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Why PA’s Liquor Stores Need To Be Privatized

Commentary
related FREINDLY FIRE

 

By Christopher Freind

Part 1 of 2 on the state’s liquor battle

(CNBNews.net) In 2010, Governor Tom Corbett was elected by a wide margin, in large part because of his Doc515b8970bd761495372278 insistence that the state-controlled liquor system be privatized --- an issue on which he was absolutely correct.  Despite that being a cornerstone of his campaign, nothing was accomplished during his first two years, even though he enjoyed historic Republican majorities in both legislative chambers.  

Since privatizing liquor is one of the few issues that enjoys a large consensus, it’s baffling why it took so long for the Republicans to put forth a plan. Now they have finally done so, yet it’s so ill-conceived that state-store union employees are punch-drunk with elation --- but that’s for tomorrow’s column.

For now, though, it’s important to realize why privatization is so long overdue.

*****

Sometimes the grass really is greener elsewhere. For Pennsylvanians, that “green” is all the money saved by consumers in other states because they aren’t gouged when buying alcohol.  

For the uninitiated, here is a primer for how Pennsylvania’s alcohol monopoly works:

Pennsylvania is the largest purchaser of booze in the country.  The state government, through the Liquor Control Board (LCB), controls the purchase, distribution and sale of all wine and liquor.  You might think that with such immense clout, we would have outstanding selection and competitive pricing.  But as we all know, that’s clearly not the case. 

Interestingly, the LCB is charged with two distinct, and inherently contradictory, roles.  While it is responsible for raising revenue through the sale of wine and liquor, it is also charged with controlling the sale of booze throughout Pennsylvania.  By definition, if the LCB is succeeding at one, it must be failing at the other.

The major reason why alcohol is so expensive is courtesy of an 18 percent "temporary" tax. So a $10 bottle jumps to $11.80 --- and that’s before the 6 percent sales tax is calculated, making Pennsylvania inherently uncompetitive.  But since it’s a government monopoly, the bureaucrats don’t care. Oh, and why the 18 percent levy? To rebuild Johnstown after its second flood.

 Which occurred in 1936.  So much for “temporary.”  

Anyone traveling outside Pennsylvania knows how refreshing it is to enter a grocery store, and, remembering you need a bottle of wine, browse the plethora of vino at your fingertips. Since others accomplish this feat with little difficulty, it’s incomprehensible that the nation’s sixth largest state can’t--- or, more accurately, won’t --- do the same.

It is infinitely more efficient when a private company, responsive to the needs of the free market (instead of bureaucrats), stocks its shelves with items that consumers actually want, at a fair market price.  That’s the core principle on which America was founded.

But Pennsylvania remains stuck in the Dark Ages, choosing to remain there. It hasn't dawned on the politicos that they are losing untold revenue because of their Draconian system, as millions cross state lines to fill their liquor cabinets.  

And despite the Interstate Commerce Clause, if you are caught bringing alcohol into Pennsylvania, it’s a criminal offense.  In fact, such "criminals" used to have their cars confiscated for doing so. 

To be fair, today's LCB has made substantial progress. Not too long ago, customers had to place their orders at the counter, since browsing was not permitted.  The clerk would disappear into the bowels of the store, only to return ten minutes later, more often than not stating that they were "out of stock" and asking for another choice.  Now imagine that scene at Christmas, with 30 people in line. 

But that's not all.

Nothing was chilled. No ancillary items such as tonic water were sold. No employees were permitted to offer advice.  And credit cards were not accepted.   

And all this because former Governor Gifford Pinchot, who as a young man became violently sick while imbibing overseas, became determined to make alcohol as difficult as possible to obtain.  

But the LCB's improvements amount to being valedictorian of summer school.  The whole system has to be scrapped.

The ultimate irony is that the Keystone State, birthplace of American democracy and cradle of liberty, continues down the path of state control and government regulation, to the detriment of its twelve million citizens.  

So what are chances for true liquor privatization? Tune in tomorrow, but get a drink. You’ll need it.

Chris Freind is an independent commentator who operates FreindlyFireZone.com. He can be reached at CF@FreindlyFireZone.com 

 

READ PART TWO

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