Practicing Economics Without a License

Wednesday, June 24, 2015
Posted in category Regulatory State

I just came back from Cleveland where I spent a couple of days loitering around Little Italy and making some new friends over some good wine. I love to engage in conversations with the small entrepreneurs, wherever I travel, because they are always teeming with stories of how they beat the regulatory state, time after time, in order to fulfill a dream and open a peaceful establishment that serves customers with desired goods and services.

This young Sicilian gentleman I talked to on a couple of occasions grew up participating in the family tradition of making wine. As with the Italians and Sicilians here in southeastern Michigan, it is a big family affair to ship grapes in from out of state, crush them by hand, and have the entire family involved in the winemaking process. He said he had always dreamed of owning his own restaurant because all he knew was food, wine, and making people happy.

Upon trying to open his restaurant he discovered he’d have to cough up about $50k to buy the liquor license, or, in the alternative, if he made wine, he could be a “manufacturer” and he could therefore purchase a permit for a few thousand bucks. And so he did, and he crushes the grapes in the basement of the restaurant and makes the most fantastic ‘homegrown’ wine I have ever had the pleasure of drinking. So I bought a few bottles. That young man is making money, keeping his debt low, and expanding his restaurant to a more “upscale” place in downtown Cleveland this August.

A different turn of events took place just a couple of weeks ago, in Pittsfield Township near Ann Arbor, Michigan. A band of authoritarians admittedly practiced bad economics without ever having to apply for, or receive, a license to practice economics. Zingerman’s Creamery, which is a hugely popular gourmet food company, was trying to expand with a new building across from its current location.

Zingerman’s Creamery, which makes the brand’s dairy products, is hatching plans for a new 3,200-square-foot building with a 3,000-square-foot mezzanine across the street from its current location, according to township records.

As part of its expansion plan, Zingerman’s Creamery wants to add a tasting area with about 20 seats where customers could sample beer, wine and mixed drinks.

The business was denied its liquor license because Pittsfield Township only has five liquor licenses left to grant through 2021, and Pittsfield Township Supervisor Mandy Grewal said that “the township must guard its liquor licenses prudently, viewing them as an economic development tool.” Now the states regulate and micromanage¬†political favors and rent-seeking opportunities liquor licenses, and then, when that hurdle is cleared, the local bureaucrats take over the “economic development” aspect of regulation. The article ends with that same Township bureaucrat noting that she and her fellow unlicensed economist colleagues are grateful for Zingerman’s presence in the community and the Township “will continue to work with them to make sure they continue to stay grow and thrive in our community.” I bet most readers of this Detroit¬†Free Press article did not note the irony in this story.

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