by Dr. Roy Cordato
Senior Economist, Emeritas
One of the best examples of pure socialism in the United States can be found right here in North Carolina – our system of distribution and sales of alcoholic beverages.
The classic definition of socialism is an economic system where the government owns the means of production and competition is prohibited. People regularly refer to the idea of Medicare for All, promoted by Democrats Bernie Sanders, Alexandra Ocasio-Cortez, and Elizabeth Warren, as socialism. In fact, Medicare for All has more elements of capitalism than N.C.’s ABC system does.
While Medicare for All is sold as government-run health care, it is not. Its supporters do not argue for the government takeover of the provision of health care. Truly socialized medicine would mean that the hospitals are owned by the government, the doctors and nurses are government employees, the doctors’ offices and clinics are state-owned operations, and the pharmaceutical companies and drug stores are nationalized. Under so-called Medicare for All, the basic infrastructure of the health care system would remain in the private sector. The payment system would become socialized. And if private health insurance and self-payment were allowed to continue (which even Democrat Kamala Harris now says she supports), even payments wouldn’t be completely socialized.
North Carolina’s ABC system doesn’t come close to this level of private ownership. Not only is every aspect of the wholesale and retail distribution of distilled spirits heavily regulated by the government, but it is owned by either the state or local government in true socialist form.
Once the ABC system purchases its product from the distillers, every aspect of the process is owned by the state or local government. The government decides what products will be available to North Carolina consumers and in what quantities. It owns or leases the warehouse facilities where the product is stored. It controls the distribution trucks that carry the product to the retail stores, and it owns all of the retail outlets (ABC stores) in the state.
In taking direct ownership or control of all of these steps, it has also given itself complete monopoly power. Not only is competition from private retail stores illegal, but alternative wholesalers of any kind are prohibited.
Just imagine if N.C.’s ABC system became a model for Medicare for All. U.S. health care would become one of the most radically socialized systems in the world. There would be no private hospitals, doctors’ offices, or drug stores, just as there are no private liquor stores. The government would decide what medical services would be available at these government-owned health care providers, just as the state decides what brands and types of spirits are sold in the state.
Like it or not, North Carolina’s system of distilled spirits distribution is based on a classic socialist model of government ownership, and the fact is that there is no sound economic justification for it. It is not a public good, and the only reason why it is monopolistic is that the state has made it so. It certainly isn’t a “natural monopoly.” Like any other industry, desocialization will benefit consumers by creating competition, lowering prices, and expanding consumer choice. On the other hand, if the state and local governments really want control over its citizens’ alcohol consumption choices, then socialism is the perfect road to travel.