TCS Daily

Booze Without Borders

By Waldemar Ingdahl - December 6, 2005 12:00 AM

Dear President Barroso,

You might have noticed in a recent issue of the Financial Times that Systembolaget (the Swedish Alcohol Retail Monopoly) ran an advertisement imploring you to not break up their monopoly on the selling of alcohol.

Now, there's nothing surprising about a large special interest group fighting to keep its monopoly, nor that it would spend a lot of money doing so. Systembolaget is spending 8 million Swedish kroner (€826,000) of Swedish taxpayers' money to influence your opinion. There's something inherently wrong with quasi-governmental organizations lobbying for a bad policy with the taxpayers' money.

The Swedish government is worried that cross-border traffic is undermining its retail monopoly at a time when other European Union states are watering down their regulations. The government has lost more than a million euros in tax revenues the last two years. But, as you know, it is a founding principle of the EU that a good permitted in one member nation should be allowed throughout the whole union. You also know that monopolies often breed shady business practices, and Systembolaget has recently been involved in many corruption scandals (yes, we do have corruption in Sweden, too).

You are certainly tired of us Swedes, Mr. President, as you recently expressed your disappointment over the fact that Sweden has dropped out of an active role in Europe while still hectoring the other members on their morals and national policies. But you should consider talks on dismantling Sweden's exception to the EU treaty on the retail monopoly of alcohol with our Prime Minister Göran Persson. This is a health issue as well as a competition and free movement of goods issue.

Systembolaget claims to be very successful in its mission, and slyly remarks that it should be an example for the rest of the EU. Is that true?

Alcohol has always been a problematic issue in Sweden, Mr. Barroso. As you might know we had a referendum in 1922 on prohibition. The referendum ended in alcohol being allowed but under strict control of the government in order to protect citizens from the dangers of alcohol abuse. I would argue that the Swedish model of battling the public health risks of alcohol nowadays is not about public health, but about maximizing the tax revenues of the government.

The Swedish model is based on the total consumption theory. It considers public health as a statistical aggregation that is improved if alcohol consumption of the whole population decreases. It does not consider by whom, when and how alcohol is drunk. But contrary to logic it considers what particular beverage is consumed. From the point of view of the total consumption model a population consisting of 90 percent teetotalers and 10 percent serious drunks is better than a population consisting of 100 percent moderate consumers, since the total consumption is lower.

It has been calculated that 3 percent of all Swedes are alcoholics. Of their consumption Eckhart Kühlhorn, one of Sweden's most distinguished experts on drinking habits, has calculated that only 20 percent is obtained from Systembolaget. The rest is either made in illegal distilleries, or brought from abroad, sometimes by organized criminals. In other words, Systembolaget cannot restrict the availability of alcohol to those the policy should be aimed at.

The decrease in total consumption during the 1990s for which Systembolaget claims it is responsible disappears when you add the alcohol that is smuggled, illegally manufactured or brought in from abroad. Despite the officially low figures on alcohol consumption you cannot call Sweden "Europe's most sober nation" any more. We have a far higher degree of consumption of spirits than other EU members, and the consumption is dangerously concentrated during the working week.

Increased alcohol consumption since the mid- 1990's has raised the number of alcohol related deaths from 6,000 persons yearly to 7,500. The costs of alcohol related health care have increased from €11.5 million in 1998 to more than €16.5 million today. This does not look like a very successful policy, Mr. Barroso.

Alcoholism is a medical problem, not a strictly social one. From a medical point of view it is a complex genetic disease. It is well known that some people do not develop an addiction to alcohol despite a large consumption, while others are remarkably affected by even a small intake. This implies a much more modern individualized public health policy, with the government maximizing the opportunities of the single citizen rather than relying on outdated statistical aggregations. It does not sit well with the total consumption model that is advocated by Systembolaget.

Other EU members do well to be concerned with the harm alcohol can cause their citizens, but the Swedish policy does not consider differences among different types of alcohol abuse- it thinks that we all can become alcoholics and infringes on the free choice of all individuals. What constitutes an alcoholic cannot be measured solely by the quantity of consumption, and high prices due to hefty taxation do not keep alcoholics from drinking. (Systembolaget tried, contrary to their own total consumption model, to steer Swedes into drinking more wine than vodka. This failed miserably as many adopted drinking both, wine on weekdays and vodka on the weekends.)

The Swedish alcohol monopoly has failed in its declared public health mission. It might have worked when Sweden was not a member of the EU, but no longer. So the next time you see Mr. Persson, for the sake of free competition in the EU, combating corruption and public health ask him to disband the retail monopoly. He can discuss it with his wife Anitra who happens to be the director of Systembolaget.


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