May 16, 2005 was a great day for fans of free markets and especially wine. For on that day, in Granholm v. Heald, a case I had the honor of arguing, the U.S. Supreme Court struck down state laws prohibiting the direct interstate sale of wine to consumers.
But six years later, Congress is considering a bill, H.R. 1161, which would overturn that ruling and allow states to restore protectionist trade barriers against wine grown outside their state line. Not only would this bill hurt Arizona’s budding wine industry, it would reduce wine choices to consumers all across America.
As you may recall from high school civics class, one of the principal arguments in creating the U.S. Constitution was its creation of an open national market, putting an end to state trade barriers. The Constitution allows states to enact protectionist barriers only when Congress expressly authorizes such action – as it did in the area of health insurance, which has had disastrous implications for cost, choice, and interstate competition.
H.R. 1161 is being billed in some circles as “states’ rights” – which it is only in the sense of allowing states to engage in the type of destructive, anti-competitive activity that helped lead to the Constitution in the first place.
In fact, the bill is all about protectionism, which explains why its co-sponsors include Reps. John Conyers, Jr. (D-MI) and John Dingell (D-MI), two Congressmen who aren’t known for their warmth toward free markets, much less states’ rights. The bill’s principal backer is the multi-billion-dollar liquor wholesaler industry, which makes enormous monopoly profits by controlling wine distribution. The Granholm decision opened the interstate wine markets a bit – to the benefit of winemakers and consumers – but the liquor distributors want to close them again.
America’s economic structure is based in large measure on open trade among the 50 states – to which H.R. 1161 presents a serious threat. While the bill has over 100 sponsors, so far among the Arizona delegation, only Rep. David Schweikert (R) has signed on, and perhaps he will reconsider. This bill would return us to the dark times when a government-sanctioned monopoly industry, rather than consumers, dictated the wines we could enjoy.
Clint Bolick is director of the Goldwater Institute’s Scharf-Norton Center for Constitutional Litigation.
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