We continue serialising an epic essay from the New Zealand Initiative’s Eric Crampton, exploring what life is like in and out of New Zealand. Today: chapter six, on drinking.

Read chapters one and two here, chapters three and four here and chapter five here.

Chapter 6: Driving you to drink

Trillian did a little research in the ship’s copy of The Hitchhiker’s Guide to the Galaxy. It had some advice to offer on drunkenness.

“Go to it,” it said, “and good luck.”

It was cross-referenced to the entry concerning the size of the Universe and ways of coping with that.

I grew up on a farm in Manitoba in the 1980s and ’90s. Drinking might not be the best way of coping with Canada’s crazy rules, but it’s understandable.

If you wanted to farm without dealing with government-run marketing boards and quotas, you avoided growing wheat, barley, pork, poultry, eggs or dairy. Classmates expecting to inherit their parents’ dairy quota swore it was the best system in the world, but I had my doubts.

If you wanted to listen to the radio while cutting hay, Canadian content regulations meant listening to the few tolerable Canadian songs that got played over and over again until you wanted to throttle whoever had designed the rules.

Taking to the lake instead of the fields wasn’t any help. Commercial fishers on Lake Winnipeg, which is roughly half as big as Canterbury, had to sell their fish through the government-backed monopoly fish buyer, the Freshwater Fish Marketing Corporation.

The system then worked tolerably well for fishers around Selkirk, at the south end of the lake, but abysmally for the aboriginal fishers at the north end, far from the only place they could legally sell their fish. Political clout drove outcomes, and the Indian reserves at the north end had none.

It was enough to drive you to drink. But where? Manitoba had only two breweries for its million people – and no imports. Under provincial regulations, to sell beer in one province, you had to brew it there. Americans could get beer from other parts of Canada more easily than Manitobans.

Other regulations made it near impossible for craft breweries to emerge. Half Pints led the charge for craft brewing in Manitoba. When they wanted to expand their home-based brewery to a more commercial size, they phoned the provincial regulator, who just laughed and hung up.

Manitoba has been liberalising its rules since 2013, but the rules are still archaic and complicated by New Zealand standards. The rules are such a mess that the Manitoba government has had to consider subsidising small brewers to get the industry going. Ronald Reagan’s quip about government sums up Manitoba rather well: “If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidise it.”

New Zealand’s regime, by comparison, is pretty sane. But keeping it that way requires vigilance.

Here in New Zealand, home brewing is legal and easy – as is distilling your own spirits. You will get into trouble for selling your home brew without paying excise. But making your own whisky to share with your friends is perfectly legal – as it should be.

And while America might never have had Nascar if it had sensibly allowed home distillation, as Appalachian moonshiners’ races with the revenuers was where Nascar got its start, that is no reason to ban alcohol production.

Distilling your own vodka, in most parts of the world, is likely to get you arrested. If you do a good enough job of it in New Zealand, you wind up building 42 Below from the still in your garage, turning it into a multimillion dollar business, and selling it to Bacardi for $138 million.

It is easy to set up shop as a new brewer or distiller – and many home brewers do. So long as you pay your excise, it’s not harder than any other kind of drink production.

One of my favourite New Zealand brewers, Cassels & Sons, started by giving samples, and selling a few bottles, of their home-made beer at the Lyttelton Farmers Market on Saturdays at the local school playground. Their stand was a plank on top of old milk crates.

That small-scale production and sale let them figure out that people were willing to pay for what they were selling, and gave them the confidence to turn their old brick woolshed in Opawa into a brewpub. They opened just a few months after the Christchurch earthquakes.

That kind of story is utterly unremarkable in New Zealand, but would be impossible in too many other places. The rules around alcohol production elsewhere often mean you cannot start small – compliance costs are so high you have to start big. And starting big is risky.

Because New Zealand’s rules for starting craft production are simple, we have a fantastic craft beer scene. The Brewers Guild lists some 95 members, and not all small brewers are members. For a country of 4.7 million people, that’s pretty good: about 20 breweries per million people.

Manitoba has a population of 1.2 million and nine breweries. Which itself is an improvement over a decade ago when you would have been lucky to find three.

New Zealand’s alcohol excise is also simple. The general principle: the excise levy on drinks should be proportionate to the amount of alcohol in them.

We can argue about whether excise is the right way to stop dumb people from doing dumb things while drunk. And I have argued that. To steal a line from my friend Edward Stringham, taxing alcohol to prevent problem drinking is like hiking the petrol tax to reduce speeding.

But let’s leave that one for another day.

Let’s also ignore how odd it is that a bottle of whisky carries about double the excise per unit of alcohol as a bottle of beer.

New Zealand’s excise system just makes more sense than trying to control prices through state monopoly retail outlets, like those in Ontario, Canada. There, the rules help the public sector union that staffs the liquor outlets hold the whole province hostage by threat of strike.

For all of New Zealand’s problems with police extorting licensing conditions from shop owners, we are nowhere near Pennsylvania, where liquor permits are rare and tradeable – and sell for hundreds of thousands of dollars. Pennsylvania is not alone – in one part of New Jersey, a liquor licence traded for $700,000.

But the Asylum’s wall does need defending. Anti-alcohol activists in New Zealand have been pushing to restrict the number of places allowed to sell alcohol. This would inevitably make liquor permits scarce and valuable resources, build a powerful constituency for further regulations that tighten access, and boost the value of the permits. Let’s not build self-perpetuating holes in the Asylum wall.

Read the next instalment of Outside the Asylum here, or the full series here. If you’d prefer – listen to this chapter below.