Unintended consequences, Coke and pizza edition

Coke_2litre_bottlesOne of the most cited, but frequently dismissed, criticisms of paternalistic regulation is that it leads to unintended consequences. Normally they are more principled, such as regulations discouraging individual responsibility and learning how to manage risk.

As many people may be aware former Republican turned independent Mayor of New York City, Michael Bloomberg, is banning the sale of soft drinks larger than 16 ounces from 12 March 2013. For clarity 16 ounces is less than half a litre.

The stupidity of this proposal is immediately obvious. People may not be able to buy a two litre of Coca Cola, but they can buy two one litre bottles of Coca Cola. Nothing stops people going back for more if they want. But there are also unintended consequences as a report in the New York Post shows:

Say goodbye to that 2-liter bottle of Coke with your pizza delivery, pitchers of soft drinks at your kid’s birthday party and some bottle-service mixers at your favorite nightclub.

The assumption was that this ban would hit 7-Eleven’s Big Gulps that are grotesquely large, but ultimately it is the choice of those who want to buy them to do so. But in practice it is also hitting one and two litre bottles of soft drink delivered with a pizza order designed to serve an entire family. As the article continues:

[C]onsumers, especially families, will soon see how the rules will affect their wallets — forcing them to pay higher unit prices for smaller bottles.

Typically, a pizzeria charges $3 for a 2-liter bottle of Coke. But under the ban, customers would have to buy six 12-ounce cans at a total cost of $7.50 to get an equivalent amount of soda.

The ban is also hitting mixers at bars, so you cannot share a jug of mixed cocktails:

[I]f you’re looking for a night of bottle service at a Manhattan hot spot, be warned: Spending $300 on a bottle of vodka no longer entitles you to a full complement of mixers.

The carafes in which mixers are typically served hold 32 ounces, and the most common mixers — sodas, cranberry juice and tonic water — will be limited. Only water and 100 percent juice will be unlimited.

To some the clearly absurd practical application of this law may appear to be bureaucratic overreach. But it isn’t. These are the unintended consequences of one-size-fits-all laws based on the assumption that government, not individuals, know best.

As I wrote mid-way through last year there were a number of unintended consequences of placing more taxes on alcohol, including reports that young people were substituting illicit drugs for an alcoholic buzz. Similarly increased tobacco taxes increase the incentive for people to buy chop-chop. James Paterson wrote something similar about regulation on fast food. Chris Berg has highlighted that advertising regulation on food led to lower quality television programs for kids to watch and increased the cost of toys.

What’s more concerning is how we don’t learn about the unintended consequences of over-regulation and blithely continuing over-regulating.


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