Monday, July 19, 2010

Blast From the Past -- Moonshine

In the 1920s and 1930s we had economic stagnation following a record boom, flappers, widespread appreciation of Jazz music, growing popularity of the automobile, and illegally produced liquor. Now in 2010, we've still got the first and last items from that list. There's been a spate of recent news articles discussing the moonshine phenomenon in the United States. According to the BBC, up to a million Americans have participated in the illegal production of alcohol. Statistically, you might be one of them.

In my home state of Washington, every liquor store must be run by the government. While this is advertised as preventing underage drinking and abuse of alcohol, it also serves a convenient revenue-raising function for the state (at the expense of college students from Seattle to Walla Walla). Of course, this is pretty common in other states too. Across America, liquor is one of the most highly taxed and regulated items on the market.

On the one hand, there's a case for regulating alcohol distribution and consumption (given that the number of deaths from alcohol, excluding homicide and accident, is 23,199 people in 2007 alone). On the other hand, with numbers like that you have to wonder how well the government's protective measures are working. Either way, it's indisputable that all regulations generate some form of black market. When the product is as socially accepted and culturally pervasive as alcohol in America, then illicit production becomes a certainty.

While moonshine became famous during the Prohibition era, it didn't disappear when alcohol was legalized. Illegal moonshine has moved away from criminal gangs, and is now more about home production. In the age of the internet, you can conveniently order a copper still to your home and set up shop making moonshine for a few hundred dollars. While the fines for illegally producing alcohol aren't cheap, the risk of being caught for having a still in your basement is relatively low. Compare that to thousands of dollars for a distiller's license, and it makes sense why so many people are producing moonshine.

America was founded on resistance to taxation, so it's no surprise that tradition is still alive and well with regard to our second national pastime, getting drunk. Thanks to the 21st Amendment the power to regulate alcohol was left to the states, and they've obviously enjoyed the privilege. To reference Washington again, consumers pay a 20.5% tax on liquor which must be bought in state-run stores. While these high taxes are promoted as combating underage drinking and other societal ills, Washington State takes a “complicated” stance on the issue; the liquor tax code is adjusted to encourage small bottlers to enter the market. Should alcohol be cheap and available or shouldn't it?

The issues surrounding alcohol are complex, and made more so by the web of regulations issued at all levels of government. Often good-intentioned policies aiming to reduce the societal harms of alcohol backfire. For example, a California tax on “barrel aged” liquors, intended to keep dangerous beverages like Mike's Hard Lemonade and Smirnoff Ice out of the hands of teenagers, instead punished craft beer distillers who are producing innovative new flavors by aging their beer in alcohol-soaked barrels. Larger brewing companies are paying the tax without a problem, so sugary malt drinks are here to stay. The outcome for small, enterprising breweries is much less certain.

This brings up a reason for home distilling that hasn't been mentioned yet -- flavor. Some people crave the distinctive taste of clear whiskey made famous as “white lightning” during the Prohibition era. The current generation of liquor snobs has gone back to its inebriated roots, so to speak. As a symbol of resistance to hyper-active government and an economic necessity during lean times, it's clear moonshine is here to stay.

Unfashionably Economic

1 comment:

  1. Insightful post! One minor addition, America was not just founded on resistance to taxation, but taxation without representation. ;-)