Government Monopolies Even Liberals Can't Love

In a post yesterday, I said that it would be absurd for the federal government to produce its own brand of cola, not because doing so would make us all less free, but because there's just no need. Well lo and behold, today I find out that the state of Pennsylvania, where I used to live, has its own brand of mediocre wine, called Table Leaf. It's manufactured by a winery in California, but sold through state-owned Pennsylvania liquor stores. Does that seem nuts? Well, it starts to make sense when you recall that in Pennsylvania, the state has a virtual monopoly on liquor sales through the stores run by the Liquor Control Board. So in addition to making it incredibly inconvenient for you to buy a bottle of wine or other booze, they also are able to market their own house brand (at apparently inflated prices). In the decade I lived in the state, I never met a single person who thought the state monopoly wasn't ridiculous (polls show support for privatization to be strong, albeit not universal).

As the National Journal writes today, Tom Corbett, the highly unpopular governor there, might be able to save his political skin with an effort to privatize liquor sales. Last week the state House passed a privatization bill, though the outcome in the Senate is uncertain. Why I find so puzzling is that every Democrat in the House voted against it. It isn't as though a state liquor monopoly provides some essential service like health care that liberals feel everyone needs to be guaranteed, or that the private market has proven to be unable to satisfy consumers' liquor needs. Yes, there are government jobs at state stores that would be lost if the system were privatized, which is why unions are opposed, but there's only so far you can go in defending a system that is almost impossible to justify on any broader conception of the public good.

But as one longtime Philadelphia columnist told me, when you combine the unions' opposition and the fact that Democrats just hate Tom Corbett and aren't inclined to support anything he's pushing, that's enough to keep their opposition solid. There are also some other interests at stake. There have been allegations of corruption at the LCB, and one Philadelphian with good knowledge of the liquor situation whom I contacted points to another small but powerful constituency that likes the system as it is: "The powerful and connected cabal of top-shelf restaurateurs. They can get Special List Offering (SLO) wines, which we the public can't get in State Stores. Take away Steven Starr's and Jose Garces' monopoly on serving non-state store wines, then the strong BYOB movement in Philly becomes a tsunami."

So let it not be said that I'm a knee-jerk ideologue who'll just accept whatever passes for the left position on any issue that comes up. I still think there are places where markets don't work as they should, and government has a right and an obligation to step in. But when it comes to the distribution of alcohol, the free market (properly regulated, of course) can almost certainly do it better, even if in this case it's the Republicans who are pushing privatization.


I must say, I didn't realize that Table Leaf was a PLCB private label, but I'm glad that I've never bought any.
That said, let me add a couple dimensions from here on the ground: Nobody, especially not the GOP, is offering a plan to simply allow (normally regulated) liquor sales in PA similar to what you might find in other states*. Instead, it's always some sort of giveaway to private interests, usually coupled with a bad deal for tax payers and/or users of state services. For example, the House-passed bill keeps state stores in sparsely-populated areas (so the PLCB is a provider of a public good?), gives existing beer distributors a 90% discount on purchasing licenses to sell wine and liquor (because why not reward people who've already gotten rich thanks to a government monopoly?), and uses the funds raised by the transition to make a one-time payment to school districts that have been consistently screwed by Corbett's hard-right budgeting. So the Rube Goldberg system remains in place, entrenched interests benefit first, and Corbett tries to paper over his draconian education cuts just in time for his reelection campaign. Union workers aside, can you see why this doesn't appeal to PA Dems?
A couple other notes: the system has persisted as long as it has due to support from unions on one side and moralists on the other. Needless to say, said moralists are well-represented on the right side of the aisle, and it's typical for privatization bills to continue the most stifling restrictions on liquor sales. If private liquor sales simply means paying the same prices at the same, limited number of stores during the same, limited hours, with the main difference being that the boss gets a bigger cut while the workers get less, then why should I support it? Also, there's a broad assumption/misperception that PA prices are significantly inflated due to the system. IME, this is false: when I travel out of state, I often stop at liquor stores in hopes of bringing back bargains, but it's rare that I find any; hard liquor, in particular, is generally much cheaper in PA than in NJ, MD, or OH. The main savings I see are from case discounts, which PA frustratingly won't match. There are, of course, states with cheaper alcohol, but those are states with lower taxes, not the Magic Of The Market. It's probably is worth mentioning that the PLCB is pretty good about keeping its stores away from skid row locations; it doesn't justify the whole system, but it's probably a social good on the whole (paternalistic as it may be).
In sum: Dems rarely offer privatization bills because they see more downside from union anger than upside from voter support. The GOP never offers privatization bills that deserve Dem support (from officials or voters) because, well, the GOP doesn't share our values. A Dem privatization plan (say, one that required union workers at all liquor outlets) would get just as many GOP votes as GOP plans get from Dems.
And yes, PA citizens get screwed.

*I'd note here that, near as I can tell, there are states that hardly regulate at all, like Texas, and there are all the other states, each of which has some goofy rules about who can sell what kind of alcohol when. PA's rules are goofier than most, but how many states require supermarkets to sell alcohol through separate ministores?

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