The Art of Wort

One day when I was indulging in some paranoid cynicism concerning assaults on the three-tier system I asked myself, if the King of Wu commanded Sun Tzu to tear down the three-tier system, what would Sun Tzu do? I am not an expert on three-tier legal issues or military strategy, and I don’t have the stake in the three-tier system my clients do, yet the question hooked me.

So I bought myself a copy of Sun Tzu on The Art of War The Oldest Military Treatise in the World by Lionel Giles, M.A. Giles’ work is much more than a translation of Sun Tzu. It contains strategy from other military notables and is a kind of Chinese cultural examination. It kindled my desire to explore the question further.

The Art of War begins, “War is a matter of vital importance to the state. It is a matter of life and death, survival or ruin.” As such, Sun Tzu cautions that, “He who wishes to fight must count the cost.” In the context of a war on the three-tier system these vital precepts present two basic questions. First, who might want to demolish the three-tier system, and second, what would be (or could be) the cost to those who chose to attack.

There are probably a fair number of interests that might seek to ruin the three-tier system. However, a short list would have to include free-market purists, retailers and suppliers. Note these are potential three-tier enemies considered in the context of a hypothetical question. Some of these groups are more likely antagonists than others, and some would be more dangerous adversaries if they chose to beset the three-tier system.

Free market purists would, in all likelihood, support the elimination of the three-tier system. If an anti-regulation stance is at the core of your philosophy, you aren’t going to be a fan of a mandated middle-tier and a host of other important three-tier regulations. Free market purists are individuals who would be inclined to label the businesses constituting the middle-tier as “middle men”. And they are people who willfully ignore ugly historical realities while advocating an absolutist free market approach to anything and everything.

These three-tier antagonists are ideologically driven. As such, they would attempt to lay claim to what Sun Tzu believed was the most important of his five fundamental factors for success in war, “moral influence”. However, their claim to social and economic morality would be strained. Their arguments would be appealing in the abstract but ridiculous in the context of reality.

Interestingly, what some Art of War translations refer to as “moral influence” others refer to as “politics”. Those that use the term politics note that for Sun Tzu “politics is what causes the people to be in harmony with their ruler”. Fortunately, we live in a representative democracy and we don’t have a ruler. Instead we have the rule of law. I am confident the American people believe and will continue to believe alcohol regulations are necessary. The American people will always reject a purely laissez-faire approach to the manufacture, sale and distribution of alcohol – if the proper counter arguments are made.

Free market purists exist and they are clearly not supporters of the three-tier system, but they do not strike me as a significant threat. Their strained ideological arguments can be thwarted with solid factual counter-arguments. They are vocal but they are not numerous. Additionally, economic ideology by itself is typically not enough to muster the resources required for victory. An economic incentive is typically required. Further, their style is not consistent with the strategies of Sun Tzu. Their opposition is forthright. They have absolute faith in their world view, so their assaults are transparent. And this is not what Sun Tzu would do.

I’m going to go out on a limb and suggest that at least one individual at Costco is a student of Sun Tzu. A review of the Costco saga suggests a cognizance of Sun Tzu’s statement that “Those skilled in war bring the enemy to battle. They are not brought by him.” And impressively, they found a way to use the court system to do as Sun Tzu instructed, that is, “forage on your enemy”.

It is now abundantly clear certain retailers are a genuine threat to the three-tier system, and despite representations to the contrary they clearly have an economic incentive to see the system dismantled. Of course, retailers are a highly diverse collection of business entities and their attitudes towards the three-tier system are equally diverse. Some would like to preserve it as is. Some would encourage modifications. Some are ambivalent. And a few do not care for it – at all.

The good news is the retailers who value the three-tier system likely far outnumber those who do not. The bad news is those who do not value it are very powerful and their ranks may grow over time. It is essential that those who value the three-tier system do not mistake a retailer’s favorable disposition towards DSD (direct-store-delivery) for support of three-tier regulations. One is a sales and service methodology. The other is a legal framework. The former does not require the latter. It is entirely conceivable that some large retailers might seek to eliminate three-tier regulations while simultaneously demanding more DSD services.

The last of the possible three-tier adversaries on my short list is suppliers. Suppliers could be the most dangerous potential adversary of the three-tier system. Please note I say possible, could be and potential. This is the most profitable market in the world, so if certain suppliers were to attack the system, then those suppliers would be wise to do as Sun Tzu commanded and “count the cost”.

Certainly, I am not the first individual to consider that the superpowers of alcoholic beverages are global entities and that in the preponderance of their markets their direct control over the distribution and sale of their beverages is not encumbered by a three-tier system. Elsewhere they can exercise control over the process from beginning to end. The notion that one such supplier might decide to end their support of the three-tier system in favor of their own corporate interests is not inconceivable. If that day comes and if the teachings of Sun Tzu were followed, the attack would be upon the middle-tier, and the aggression would look nothing like the undisguised aggression of the free market purists.

Any effort to subjugate the three-tier system conceived by Sun Tzu would not begin with a massive violent assault. Sun Tzu would first attempt to win without fighting. Then if fighting was necessary he would seek to preserve the value of the market. His campaign against America’s three-tier system and its middle-tier would not include a scorched earth policy.

Sun Tzu wrote, “Generally, in war the best policy is to take a state intact; to ruin it is inferior to this. To capture the enemy’s entire army is better than to destroy it… For to win 100 victories in 100 battles is not the acme of skill. To subdue the enemy without fighting is the supreme excellence.” A sovereign superpower supplier would not want to ruin the world’s most profitable market. The sovereign would want to capture the market’s bounty for itself. To achieve this end Sun Tzu would employ the skillful use of “deception, wisdom, and strength”.

Sun Tzu said, “In war, practice dissimulation, and you will succeed.” The ancient Chinese general believed “The whole secret lies in confusing the enemy, so that he cannot fathom our real intent.” Reading these statements I can’t help but think of ABI’s non-existent branch policy and MillerCoors’ three-tier doctrine (CARE Lite – great words, less binding). If the sovereign commanded that Sun Tzu bring down the three-tier system, that intension would not be announced. Sun Tzu would instruct the sovereign to continue professing their support of the three-tier system while they sought to undermine it.

It is worth noting that Sun Tzu did not believe every order of the sovereign should be obeyed. Art of War states, “It is essential for victory that generals are unconstrained by their leaders.” If fighting is sure to result in victory, then you must fight, even though the ruler forbids it; if fighting will not result in victory, then you must not fight even at the ruler’s bidding.” The legendary story of the concubines merits reflection.

Wisdom would suggest a patient approach designed to dissipate the adversary’s strength. Sun Tzu would attempt to “Reduce the hostile chiefs by inflicting damage on them” and “foment intrigue and deceit” among his adversaries and their allies.

If there had to be fighting Sun Tzu would conceal his strategy and objectives. Sun Tzu instructed, “In battle, use a direct attack to engage and an indirect attack to win.” Sun Tzu would “avoid what is strong” and “attack what is weak.” He would force his opponent to reveal himself, so as to find out his vulnerabilities. He would “make you prepare on your left so you would be weak on your right.” I fear the middle-tier might readily fall victim to such tactics.

Lionel Giles’ book had a couple powerful quotes that were not from Sun Tzu. One quote from Frederick the Great’s Instructions to His Generals states, “A defensive war is apt to betray us into too frequent detachment. Those generals who have had but little experience attempt to protect every point, while those who are better acquainted with their profession, having only the capital object in view, guard against a decisive blow.” Another quote attributed to Col. Henderson suggests The highest generalship is to compel the enemy to disperse his army, and then to concentrate superior force against each fraction in turn.

Reading these passages I found myself wondering if these ideas are not something the defenders of the middle-tier should consider. My perception is the middle-tier’s defenders feel every battle must be fought. No protection can be left undefended. The logic being that if X happens, then Y is sure to follow. For example, allowing small brewer self-distribution is a slippery slope [Personally, I’d trade limited self distribution for a stronger franchise law in a heartbeat but that’s another discussion]. Hearing these arguments in the past I’ve quietly thought to myself, they must know the slippery slope argument is on just about every list of logical fallacies ever compiled. Now I know it isn’t just a logical issue. It’s a strategic issue. I find myself wondering what dispensable fortifications are depleting resources from essential protections. I find myself contemplating Sun Tzu’s statement that, “The winning army realizes the conditions for victory first, then fights. The losing army fights first, then seeks victory.

Sun Tzu writes much about the importance of ground. Sun Tzu says, “How to make the best of both strong and weak—that is a question involving the proper use of ground.” “Therefore, the skillful commander takes up a position in which he cannot be defeated…” Laws and regulations could be considered the analog of ground in the context of a war against the three-tier system. Some of these laws and regulations, like “narrow passes”, are easily defended. Others are not easily defended. Rushing to their defense could be as imprudent as marching to battle in a quagmire.

Those who would preserve the middle-tier should consider the question of when and where to fight and with whom they intend to fight. Several of Sun Tzu teachings should be considered:

  • You cannot enter into alliances until you are acquainted with the designs of your neighbors.
  • When the enemy has made a plan of attack against you, you must anticipate the enemy by delivering your own attack first.
  • You will not succeed unless your men have tenacity and unity of purpose, and, above all, a spirit of sympathetic cooperation.
  • On desperate ground fight… If you fight with all your might, there is a chance of life; whereas death is certain if you cling to your corner.”Art of War states, “To move your enemy, entice him with something he is certain to take.” “[H]old out specious allurements and make them rush to any given point. By holding out advantages to him, he can cause the enemy to approach of his own accord; or, by inflicting damage, he can make it impossible for the enemy to draw near.” I worry that vague representations and non-enduring commitments will be sufficient bait for the defenders. I fret over the defenders swallowing the bait, becoming infirmed and compromising their defenses.But these wild thoughts are probably no big deal. I don’t worry about such things every day; only on my more cynical days.
  • In addition to Lionel Giles’ book, Sun Tzu on The Art of War The Oldest Military Treatise in the World, I also utilized a History Channel program title Art of War and this translation of Sun Tzu from the Brooklyn College website.
  • Sometimes I consider the possibility that the three-tier system’s enemies are masters of Sun Tzu. I contemplate the notion that their plans are already underway. I wonder if they are executing a strategy consistent with Sun Tzu’s recommendations; “Let your plans be as dark as night—Then strike like a thunderbolt.” I wonder if they are already charting a patient methodical course designed to minimize the duration of any conflict because they understand “No nation has ever benefited from prolonged war.” I worry that a plot is slowly unfolding and when it is revealed the ending will come swiftly. Sun Tzu says, “When a falcon’s strike breaks the body of its prey, it is because of timing” and ‘When torrential water tosses boulders, it is because of momentum.”
  • Among my cynical concerns is the notion that those not truly committed to the three-tier system are more versed in the teachings of Sun Tzu than those who would defend the system. I fear those who might dismantle the three-tier system appreciate Sun Tzu’s use of bait.

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