Two Vignettes of Regulation: II

Arthur Samish was a lobbyist who ran California in the 40s and 50s.  Senator Estes Kefauver described him: “He is a combination of Falstaff, Little Boy Blue and Machiavelli, crossed with an eel.”

Samish recalled in his autobiography: “One time a reporter asked me how I was getting along with the governor. “I am the governor of the legislature,” I told him. “To hell with the governor of California.”

His most important client was the sellers of alcoholic beverages.  Samish had a keen understanding of the way that economy works.  Here is his economic analysis.

“I operated on the theory that only by regulation and enforcement could the alcoholic beverage business thrive and prosper. Cutthroat competition could have been ruinous …. only by regulation and enforcement could the alcoholic beverage business thrive and prosper.  Cutthroat competition could have been ruinous. So I put through fair-trade laws to protect wholesalers, distributors and retailers. All of them make a profit in California, and they always have.”

“But look what happens in states that don’t have fair trade.  New York, for instance.  When the fair-trade laws were in effect there, a liquor license could have been worth $250,000.  Then the state removed fair trade and the license is worth virtually nothing. The liquor business started competing so fiercely that it was tough for anyone to make a profit.”

See Samish, Arthur H. and Bob Thomas. 1971. The Secret Boss of California: The Life and High Times of Art Samish (New York: Crown).

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