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Wednesday, July 14, 2010

The Dead Hand of Jim Bell...

No, Jim Bell isn't really dead; at least, not so far as I know. But his Frankenstein monster, Red Bell Brewing, continues to haunt Philadelphia brewing. Witness this misreasoned claptrap from the usually eruditer-than-this Joseph DiStefano, titled Beer Will Save America! Funny. DiStefano is bringing up the proposal by Senators John Kerry (D-Mass.), Mike Crapo (R-Idaho), Ron Wyden (D-Ore.), and Susan Collins (R-Maine) to lower the federal tax on craft beer. Kerry says it will create jobs (it will), Jim Koch of Boston Beer points out that craft brewing is one of the few success stories in the recession (it sure as hell is), and the Wall Street Journal says the tax cut will help the craft brewing industry (well, duh).

But DiStefano says "We've been this way before." He opens up the Scary Closet and brings out the shaggy boogiemen of Red Bell and Independence (and not even the right Independence, you big dope; that link goes to the closed brewpub) as being "among the many beermakers backed by the taxpayer-subsidized U.S. Small Business Administration in the late 1990s; both also sold shares to the general public; both are among the many investor- and taxpayer-subsidized brands that flopped."

Well, imagine that: there are businesses that sold stock and went under. That couldn't have anything to do with how the Inquirer sucked up to Jim Bell and printed any damned bullshit he sent them, could it? As far as that goes, "investor-subsidized"? What the hell's that? The shareholders made an investment, they took a risk. If they'd gotten bailed out, that would have been a subsidy. But small brewers don't get bailed out, they just close.

But the main point? This isn't even a subsidy! The Feds raised the beer tax back in 1991, the senators want to roll that back -- like every other part of the 1991 tax increase, like the luxury tax on yachts that somehow got repealed... -- they're not going to SPEND money on this 'stimulus package,' the brewers are going to do that. 

Then he gets silly: "What's the big deal with small-batch beers? Yes, they probably taste better. Yes, they're definitely winning market share from Bud and Miller and Coors over the years. So much that the giants have been closing and consolidating plants and selling out to foreign owners."

Okay, no. Much as this thought leads beer geeks to turn off the lights and fondle themselves in front of the gently glowing screen of a computer locked on, it's simply not true. The "small-batch beers" just are not selling enough to have caused the "selling out to foreign owners." The big guys have been consolidating to save costs and boost market share, and right now it's the foreigners turn to buy. It's got nothing to do with craft beer, which is still under 5% of the market. You want to point a finger, point it at Corona and Heineken, which have taken three times the share away from the big brewers. So DiStefano is either ignorant, or misleading you. Take your pick.

It's the conclusion that's the kicker, though: "But does that really add up to more and better jobs that merit public subsidies?" Well, yes, it does add up to more jobs. Period. Give craft brewers a tax break, and I guarantee, they will SPEND that money on new hires, on better benefits for the workers they do have, on solid industrial equipment, on advertising and promotions. They won't squirrel it away in a tax break somewhere, or send it overseas. Which, I would think, would be a GREAT way to get an effective stimulus activity out of...wait, that's right, it's NOT a public subsidy! That would be if the government GAVE THEM MONEY. But we're not even talking about giving them money, we're just talking about TAKING LESS AWAY FROM THEM.

Am I wrong? Is it really a "public subsidy" when you cut back on an excise tax that shouldn't even be there in the first place? Or is this just one more example of how the brewing industry (and the spirits and wine biz) is treated unfairly because everyone is scared to death of alcohol? I'll tell you what, Mister DiStefano, I would much rather see taxes ratcheted back on a growing, thriving production industry than see government funds given to the banking industry. How about that, fella?


Sam Komlenic said...

According to

Tax (noun), 1 a : a charge usually of money imposed by authority on persons or property for public purposes.

Subsidy (noun), a grant by a government to a private person or company to assist an enterprise deemed advantageous to the public.

Less tax does not equal a subsidy, period. No subsidies here, just political rhetoric. Business as usual from an ever more polarized political landscape.

As goes the country, united we stand; divided we fall. Can we ever find any common ground in the big picture anymore? It's getting to be almost depressing to me.

Anonymous said...

it is kind of a shame. I posted in the talk backs, but it is amazing the rage this gets out of people. But DiStefano strikes me as a putz. "Oh yes," Lack Of research, or being lazy and giving the post to an intern just to sign off on it. But hey, we live in the united polarized states of america. god bless it

Bill said...

I giggled a bit about your Ratebeer line, but you have to admit that a professional booze writer who maintains three separate blogs with lengthy rants and raves about beer... that guy making fun of Ratebeer folks is like a 20 piece set of cast iron cookware calling the kettle black!

Lew Bryson said...

Seriously, guys...I keep seeing this kind of crap on every newspaper story on the Web. PLCB story? Obama. Crime story? Obama. Pollution story? Obama.

It's just sad. The funny thing is that they're often the same people who say he's doing nothing. Amazing. It's got NOTHING to do with him!

Lew Bryson said...

Oh, no, Bill, one big difference: I'm a professional, don't try this at home!

nate said...

Yeah, the Rate Beer line gave me a laugh.

Regardless, I have seen a few stories touting the repeal of the excise tax as a "stimulus" for small brewers. Really? It's not a stimulus. Besides the fact that the term is ambiguous, it seems that its most recent context suggests that a stimulus is a tax swiped on our Chinese charge card that is then granted out to companies to boulster jobs/consumer spending. A repeal of a tax isn't a stimulus, or as you state, a bailout.

Even if it were a subsidy, a subsidy never guarantees 100% success in an industry, so to point out a closed down brewery does nothing to enhance his argument.
...just my opinion.

Jon Geeting said...

Great post Lew. I think the case for that it would be an effective stimulus is a good one. The small companies would definitely spend the money, which is the whole point of stimulus. One quibble with sam k's comment - from a budgetary standpoint, there's no difference between tax cuts and spending. Choosing to collect less revenue has the exact same impact as exchanging the same amount of revenue for a good or service.

Also, I was reading the other day about the Campaign for Real Ale (CAMRA) in the UK, a highly successful advocacy group who have been instrumental in promoting craft brewers over mass-produced swill and have actually succeeded in increasing the market share of craft brewers. It's mentioned in the book "No One Makes You Shop at Wal-Mart" by Tom Slee. I'm sure you've heard of this org, but I wonder if there is any similar organization in the US?

Sam Komlenic said...

All I'm saying is, read the definition. Tax and subsidy are two different things and don't seem to have the ability to be co-joined as goes Merriam-Webster.