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Originally Posted by Samurai Your data would be relevant if we are talking about P/L of an industry. For example, most people in my district have discontinued traditional farming because it is a net wealth destructor. Due to the high cost of labour, traditional farming can only earn 70-80% of the cost. So people have given up farming and have taken jobs in retail or manufacturing sector. [...]Net loss doesn't mean capital/resource will flow to other industry. |
Here you are talking of earnings and cost in a purely accounting sense. The economic sense of the terms is what I was talking of. In the economic sense, the cost includes opportunity cost. If the alcohol industry added $211 billion to the US GDP (which is also strictly speaking, not true because part of that must be B2B sales to hotels, restaurants and the like and hence double-counted) and the US spent more than $211 billion on issues in healthcare, law & order, criminal justice, loss of productivity etc. arising out of alcohol consumption then the industry is a net wealth destructor in the economic sense.
Anyway, this discussion is now probably off-topic for this thread; so I'll be happy to take it off from here to PMs.
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Originally Posted by Samurai It is a proven fact that increasing the cost of alcohol, does reduce the consumption. But this is a method that can't be stretched beyond a point. If you make it too expensive, it will lead to illicit liquor production/consumption and then the cure is worse than the ailment. |
I am not questioning this point; in fact I totally agree with it. This increasing the (accounting) cost to reduce consumption is one of the measures I had in mind when I spoke about supply-side intervention; but as you say it only goes so far. Beyond that is the present measure - which in effect, increases the opportunity cost. Therefore, in an economic sense the 500m limit complements the taxation regime.
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Originally Posted by Samurai Consider a demand-supply graph. The hardcore drinkers (who mostly drink and drive) are usually at the higher end (left side) of the demand curve. Moderate drinkers (who rarely drink and drive) are usually at the low end (right side) of the demand curve. When you move the supply curve to the left, using higher price or restricted access, who really gives up drinking? Obviously, the ones in the low end of demand curve, but not the hardcore drinkers who commit DUI. |
I thought about this a bit; and I am not convinced you are doing the right analysis here.
- First, the people on the left side of the demand curve are not "hardcode drinkers". They are the people who are willing to pay a lot more than the market discovered price for their alcohol. If we consider all types of alcohol as fungible, then these are the people who buy imported champagne and single malt scotch whisky and the like.
- Second, your "hardcore" and "moderate" classification is about the amount and frequency of consumption I imagine; it can't be a direct indicator of whether someone DUIs or not. Occasional drinkers will DUI too; and I reckon they are more likely to DUI (since they consume alcohol only occasionally, they might not be fully aware of the cognitive effect of alcohol on themselves).
- Third, alcohol I think is price-inelastic on the demand side; so the kind of "give up drinking" you postulate might not happen with a price rise. What is more likely to happen is that discretionary spending elsewhere will be cut by consumers in response to a price rise of alcohol.
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Originally Posted by Samurai This is why countries with mature policies have left the supply side untouched. Instead, they focus on enforcement via DUI checkpoints to catch the real culprits. For example, I remember that in NJ one could get his car impounded and even lose the DL if caught while DUI. Without a car/DL, you can be crippled in NJ. That is a big deterrence for DUI. |
Yet, I imagine even in NJ there will be vast stretches of roads where someone could DUI without being caught at all hours of the day, and there will be several hours a day when one encounters no DUI checkpoint on all roads. I couldn't find an authoritative link, but some reading I did suggests NJ saw an increase in DUI from 2015 to 2016.
Btw, in multiple pubs in the UK I have seen this system in place: Among a group of drinkers, one or more are designated as drivers and will not be served alcohol (the group informs the bartender beforehand). If the designated driver (or a solo drinker, or anyone, really) wants to drink they then surrender their vehicle keys to the bartender (who will then arrange for the cab/minicab to take them home). I'm not sure how this system came into being; but I imagine as a demand-side control it is far more effective than DUI checks though it operates on the honour code.
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Originally Posted by Samurai I am skeptical of this 500 meter rule because it only touches on the supply side, making it slightly difficult to obtain liquor. That won't stop the hardcore drivers, who usually commit DUI. Meanwhile, it has destroyed tens of thousands of legitimate businesses, and put their employees out of work. I know many who invested heavily (often running in crores) quite recently in new bars/pubs, taking loans and putting their life savings. The legal business they started, is now wrecked. |
On the other hand, these "legitimate businesses" must have done their homework prior to starting them; that their licenses are granted only for one year at a time, and that there are multiple litigation at all levels of the justice system that could adversely affect their business, that there are political parties that have promised prohibition in their manifestos which could ascend to power come next election, that every rung of the executive from district collector upwards could stop their trade with little notice, that the supreme court has ruled years ago that article 19(g) does not apply as-is to alcohol retailing and so on.
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Originally Posted by AltoLXI |
I haven't fully researched this yet, but I don't think (from what I've seen so far) this is a decision the states are going to take quickly or lightly due to the following reasons:
1. State highways get union government funding from the cess collected and various infrastructure development programmes. Once you start denotifying state highways, you end up with lesser share of such funds.
2. The power of states to collect toll on non-state highways is limited. This will affect the states' ability to develop such roads on BOT basis.
3. The maintenance of these denotified roads will become the responsibility local self-government bodies (panchayats/municipalities/corporations) who seldom have the funds or the knowhow to maintain such roads.
Net effect of all three seems to me is that roadways development will take a huge step backward in the states that choose to go down this denotification path.