Cameron fails to understand the Booze Problem

ToryDiary reports David Cameron as saying yesterday

“We need to look at the unbelievable availability of very cheap drink, getting three litres of cider for £1.99, at all hours of day and night. We’ve got to do something about this and I’m exploring what we can do to deal with the drink that’s fuelling so much of the crime in our country.”

Please, please, Mr Cameron can you rise above the thinking of the Labour government?

On my ‘O’ Level economics course I learnt that raising taxes on booze was a good way of raising revenue, as demand is inelastic with respect to price. This is still true, so to plug the budget deficit they could look to raising the tax.

The other side of the coin is that it is a poor way to reduce consumption. For young people it may have more of an impact of their expenditure on alternatives (alcohol in pubs or nightclubs, clothing or car expenditure, or saving). For some it may be a Giffin good. Their consumption will increase on booze at home, and they will spend less on going out.

Minimum price is even worse. You may get people going up market,as the differancial between white cider and better alternatives diminishes. Also the quality may improve. But what will increase massively in the profit per unit to the retailer. Supermarket and Off-licence shares might rise is this is pursued.

 The social problem of alcohol will not be solved by stricter laws or by higher price. It needs a social change. It is only when large numbers of people stop believing that the best way to have a good time is to get totally pissed; and when it is seen as a weakness to lose control of one’s faculties. Then the consumption and the binge drinking will go down.

 Update 23 08 09

The Adam Smith Institute similarly see this as a social problem.


%d bloggers like this: