Let's get out of the alcohol business
Last year, my husband and I traveled to Hong Kong on business. When we walked into a little grocery store, we found shelves stocked with wine, champagne and other alcoholic beverages. "China is more free than Pennsylvania!" I joked.
Indeed, for those who have spent much of their life in Pennsylvania, driving to a state store for wine and a distributor for beer might seem normal. But for those who have lived in other states, Pennsylvania's control of alcohol seems draconian and just plain odd.
A March 30 article in The Economist concludes of Pennsylvania, "Because of antiquated and peculiar laws, buying alcohol in the state is not easy." The author notes that state stores close early and aren't open Sundays, that Pennsylvanians can only buy beer in cases, and that it is illegal to ship wine home from out-of-state wineries. The author argues that the state-owned liquor stores place Pennsylvania in the "dubious position of regulating as well as promoting alcohol sales."
Pennsylvania's control of liquor dates back to the repeal of Prohibition. It seems that some Pennsylvanians weren't very fond of the 21st Amendment, which decriminalized the consumption of alcohol. They sought to create a state system of pseudo-Prohibition. Gov. Gifford Pinchot, a Prohibitionist, predicted that the Pennsylvania Liquor Control Board would "discourage the purchase of alcoholic beverages by making it as inconvenient and expensive as possible,'' and claimed to have created "the best system of liquor control yet devised in America.''
Accordingly, many of the arguments in favor of state-run liquor stores involve the regulation of people's behaviors. The evidence on the effectiveness of such controls is mixed, at best. Pennsylvania's alcohol consumption and alcohol-related incidents do not appear to be lower than our less-regulated neighbors. Yet, even if government monopolies are effective at controlling behavior, is this an appropriate state function? If so, why not have state stores for cigarettes, weapons or fast food? Perhaps we could have state stores for gasoline sales in order to reduce fuel consumption. Why stop at alcohol?
The state had no business getting into the alcohol business in the first place. Yet once this system was in place, arguments for unraveling it tended to focus on the consequences of shutting down the enormous operation, rather than on the proper role of government in society. Recently, opponents to proposed reforms identify two main consequences: loss of jobs and loss of state revenue.
It is clear that the closing of state liquor stores will result in some immediate job loss. While I am genuinely sympathetic to those who will be affected, I also don't believe that this is a legitimate argument for continuing a state-run enterprise that could be more effectively managed in a private market. There are times when government should be scaled back, and this will almost always result in some job loss. The same is true of cuts to the military budget or state cuts to higher education. In this case, some of the lost jobs will be replaced by growth in the private sector, as retailers see greater profits from alcohol sales. Yet again, the principle here is important. The state could always provide more jobs by assuming responsibilities that belong to the private sector. That doesn't mean it should. In fact, the less efficient the state is, the more jobs it provides.
Second, opponents to liquor privatization argue that the state will lose the significant revenue produced by state stores. Again, the evidence here appears to be mixed. The losses will be offset by the initial sale of licenses and by the state tax on alcohol, which currently makes up a large share of the Liquor Control Board's profits. Additionally, if the state liquor stores are generating great profits, perhaps they are doing so at the expense of the consumers. But again, I have to ask the philosophical question: Couldn't the state earn revenue by commandeering and monopolizing any commodity? Does the opportunity to produce revenue provide a legitimate rationale for state ownership of a business or enterprise?
Additionally, privatization has the potential to keep more revenue in the state. The South Jersey Times recently ran a story about the negative effect that Pennsylvania liquor privatization would have on alcohol sales -- in New Jersey. According to a survey by the Pennsylvania Liquor Control Board, 45 percent of consumers in the Philadelphia area cross the border to purchase alcohol, resulting in the loss of millions of dollars in taxes every year. This alone is a good indication that our current system isn't meeting consumer needs, nor is it curtailing consumption. Consumers are actually willing to break the law to avoid the Pennsylvania state store.
After Prohibition, many states adopted controls on alcohol sales. Slowly, these are being scaled back. Now, only Pennsylvania and Utah exercise complete state monopolies on liquor and wine sales. None of the other states that have moved to privatization have suffered the type of moral decay and financial calamity that alarmists warn will befall Pennsylvania if we finally move out of the Prohibition era.
April Kelly-Woessner is an associate professor and chairwoman of the political science department at Elizabethtown College. She is also a correspondent for Lancaster Newspapers Inc. Email her at email@example.com.