I was down below the Maryland border a few months back and, on a lark, stopped in one of the many liquor stores that dot the landscape. Basically, I wanted to see how prices there stacked up to prices here; and in general, I found them to be comparable to what I might find in the local state store, or my friendly neighborhood beer distributor. A buck more here, a buck less there, etc.
But, among other things, I saw that they had Almaden’s Pinot Grigio in a five-liter box, for about $19. Hm. I know some folks who drink Pinot Grigio (not me, I’m strictly red), but in the Lancaster County state stores I haunt, you can’t get the five-liter Almaden box. You can get other brands in a three-liter box, for $18 (if it happens to be on sale).
Yeah, on the occasions I buy this particular wine, I’d love to get two more liters for a buck more. So next time I bought booze up here, I asked the guy behind the counter – do state stores stock this? His answer: No.
And I thought: Well, there’s an argument for privatization right there.
Gov. Tom Corbett unveiled his privatization plan yesterday; he becomes the latest Pennsylvania governor to tackle our state store system, the great relic of prohibition:
Under his plan, the state’s 600 state-owned liquor stores would be shut down, with about 1,200 wine and spirit licenses auctioned off and separate licenses available for supermarkets, convenience stores and big-box retailers.
Supermarkets and big-box retailers, such as WalMarts, could sell beer and wine and convenience stores beer, giving what Corbett said would be expanded choice and convenience for consumers.
I’m of two minds about privatization. I’m convinced Corbett is pursuing it for ideological as well as practical reasons. Conservatives want to shrink the size of government and stick it to unions. If you can shrink the size of government by sticking it to unions – all the better, from the right’s point of view.
Interesting point made over at NewsLanc as well:
There are perhaps a hundred million dollars in studies, legal fees, financing earnings, real estate commissions (State Stores must be sold or sub-leased) involved in privatization of the State Stores. Professionals who would sell their services circle as hungry wolves surround an old moose, salivating over the anticipated kill.
Corbett touts the revenue Pennsylvania would generate from privatization, but what would be the cost to the state – of the studies, of the legal fees, etc.?
And the jobs Corbett would eliminate are good jobs – jobs that can support families. Yes, they’re government jobs; but this particular branch of government more than pays for itself.
If the system ain’t broke, as they say.
And yet… while the system ain’t broke, it could operate more efficiently. Why must you or I remain constrained in our ability to buy wine before noon on a Sunday? Why shouldn’t beer and wine available at more outlets? The PLCB’s economy of scale means small local wineries have a hard time breaking into state stores. And what if I want something – like that five-liter box of Pinot Grigio – the PLCB simply doesn’t stock?
Here’s a thought, then. Instead of scrapping the state store system – simply end its monopoly.
Instead of scrapping the 600 state stores and issuing 1,200 new licenses – keep the state stores, and sell 600 new licenses.
Let the new licensees compete against the existing system. Which may sound daunting at first glance – who could compete with the state! The PLCB buys in such volume they’ve got a price advantage!
Right. But the state is also at a disadvantage due to labor and other costs. Which is why the price of booze is often less down in Maryland, even at smaller stores.
The PLCB would still issue the licenses and collect the revenue. If sales at existing state stores drop, the volume and revenue is made up at the new outlets. Pennsylvania, it seems to me, could do this now without having to sacrifice a single liquor store job, at least for now.
And if the existing system wants to compete, it would have to find a way to expand selection, offer more convenient hours, cut labor costs. But here the union could at least have a say in these decisions, rather than simply being pink-slipped by Corbett.
Ultimately, in theory, a streamlined state store system could crowd out private enterprise. In reality – it’s government. So no, it’s probably never going to be as ruthlessly efficient as the private sector (and I don’t really think it should be). It will always be at a certain disadvantage, even while retaining other advantages.
Actual competition would be possible.
Just a thought, anyway. Our battle lines are pretty set on this issue, so I’m not sure what to expect out of this latest assault. Like many consumes, I’d personally like more choices. But I don’t think a win for consumers requires scrapping a system that does work, if not as well as it could.