The guys at Freakonomics have always struck me as a bit too quick to jump on the anti-alcohol wagon; sure, there are valid points to be made for the social costs of alcohol abuse, but the numbers that are out there would really benefit from a closer look. But this piece was handled more fairly, I thought, even though the big quote from the Herzenberg study overweighted things a bit.
Thing is, as the comments pointed out, the whole argument that privatization increases consumption is quite likely a flawed one, based on questionable methodology: "retail purchase" is a reliable substitute for "consumption." That sounds okay, till you consider how many Pennsylvanians cross the Delaware, Maryland, and New Jersey borders to buy caselots of booze. Look, if my DAD did it, I know plenty of other Pennsylvanians are doing it. Hell, I'm in Kentucky right now, and I have four bottles of bourbon that I can't get in PA in the car (Old Fitz BiB, Heaven Hill 6 Year Old BiB, and Charter 101 (the 4th is a surprise for someone, but trust me: it's not available in PA!); I'm planning on giving them all away before I return to PA, though...).
It doesn't even pass the "straight face test," to use a popular Washington phrase. If consumption in these newly privatized states and provinces were really up by 48%...where's the corresponding increase in alcohol-related problems? Because there is none. We're being sold a sack of crap again.