If State House Republicans get their way, there won’t be a Highland Park School District next year.

For the rest of this year, a deal was approved that gives Detroit Public Schools $4 million to keep the doors  of public school buildings in Highland Park open but  under new management provided by Jack Martin, the state-appointed Emergency Manager of the fiscally failed school district.

For next year and beyond, the spokesman for the House Speaker said they’d like all of Highland Park’s students to be in another district. Ari Adler, press secretary for Michigan House Speaker Jase Bolger, said their plans include three options:

• The Highland Park School District could be dissolved. Adler said that’s not likely because the district owes tens of millions to the state of Michigan and to its vendors. Adler said the Republicans are still researching how a district can be dissolved and the consequences of such an action.
• The Highland Park School District could be absorbed by another district.
• The state could appoint a management company — much like charter schools — to run the district or have a neighboring school district run it.

The deal reached March 2 allocates $4,000 for each current Highland Park student to be used for whatever school district they attend through the end of the school year. If the students stay at Highland Park, they will be taught by the same teachers in the same classrooms, said Terry Stanton, spokesman for the Michigan Department of Treasury.

“I'm confident we handled this in a way that ensures none of the money is going to go to the fiscally inept Highland Park School District,” said State Rep. Tom McMillin, R-Rochester, in an email. “We were not going to use state taxpayer money to bailout incompetence. The district leaders who were responsible for the mismanagement that created the crisis are the ones who will suffer the consequences. I expect many, if not most, of them will soon be unemployed. The kids, though, will now at least have a fighting chance.”

Highland Park had not been able to meet its payroll obligations three times this year, the latest being Feb. 24, said Sara Wurfel, spokeswoman for Gov. Rick Snyder.

The 969-student district previously received $4.2 million in the summer of 2011 as part of a hardship loan.

State policymakers will reform Michigan’s antiquated alcohol regulations this year if Gov. Rick Snyder adopts ideas submitted by a liquor reform advisory panel he created months ago.

Change is certainly needed; in particular, the state effectively grants monopolies to a few lucky private, for-profit beer and wine wholesalers. These regulatory privileges should be struck from state law in the name of fairness and competition.

A basic principle of economic theory is that competition — or the threat of competition — is good for consumers. Monopolies facing no such threat are generally bad.

In the strictest sense, a business monopoly is a single seller of goods or services. Most businesses find it difficult to maintain monopoly status in a system of rugged competition. As Nobel Memorial Prize-winning economist George Stigler has written, “Most important enduring monopolies … rest upon government policies.” Cable franchises and utilities come to mind.

Beer and wine wholesalers effectively possess monopolies because state law mandates that suppliers of beer and wine grant exclusive sales territories to wholesalers for the suppliers’ products. All retailers, such as liquor stores and bars, must buy their beer and wine from their area wholesaler. The result is a territorial monopoly.

You don’t need a Ph.D. in economics to understand what happens when firms obtain monopoly status: Prices rise and services suffer.

Consider just one example. In 2002, Northwest Airlines was busted for trucking beer and wine to Detroit Metro Airport instead of acquiring it through a Michigan wholesaler. According to the Detroit Free Press, Northwest reported it was saving up to $3 million per year by shipping the alcohol to the Great Lakes State, rather than buying it locally.

Now multiply this experience by the thousands of businesses licensed to sell at retail — and by their hundreds of thousands of customers — and you’ll understand the magnitude of what is effectively a state tax that benefits territorial beer-and-wine wholesale monopolies.

All of this might be acceptable if these wholesale monopolies somehow produced an overall increase in safety for Michiganders. The preponderance of the evidence, however, suggests that monopolies do not. Even state-operated monopolies on the wholesaling of all liquor products have not been shown to improve public safety.

Indeed, there is no statistically significant difference in alcohol-related fatalities, car crashes and binge drinking between states that monopolize liquor wholesaling and states that do not. While monopolies can discourage drinking through higher prices, they haven’t lowered the social costs of excessive drinking on balance.

For their part, beer and wine wholesalers typically blanch at the term “monopoly.” Mike Lashbrook, president of the Michigan Beer and Wine Wholesalers Association, recently disputed the term in The Saginaw News by arguing that there are many different beer and wine products to choose from on grocers’ shelves.

But this is like arguing that because there is a wide selection of items in a Meijer store, consumers won’t be hurt if Meijer is the only box store chain allowed to operate in Michigan. Obviously, Michigan consumers would suffer if Wal-Mart and similar wholesale-style retailers couldn’t compete with Meijer. Ultimately, many products can end up on retailers’ shelves while wholesalers still enjoy monopolies that jack up consumer prices.

Indeed, the state government also distorts the Michigan marketplace by acting as a monopolist wholesaler for stronger liquor products, such as whiskey. Recent Mackinac Center for Public Policy research suggests that nationwide, such state controls raise liquor prices by between 3 percent and 6.3 percent.

Granting effective monopoly status to a few lucky businesses — or to state government itself — is fundamentally unfair to Michigan consumers. It benefits a relative handful of wholesalers and makes our political institutions seem myopic.

Killing these wholesale regulations should be the first order of business for reforming Michigan’s alcohol control code this year.

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Michael D. LaFaive is director of the Morey Fiscal Policy Initiative at the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Mich. Permission to reprint in whole or in part is hereby granted, provided that the author and the Center are properly cited.