Jack Daniel’s Recipe Is So Good, It Should Be Mandatory!

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Imagine that you were starting your own auto mechanic business. Would you think it was a good idea to have a random, totally unrelated bunch of guys decide if the cars you fixed were safe enough to put back on the road? Would their judgement likely be better than your own? What if many of them hardly had any prior experience in the field, and their sole duty was to set the “safety standards” as they deemed fit, and to punish people for driving vehicles they’ve determined to be dangerous, for whatever reasons? They may or may not have ever even worked on a car themselves, let alone studied auto mechanics, in the first place. Would that be a system guaranteed to keep things as fair and safe as possible for all parties involved, including you and your mechanic business, any future passengers of the car, any other drivers on the road, the car’s manufacturer, pedestrians, etc.? What if those random guys also happened to have some friends who worked for one of your auto shop’s competitors, and often liked to favor that business over your own, even though the other shop might not have the same spotless safety record as yours? What if they got kickbacks for doing so? Would that still seem fair to you, then, do you think? Would that still seem safe?

Well, in a nutshell, for many industries, that group of “random guys” is the government. And in Tennessee, they’re coming for your whiskey next. That’s right: these anonymous bureaucratic mobsters, most of whom lack any credible background in whiskey production, are now working to establish the standard for what “Tennessee whiskey” will officially come to be universally considered. They’ve also managed to spark quite a controversy in the process, and with good reason.

The regulation standards that are presently on the table for discussion include making it mandatory for every batch of alcohol that is produced bearing the label “Tennessee whiskey” to be made from at least 51% corn fermented mash filtered through maple charcoal, and to have an alcohol content of at least 40% by volume. Additionally, each new batch of the stuff to be produced will have to be aged in new barrels made from charred oak wood, every single time. Interestingly enough, these distillation requirements are identical to those of Jack Daniel’s–the top-selling maker of Tennessee whiskey in the world. Just a coincidence, or a calculated attempt by Jack Daniel’s and Brown-Forman (the company who owns Jack Daniel’s brand) to stifle competition?

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To that effect, even the single stipulation alone that each batch of Tennessee whiskey be aged in new barrels made of charred oak every time would raise production costs for many whiskey distillers by hundreds of dollar per barrel. A spike in cost such as that would make production virtually impossible for smaller competitors, and that’s just one of the new rules being proposed. Now, imagine each of the other new requirements’ additional costs factored in as well, and it’s easy to predict the kind of devastating effect that these new rules would have on countless businesses.

Jeff Arnett, the master distiller for Jack Daniel’s, argues that the move is no different from the standards that govern the classification of champagne versus regular wine, for example, and that the newly-imposed standards will actually benefit independent distilleries. He insists that smaller whiskey makers “don’t mind being held to a higher standard, because they don’t want to create cheap products simply to be synonymous with the state name.” Other voices in the industry seem to disagree, though, insisting that the production process should remain as it has always has in Tennessee: free and lax, allowing for greater varieties of quality and taste to be produced.

This is hardly the first time that “random guys” in government have meddled with industry in the name of regulating “certifiable standards,” though–often with the same harmful results for producers and consumers, alike. One example is the new set of labeling standards for gluten-free products, which has been in place only since August of 2013. The government now requires that in order for any product to bear the label “gluten-free,” the FDA must first conduct an “assessment” to determine that each ingredient contains less than 20 parts per million of gluten, and that the item has never at any point contained gluten (even if the gluten has since been entirely taken out). As a result, many companies must now choose a different, less-convincing description for their products’ labels. Meanwhile, large-scale producers who hold industry clout seem to have little difficulty getting their products certified.

Defenders of such policies argue that systems like this are in place to keep people safe and informed. Opponents of government monopoly over various industry standards insist that businesses’ reputations among consumers are enough of a means of regulation. They feel that basic word of mouth, along with certifications by reputable independent agencies, would do just as good of a job at keeping the public safe and informed, without the need for the expensive assessments which often favor big-name producers. Businesses that consistently and responsibly satisfied the needs and demands of their customers’ would naturally come to be trusted over those that were less reliable.

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An even worse side-effect of these kinds of policies is that oftentimes, government labeling standards aren’t entirely informative, and are frequently vague to the point of being downright misleading. An example of this is the USDA’s certification process for labeling organic products. For one thing, items bearing the “organic” label must contain at least 95% organic ingredients, as has been certified by a “USDA-accredited” third party organization. Who’s to say that those “accredited” organizations are even credible in the first place? The USDA, with their exclusive authority over the entire classification process? It’s hard to take the word of any monopoly seriously; consider the earlier example of the “random guys” favoring their friends’ business, simply because they have the power to do so. This kind of stuff happens in the real world all the time. And what’s more, the remaining 5% window allowed for non-organic ingredients is still a wide enough range of concentration for there a possibility of toxicity to remain. There are endless varieties of chemicals in existence (organic, or otherwise) which are so toxic to humans that even as small a ratio as 5% could be lethal. Such a system of labeling standards is misleading, and not only bars market entry for newer or smaller businesses, but actually makes consumers less safe by providing them with a false sense of security. At its best, it’s unnecessary; at its worst, it could be deadly.

Unfortunately, it isn’t always so obvious in every case who the well-connected political cronies are that lurk behind each of these treacherous policies, or what the true motives are behind why they’re passed into law in the first place. However, in almost every scenario, they are imposed under the guise of being in the name of public safety. Thankfully, though, the case of labeling standards for Tennessee whiskey is an exception to that all-too-common shroud of mystery. To anyone with any basic level of insight about the matter, it’s pretty obvious what’s going on here: this is nothing but an attempt by Jack Daniel’s and its owners to permanently corner the market for Tennessee whiskey by passing regulations to their advantage.

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Of course, there are still many instances every day where the present system of government-monopolized regulation policies does actually inform and protect consumers to an extent, but that’s not really the point here. The point is that this system is far from perfect, certainly anything but fair, and definitely not always safe. And in the case of setting standards for something as arbitrary as quality and flavor labeling of a certain type of whiskey, lawmakers aren’t even pretending that safety is the issue here, in the first place. Government has no good reason to be involved with something as trivial as labeling a style of whiskey. It’s not a public safety issue. Quality standards are something that only businesses themselves can prove to their buyers by providing a product that lives up to customers expectations of what a good “Tennessee Whiskey” ought to taste like. This legislation, if passed, will absolutely just be plain and simple market meddling to favor a specific group and disadvantage it’s competitors. Period.

In a society that was truly free, there could be more alternatives for labeling standards which are less costly to everyone, and less harmful for struggling competitors and new businesses looking to enter the market. Why not let individuals choose for themselves which products they want to buy, based on labeling systems that they come to trust through various independent means (especially now that we have the internet to help us all make better-informed decisions)? Let spontaneous order occur; people will figure out what works best for them and their loved ones. Having only one labeling system might keep people safe to a certain extent, but it squashes opportunities for new product alternatives, and ultimately limits the ability of consumers to make informed choices, because they become forced to rely on only one institution to tell them what’s safe to consume. Buyers must then trust that institution to always conduct its approvals in a fair and unbiased manner–something I’ve already given two examples of the government not always doing. Why not let freedom of information guide people in making their decisions, instead of a single third party group of “random guys” who are neither foolproof, nor necessarily impartial? It would be safer, cheaper, easier, and more fair for everyone involved, in the long run. Guaranteed.

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U.S. Treasury and General Motors Go Their Separate Ways

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The United States Treasury Department issued the announcement on December 19, 2012 that it would at long last (though, to little avail) be divorcing itself from its partnership with General Motors,  revealing plans to sell off the remaining 300 million shares of the company by 2014.  The decision marks the close of the Treasury Department’s stint enforcing a reign of corporate tyranny, where it served its role in providing private financial gains to various corporations (GM among them) while socializing the costs, leaving the public to foot the bill with billions of dollars in stolen tax money.  The end result of the Department’s corporate and state collusion has been the effective funneling of billions of dollars from the pockets of American taxpayers into the wallets of employees on the payroll of mega-corporations in industries such as automobile manufacturing and banking.

The ownership of GM by the United States government was only one of the questionable partnerships to have been formed back in 2008 during the financial crisis, when companies like GM, Chrysler, and AIG decided that their corrupt and fiscally-irresponsible business models were insufficient to keep them financially afloat.  After instructing members of Congress that they would require roughly $418 billion in funds stolen from taxpayers in order to to resurrect their decrepit rackets from the trenches of well-deserved bankruptcy, many of the corporations that benefited from the enormous bailouts were unable to pay back their plundered loot.  Of these conglomerate debtor companies, the Treasury Department has predicted that the bailed out automobile giants will finish first in the rat race to most efficiently embezzle as much money from the American public as possible.  Once all of their shares have been sold back to the private sector and the partnership between the government and corporate interests has been severed, companies like the aptly-nicknamed “Government Motors” will have done rather well for themselves at the expense of the American people.  Amazingly, however, GM in particular (despite representing the greatest financial loss to the United States government) has managed to bring in profits of over $16 billion for itself in just the last three years–a far cry from the state of pathetic economic ruin in which it had been found back in 2008, when discussions of bailouts between morally-dubious politicians and their corporate higher-ups first began.

Also amazing is the revelation that government officials have openly stated that they never even expected to have all of the bailout funds repaid back to the government (and the taxpayers who fund it) in the first place–even as far back as 2009!  Former “auto czar” (whatever that is) Steve Rattner had speculated in 2009 at the peak of the bailouts that the government would lose billions of dollars bailing out Chrysler and GM alone, but that such an extravagant loss would assuredly be “worth the money” (whatever that means) in terms of the jobs that would be saved by preventing the two companies from going bust.  By the time that all of these morally and financially-bankrupt cash-grabbing shenanigans between the state and its corporate overlords come to an economically-exhausted finale, TARP is estimated to have lost $45.6 billion ($42.1 billion of which comprises a loss to government programs that would have been used to support homeowners facing foreclosures).  It would appear as though the government has determined in its infinite wisdom that if anybody ought to have been bailed out during the financial crash of 2008, it should most definitely have been the largest and most inefficiently-managed corporations (in the hopes that they might continue to provide jobs in the future for the soon-to-be-homeless American public).  After all, who cares where one lies one’s head down to rest at night, so long as one still has a conveyor belt position at a previously-bankrupt auto factory to wake up to and slave over during the next consecutive business day?

Assistant Treasury Secretary for Financial Stability, Timothy Massad, feels as though it’s about time that the government divorced itself from the private enterprises for which it had been playing the role of malevolent parasite, preying upon the earnings of American taxpayers for so long.  Despite defending the bailout policies by remarking that, “The auto industry rescue helped save more than a million jobs during a severe economic crisis,” Massad went on to add that, “The government should really not be in the business of owning stakes in private companies for an indefinite period of time.”  Massad’s sentiments echo those of more economically-conservative market non-interventionists, who agree that six years of government ownership of private corporations would indeed constitute an indefinite period of time, but that a five-year business partnership more reasonably fits within the bracket of time that can be adequately labeled, “definite and brief.”

Mark Zandi of Moody’s Analytics was among many of those who were saddened to see the five-year relationship between the two sectors come to a bittersweet end as the two begin to go on with their separate ways, each claiming to each other that they just, “Need a little time to think–a break, is all.  It’s not you, baby, it’s me, I promise.”  It is truly a sorrow to witness a relationship of such magnitude fall to the wayside, but nevertheless, Zandi looks back fondly on the flame that had been kindled between the public and the private sector.  “It was a slam dunk success!” he proclaimed.  “It was vitally necessary and proved to be a key to ending the financial panic and jump-start an economic recovery.” He personally expects the final government loss to private corporations from the TARP bailouts to total out at a mere $24 billion (an alimony that private sector companies like GM described as, “an act of pity,” considering all the bullshit that they had had to put up with over the course of their five-year engagements with one another), though sources say that Zandi’s estimate is rather forgiving, to say the least.