The state’s film incentive, along with most of the state’s selective favors for industries and businesses, was eliminated with the passage of Gov. Snyder’s tax reform in favor of a smaller, direct expenditure. In light of this victory, it is disappointing that legislators rushed to begin a new round of economic development gimmickry.

Rep. Mark Ouimet, R-Scio Township, recently announced that he would introduce legislation to allow for film credit zones, which would enable municipalities to offer the film credits that were eliminated under the tax reform. In addition, a stealth campaign to increase the state’s direct expenditure is happening.

Michigan’s film subsidy program was enacted in 2008 and offers refundable film tax credits worth as much as 42 percent of a production’s in-state expenditures. In just three short years the program racked up $361 million in credit obligations. On an annual basis, that’s roughly twice as much as the state spends on Central Michigan University.

Nor was this program designed to boost jobs overall in Michigan. While proponents thought that the productions brought into Michigan would stimulate employment, there is an unaccounted cost to the economy for providing these jobs. The hundreds of millions of dollars in refundable tax credits came from the Michigan treasury and the Michigan taxpayers, all of whom have some better ideas for how the money might be used. The economic consequences to these individuals are unknown, unpredictable and potentially significant.

Even if the program was successful in turning Michigan into the next Hollywood, it would simply have transferred jobs from one economically depressed place (California) to another (Michigan). And the costs to transplant all those jobs would bankrupt the state.

The program was replaced with a much smaller $25 million direct expenditure in Gov. Snyder’s recently passed tax and budget presentation.

The new tax plan doesn’t really go into effect until January, so the new attempts would resurrect the program before it’s even buried.

Michigan legislators should think differently. The three years of the film incentive brought plenty of glitz to the state, but nothing worth the $361 million expense. The state was right to scale back the program, and legislators should be considering how to eliminate it completely instead of trying to bring it back.

Most residents would be surprised to learn that under the current system, the state of Michigan buys all the liquor, or “spirits,” distributed here. Our government, via the Liquor Control Commission, slaps its own price markup on liquor before imposing an array of taxes and price controls, effectively protecting the state distribution monopoly.

Residents should insist that the Michigan Legislature take a hard look at this costly and cumbersome system it has protected for decades, in large part because of the excessive political influence of a small handful of individuals who profit from the status quo.

No one would design such a system from scratch today. It was conceived in 1933 out of a perceived need to maintain government control over alcohol sale and consumption following the repeal of Prohibition. State government made itself the sole wholesale agent for all liquor sales in the state. (It very nearly became the exclusive retail agent too, and to this day, unlike for beer and wine sales, sharply limits competition through a quota system for merchants licensed to sell spirits.)

The arrangement was based on a belief that such direct government involvement would protect public health and safety, among other things preventing the distribution of adulterated products like “bathtub gin” from the remaining Prohibition-era bootleggers and gangsters. The system also appealed to prohibitionists who still wanted to limit access to the newly re-legalized liquor.

Nearly 80 years later, the bathtub gin has disappeared, but Michigan’s LCC is still buying and supplying all the liquor consumed in the state, making ours one of 18 so-called “control” states with similar setups. Nevertheless, proponents of the control system still argue that direct government control prevents an array of imaginary tragedies.

Modern scholarship seems to suggest otherwise. To cite one example, a July 2010 paper from the Virginia Institute for Public Policy found no statistically significant difference in binge-related drinking, drunk driving fatalities and total alcohol-related deaths between the 18 control states and the “open” (free) states

In addition, the state isn’t just a direct player in the distribution operation; it also mandates minimum shelf prices under which stores may not sell their products. For example, on June 3, I inspected prices at the Meijer in Coldwater, Mich., (near the Indiana border) and found that half-gallons of Smirnoff, Crown Royale and Captain Morgan sell for $23.96, $53.98 and $26.99, respectively. Twenty minutes south, the same products were available at the Meijer store in Angola, Ind., for $18.49, $47.49 and $21.99, respectively. In other words, Michigan consumers were paying in excess of 20 percent more for the same products. The lower costs in Indiana are probably directly related to it being a free state.

Part of that is the 65 percent price markup the state imposes to ensure its own profit. It then discounts the liquor to retailer licensees by 17 percent so they, too, can make a profit.  Through Sept. 30, 2010, the LCC’s net income exceeded $333 million. Some of this revenue is generated by license and inspection fees, fines and taxes. The money goes to the state School Aid Fund, the general fund, convention facilities and the “Liquor Purchase Revolving Fund,” which pays for the LCC’s own operations.

Many will correctly observe that this amounts to a “sin tax” on liquor. They’re right, but taxpayers and consumers are still being shortchanged by a system that prevents the savings that could be realized by a modern, competitive private-sector supply chain distribution system. Those savings could either be returned to consumers, taxed to provide government services, or some of each.

In other words, this direct government “control” isn’t just an archaic relic: It’s an expensive middleman that imposes a deadweight loss on both the state’s people and government. The state should get out of the distribution of spirits and leave it to the private sector.