Licensed to Booze

The Saloon, Washington DC (cc photo by Jenn Larsen)

The Saloon, Washington DC (cc photo by Jenn Larsen)

Rend Smith updates on some of the latest liquor license follies:

Three faintly lit watering holes, Jo Jo Restaurant & Bar and The Saloon on U Street, and Bobby Lew’s Saloon in Adams Morgan, are getting scrutinized by the Alcoholic Beverage Control Board today because their customers don’t order enough grub. The businesses failed to meet food sales of either $2,000 per occupant or 45% of gross annual receipts. That’s not okay if you happen to have a restaurant-class license.

Now obviously if you have a restaurant-class license you need to comply with the rules governing restaurant-class licenses. It wouldn’t make sense for the ABCB to simply ignore violations. Still, as Bunch observes the reason these scenarios keep arising is because the city makes it so difficult to obtain liquor licenses in general and the less strict tavern licenses in particular to obtain. The proponents of strict licensing have their reasons, but something that always frustrates me about community-level debates on these topics is the failure of the proponents to acknowledge that any kind of costs come with this scheme.

But the costs are quite real. There are many, many, many vacant storefronts in Washington, DC. There are also a lot of unemployed low-skill workers. Employed people and functioning businesses pay taxes, whereas unemployed people and vacant storefronts do not. And I never hear anyone say “what this city needs is more vacant storefronts, more unemployment in working-class neighborhoods, and higher tax rates on the rest of us.” But it’s apparent that there are many spaces in the city for which the economically optimal use involves having a liquor license. Hence the more regulatory barriers to getting one, the more vacant storefronts and the fewer jobs you will have.

Now quality of life and neighborhood character matter to people. And that’s fine. But people who want certain rules in place should understand the tradeoff they’re making. One reason is that if people understood the consequences of their wishes better we might be able to find less damaging ways of achieving what they want. Any effort to favor restaurants over bars and non-restaurants over restaurants is going to be economically inefficient. But implementing such an effort via regulatory mandates is, perversely, a gigantic implicit subsidy to incumbent holders of liquor licenses. If you instead eased up on the licensing and just taxed alcohol more, you’d have a similar deterrent effect on booze-selling as a business model but taxpayers rather than license-holders would capture the surplus. That, again, might allow for lower taxes on other commodities and would actually achieve the goal of bolstering non-bar economic development.

But as long as people insisting on painting their efforts at urban central planning as cost-free, and any effort to draw attention to the costs as part of a stealth rightwing agenda, it’s very difficult to make the kind of win-win policy changes that make the world a better place.