Scotch Whisky, Nike, and "Fairness"

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According to the web site of the Scotch Whisky Association, "Tax to the UK Treasury from Scotch Whisky companies amounted to 89,000 for each employee" in 1999.

That’s roughly $131,000 US per employee.

For comparison, National Statistics, a British government web site, reports that the average price of a British house in 1997 was 76,103. The average gross full time weekly earnings in the UK was 383.10 in April 1998. Multiplied by 52 weeks in a year, that works out to 19,921.20 average gross full time yearly earnings.

Unfortunately, but predictably, the UK statistics web site is not user-friendly, and does not provide separate data for Scotland. Neither does the CIA World Factbook web site, which lists 1999 estimated British per capita GDP as $21,800, or 14,816.10. The CIA figures, because they are lower, would appear to be net yearly earnings, i.e. after taxes.

Despite this slight imprecision, one conclusion seems clear: the average Scotsman in the whisky industry produces more money for the government than he does for himself.

Six times more. How’s that for fair?

Perhaps the leftists — in the United States, those are the Democrats — should push for laws limiting the price hikes from taxation to two times the salary of workers? After all, if the Left wishes to limit the amount that corporate executives earn in proportion to what factory workers earn, why not similarly link taxation and the wages of factory workers?

Work eight hours a day, five days a week, for $22,000 a year, and the government steals $131,000 by raising the price of your products. This is all for your benefit, remember. It has apparently not occurred to the "experts" in government that if they were to decrease the price of scotch by eliminating the ridiculous taxes, everyday people would have more money in their pockets, and thus be in less need of charitable relief, whether genuine help from private charities or governmental "help."

Of course, the workers are not the only ones being ripped off by taxation. Consumers of scotch whisky also get a raw deal, since taxation effectively doubles the price of scotch.

Matters are not much better in the United States. Pennsylvania imposes an 18% tax on liquor, and then slaps buyers with a 6% sales tax. That’s a 24% price increase.

Imagine, for a moment, that a private company suddenly decided to hike prices 24%. The political class would have a fit. And yet politicians desperate for money to spend are only too happy to jack up the prices of goods in order to satisfy their urge for expenditures.

The politicians’ urgent need to spend money on high visibility boondoggles that will win them re-election goes hand in hand with a paternalist philosophy. Since there are people who "feel" that there are "too many" liquor stores (one would be too many for such teetotalers) and "too much" alcohol is consumed, the government controls alcohol distribution.

In Pennsylvania, paternalism is the explicit basis for the combined 24% "sin" tax on liquor: the Pennsylvania Liquor Control Board is the state administrative agency charged by law with the regulation of literally every aspect of liquor in the Commonwealth.

"[T]he general purpose of the liquor code…is to restrain or discourage the sale of liquor," according to a case called Pennsylvania Liquor Control Board v. GMR Restaurants, decided by the Pennsylvania Commonwealth Court in 1997. So much for "free trade."

To see the rank hypocrisy of the statists, compare the governmental exploitation of Scotch whisky workers and drinkers to the hysterical attacks waged on Nike.

Buy a pair of Nike sneakers, and you will almost certainly be told how Nike pays five cents an hour to its workers in Pakistan.

Never mind, the enlightened leftists say, that the five cents per hour wage of Pakistani workers is more than the average wage in Pakistan. Five cents is not a lot in the US, the leftists argue, and so this wage is inherently immoral. (Quite to the contrary, most food relief charities will tell you that five American cents is a lot of money in the Third World.)

Never mind, as Ivan Pongracic points out, that the five cents an hour earned by Pakistanis at Nike is more than the two cents an hour the average Pakistani can earn anywhere else without leaving Pakistan. Never mind that these workers, sometimes children, would likely be starving or engaged in prostitution if they did not work for Nike.

Despite all this, it is alleged that Nike exploits little children.

Contrary to the claims of the socialists, the price you pay for sneakers is not 100% profit to the manufacturer. After the retailer takes its cut, Nike must pay its workers and sponsors, as well as taxes on income and property, and pay for utilities to run the factories, as well as the mortgages on the land where the factories sit. Nike must also plow money into research and development so that competitors will not put Nike out of business.

Were it not for sponsors such as Michael Jordan — who is alleged to be paid more than all of Nike’s foreign workers combined — promoting Nike, there would not be nearly as many Nike sneakers sold. How many kids clamor for Puma or New Balance? Those brands are not cool; advertising is the reason. They may work just as well, and they may be cheaper, but for those who want social status, Michael Jordan has made Nike the brand to have. Advertising is necessary for Nike to survive in a competitive marketplace. Jordan, then, helps Pakistani children by maintaining demand for their products.

For the Left, it is apparently evil when the profits of a private company such as Nike exceed the size of its payroll. It is apparently "fair," however, as in the case of Scotch whisky, when the taxes taken from a private company by force exceed the size of the payroll by perhaps six times.

The anti-free trade movement and the taxaholic governments of the world have something in common: they are part of the pro-slavery movement. Rather than allowing men and women to work where they choose, we are told that Nike plants must be shut down. The price of whisky is doubled by government taxation in the name of "fairness."

Fairness to whom? Not to the workers, who are little more than slaves in the nation of their birth, going to work each day to earn six dollars for the government for every dollar they earn for themselves. Rather than allow men and women to buy or not buy liquor in a free market, the sale of perfectly lawful products is restricted by law. You can buy what your government allows you to buy, when and where it allows you to buy it, and that’s all.

As Montesquieu writes, "There is no crueler form of tyranny than that which is perpetuated under the shield of law and in the name of justice."

Mr. Dieteman is an attorney in Erie, Pennsylvania, and a PhD candidate in philosophy at The Catholic University of America.

© 2001 David Dieteman

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