Friday, March 09, 2007
Finland, Alcohol, and Adam Smith
Finland rightly feared cheap booze from Estonia, and countered with a significant cut in the domestic alcohol tax. The cheaper alcohol (which would have occurred in any case, either through domestic sales or from Estonian imports) brought more alcohol-related problems. But is this a temporary phenomenon, a binge when the price of alcohol falls, followed by the re-imposition of the previous level of sobriety, such as it was? "Finns drank less alcohol on average last year for the first time in a decade, as the novelty of Baltic 'booze-cruises' to buy cheaper liquor abroad faded..." Don't get too excited: Finns still drink 11 percent more alcohol than they did before Estonia joined the EU.
Adam Smith would have predicted the binge and the sobering, perhaps even a more widespread sobriety, judging from his words in Book IV, Chapter III, Part II, of the Wealth of Nations:
...if we consult experience, the cheapness of wine seems to be a cause, not of drunkenness, but of sobriety. The inhabitants of the wine countries are in general the soberest people in Europe; witness the Spaniards, the Italians, and the inhabitants of the southern provinces of France.... When a French regiment comes from some of the northern provinces of France, where wine is somewhat dear, to be quartered in the southern, where it is very cheap, the soldiers, I have frequently heard it observed are at first debauched by the cheapness and novelty of good wine; but after a few months residence, the greater part of them become as sober as the rest of the inhabitants. Were the duties upon foreign wines, and the excises upon malt, beer, and ale to be taken away all at once, it might, in the same manner, occasion in Great Britain a pretty general and temporary drunkenness among the middling and inferior ranks of people, which would probably be soon followed by a permanent and almost universal sobriety.