MICHAEL HICKS: Legislature gets an “A” on Sunday sales

Michael Hicks, director of the Bureau of Business Research at Ball State University

Governor Holcomb’s signature on Senate Bill 1 allows Hoosiers to buy alcoholic beverages on Sundays. Fortunately, I have several recorded college football games to help celebrate the event. This would seem the occasion to say something clever, like, “Welcome to the 21st century, Indiana,” but this isn’t about modern mores. There’s something far different at work here, and that is worth explaining.

Indiana’s alcohol laws, like those in other states, are dominated by what economist Bruce Yandle calls the ‘Bootleggers and Baptists’ effect. Ironically, this example is used to explain odd coalitions that restrict the liberties of others for narrow special interests. Booze restrictions are quite literally the textbook example of odd regulatory coalitions.

Here in Indiana, bans on Sunday alcohol sales quite obviously have their genesis in cheap moralizing, but they also have an economic effect. They cut costs for liquor stores, while maintaining revenues. The ban on cold beer at convenience stores, which has thus far been inexorably linked to Sunday sales, doesn’t really have a moralizing component. Insofar as I remember, there is no doctrinal reference in any of the world’s great religions, which differentiates between cold and warm beer.

The long-term alliance between the moralizers and the liquor sellers is one of convenience, not shared passion for the wellbeing of others or commercial interests. That a long-gone legislature passed these laws, which remained largely unchanged since the FDR administration, should give current legislators pause when facing similar bans that inevitably arise every session.

The move to permit Sunday sales of alcohol is a step towards greater personal liberty. We should celebrate that on every occasion, but that is not to say there are not winners and losers in this legislation. In this regard, I think even the most curmudgeonly critic of the general assembly has to give the Indiana Senate and House a pat on the back. They took this problem on slowly and deliberately, allowing everyone to consider its effects and make adjustments.

Inevitably, the shift to Sunday sales will cause several businesses to fail. This was the focus of a study I performed eight years ago, which estimated the effect of small package stores in states that allowed Sunday sales over the past 40 years. The results were very clearly a small loss of small package stores within the immediate year or so after changing the law. We will now be able to see that effect in earnest.

These mostly small, local liquor stores opened their doors, invested their money, and dedicated their labor and talents to running a business. They did so under a set of rules that are typically older than any of the store owners. This is exactly the sort of behavior that we need more Americans to pursue. Yet, those rules just changed in ways that will make them less competitive than groceries and convenience stores. And there’s the lesson here.

We should all be gratified that adults can now make a less restricted choice as to when they can buy alcohol. No government has the competence to make these decisions for us. Still, when government presumed they possessed such an insight, they put in place a set of regulatory restrictions that made us less free. Men and women of good will lived within these rules, and their undoing damages them.

The lesson in Senate Bill 1 is that restrictions on liberty inevitably will be undone, and just as inevitably place burdens on others who have abided by the existing regulatory framework. So, the best course of action is to ask the questions about personal liberty as a bill is considered, and to save a future general assembly the labor of undoing a mistake.

Michael J. Hicks is the director of the Center for Business and Economic Research and professor of economics in the Miller College of Business at Ball State University.