at least 20 billion shekels ($6.3 billion), which will be funded by China.

Burqua bandits run riot
Bank robber Willie Sutton said he did it, "Because that's where the money is."

After a wave of bank robberies in Philadelphia, niqab-clad outlaws, who disguise themselves as Muslim women, might offer an equally straightforward answer: because it works.

As David Rusin explains, at Middle East Forum, these robbers are exploiting political correctness and sensitivities among a community that is forever demanding rights above all others:

"Banks must run the gauntlet of 'Islamophobia' charges if they pursue a seemingly obvious remedy: forbidding attire that hides customers' faces from security cameras. Financial institutions nationwide have worked to deter more conventional robberies, reportedly with some success, by implementing dress codes that ban hats, hoods, and sunglasses, but Islamists have fought restrictions on headgear.

In other miscellaneous items, you may wish to read:

• the ideas of Russian historian Pavel Stroilov, who argues in his forthcoming book, Behind the Desert Storm:  

“It was the Soviet Empire – not the British Empire – that was responsible for the instability in the Middle East.”

Stroilov fled Russia in 2003 after stealing 50,000 top-secret Kremlin documents from the Gorbachev Foundation archives.

• that Israel has a growing third world refugee problem, with an estimated 60,000 non-Jewish Africans having arrived by various means.

• the Islamist destruction in Timbuktu of the tomb of Sidi Mahmoudou, (d 955), and the doors of the Sidi Yahya Mosque (ca. 1400) prompted Daniel Pipes to list 10 other similar acts of historic religious vandalism and raise the question: What is it about Islam that so often turns its adherents against their own patrimony? His conclusion:

"Although these examples include both non-Muslim and Muslim artifacts, motives differ in the two cases: eliminating infidel remnants establishes the superiority of Islam, while eliminating Muslim ones establishes the superiority of Islamism. In both cases, the motive is foul and the results are, historically speaking, tragic."