Craft beer and Hayek’s economy of dispersed knowledge.
The Wisconsin Legislature delivered a body blow to Wisconsin craft brewers in passing the state budget this week. The biennial budget is the only bill that has to be passed. Subsequently it gets loaded up with a lot of bells and whistles that have nothing to do with state spending.
In this case it was a provision that prohibits brewers from owning beer distribution companies. It was inserted into bill to protect Wisconsin brewing giant MillerCoors from rival Anheuser Bush attempting to increase its market share in the state by buying distributors.
The measure prohibits microbrewers from getting wholesalers licenses and selling their beer along with those of other craft brewers. Under the provision the brewing permit, wholesale and retail licenses, which are now given out by municipalities, would instead fall under state regulation.
For many of Wisconsin’s more than thirty-five craft brewers, the change takes a wrecking ball to their business plans which depend on dual roles of craft brewer/craft brew distributor.
This sordid little affair is just foot note to Wisconsin’s budget process, but it illustrates the degree to which big government and big business work hand in hand. The result is more than collateral damage. In total, it is nothing less than an assault on individual economic liberty. It is always justified by a notion of some overall public economic good. Yet ultimately it erodes our economic wellbeing. That is where F. A. Hayek’s notion of the economy of dispersed knowledge comes in.
Hayek envisioned two types of economic knowledge. One is a “scientific” body of knowledge supported by an array of economic statistics through which the economic resources of an industrial economy can be most efficiently utilized. It argues for some degree of economic planning. Examples of the use of this type of knowledge is the Federal Reserve’s tinkering with the money supply, or government stimulus spending in order to spur more rapid growth of the US economy.
The other type of economic knowledge is the dispersed particular knowledge of individuals in a particular time and place. This is the knowledge of Wisconsin’s craft brewers.
In the name of economic development, the Wisconsin lawmakers saw fit to give an edge to MillerCoors in protecting and increasing its market share in Wisconsin over rival Anheuser Bush. Yet ultimately, those “good” intentions may result in fewer brewing jobs and less brewing investment in the state. The craft brewers account for about 5% of the beer sold in Wisconsin and nationwide the cottage industry is growing at 12% a year. More importantly, Wisconsin’s craft brewers an integral part of Wisconsin’s tourism industry.
From Hayek’s perspective, central economic planning can only address and be corrupted by the competing interests of a static economy. Economic planning through the dispersed individual knowledge of time and place ultimately results in the most efficient use of economic resources and drives innovation and economic growth.
