In this text published few days ago: “How can state destroy a market easily? Like this!“, I wrote about a brand new regulation imposed on distilling industry in the Czech Republic. It is obvious one can find a lot of similar examples across member states of the European Union. How can we deal with that? We must explain why this approach is not correct. Again and again.
The sad fact is that state officials often misuse their competences, i.e. they use their power given by legislation as a tool for making their work easier. However, easier work does not mean better results.
To cut a long story short: any state administration should not abuse its superior position to substitute its own incompetence, or laziness, nor as a tool for proving some activity in its own work. An obligation to place an expensive CCTV monitoring system in all factories where alcohol is produced or handled could be a good example of that. The so-called Methanol Affair, i.e. thousands of illegally produced toxic bottles of liquors launched on the Czech market in the fall of 2012, has showed that the problem is hidden. Deadly cocktails were mixed in basements, garages, old factories or seemingly abandoned barns, not in halls of official producers. Illegal activities, like tax evasion, come from illegal market then.
So let’s fight against criminals, not against legal subjects!
If we accept this regulatory body’s approach, what will come as the next step? Do we have to install cameras at our homes because we could potentially cook drugs there? Do we have to leave a DNA sample after buying a kitchen knife, because its new owner might be a potential serial killer? Are we going to move our world completely to Orwell’s 1984? Talking about regulation, everything is possible. Only the sky is the limit, as Americans say. Well, maybe the limit is even higher when the “right regulation is applied. “
But back to the important conclusion: It is absurd to think that regulation of the official market, no matter whether via taxes or production-cost increasing tools, could eliminate the black market. All these measures will lead to a clear ending – anyone who cheats will earn more. And anyone who plays fair will toy with the idea of transferring to the more profitable shadow…