The Octopus

Posted by Tom Wark on Jan 25, 2007

I was trying to think of a good way to describe the power that the wine wholesalers have accumulated over the years; a good way to indicate the real heft of their influence; a way to demonstrate what happens when the number of middle men shrink in number while suppliers increase; a way to demonstrate the kind of entity that is created when the state mandates monopoly status on a small number of businesses.

Then, the Dallas Morning News did it for me. From a story headlined "Liquor Wholesalers Ply legislators with Cash" comes this lead paragraph:

"AUSTIN – Liquor
wholesalers dumped nearly $1.7 million on Texas lawmakers in the weeks
leading up to the 2007 Legislature while pushing for changes that would
allow them to sell booze directly to restaurants and bars."

The story goes on to say:

"They spent nearly five times more on lawmakers in the past 10 weeks than they did in the entire year before the 2005 session."

$1.7 Million!

$1.7 Million!

I typed that twice on purpose.

Wholesalers have every right to participate in the political process, be it by lobbying, giving campaign contributions or trying to influence the public. I would never suggest they don’t have this right.

However, one has to wonder if there is any concern in government circles about the kind of power that would result in $1.7 million being donated in ten weeks and if it is the kind of power the government wants to be granting.

By mandating that liquor wholesalers be given a piece of nearly every alcohol related transaction, legislators are guaranteeing that wholesalers will amass the kind of power that allows them to give $1.7 Million dollars in a ten week period.

Now, consider that wholesalers have been granted a state mandated monopoly for more than 70 years. Consider that the number of wholesalers has continued to dwindle. Consider that the size of the American Alcohol pie has gotten bigger and bigger. Consider that the number of suppliers (wineries, brewers, distillers) that want to access the market wholesalers guard by grant of the state has risen steadily over the years.

Does anyone remember the novel By Frank Norris entitled "The Octopus"? It described the influence and effect of the early railroad barons who were able to obtain enormous power as a result of the monopoly they had over railroad service. It described the power they had over the growing number of farmers that relied upon the Railroad to get their grain and produce to market. It described being at the mercy of a monopolistic band of folks whose power was so great they could dictate the pace of regulation in capitals.