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Legislation, Pennsylvania

State Stores Should Not Be Allowed to Compete If PA Liquor Stores Are Privatized

Governor Corbett has made the monopoly of the Commonwealth on liquor sales a signauture issue this year.  His plan to sell the state stores has signifciant public support, will raise immense amounts of money for the state budget, and would mark a fundamental shift toward a free market system.  All of these things are good.

House Majority Leader Mike Turzai, the prime sponsor of the bill, introduced the legislation last week and is optimitic it might get a vote this month.  The concept put forth in the new bill seems to be a compromise of sorts that would allow private companies to sell beer and wine in competition with the state stores.  The state stores will be unable to compete, the theory goes, and will go out of business as a result. 

Do you recognize this argument?  I sure do.  It’s the Obama-care debate all over again, but this time Republicans are on the wrong side of it.  One of the arguments against Obama-care was that the federal government proved it could not run any aspect of the health care system; and Medicare and Medicaid were offered as exhibits 1 and 2 of that argument.  At the time, Republicans correctly said that the government should not be permitted to expand further into the private sector because government was causing so many more problems than it was solving.  Many added that without the seemingly unlimited financial backing of the federal government the public system would have gone out of business long ago.

From there, the Democrats put forth the theory that there was no harm in introducing the components of the new Affordable Health Care Act into the market because it simply allowing for open competition.  The pivate sector would simply have to compete with the government.  Sounds right in theory.  But the theory doesn’t work and the Democrats had another idea that they did not share.

Competition between the private sector and any governmental entity generally does not work .  Ask yourself (and answer honestly): when was the last time the government cut a program that wasn’t working?  Because everything the government does is “too big to fail”, the answer is never.  Said another way, the government will never permit one of its business enterprises to fail.  Instead, it backs that enterprise with more financial weight than the biggest of banks.  The result is that the scales are tipped in favor of the governmental enterprise and there is no real competition.  In those circumstances, the market never gets a chance to work, government subsidies allow the state entity to stay afloat, and the impact on the citizen’s wallet is the same.  You pay the same amount in a different way:  taxes to support the state store and keep it open instead of high prices for the liquor itself. 

The Democrats know that Obama-care is the first step to their ultimate goal of single payor because private companies will not be able to compete.  When they get in trouble, they fail.  When the government-run program gets in trouble, the state just takes more in taxes or borrows what is needed to stay open.

By endorsing the idea of allowing state stores to compete, Republicans are failling into the same trap.  The government will not allow the state stores to fail if they stay open.  Instead, they will drain the state system further by needing subsidies that will increase from year to year when people go elsewhere to buy their beer and wine.  The outcome?  The taxpayers of Pennsylvania pay higher taxes to keep open a state store system that no one is using.  Oh, and the justification will be the loss of jobs of those in the state store system.

Here’s some advice for Pennsylvania Republican lawmakers and Governor Corbett.  Don’t fall into the trap.  If you are going to privatize the liquor stores, privatize them.  If you don’t have the political will to actually do it the right way, don’t bother.

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About Josh Quinter

I am a politcally active private practice attorney in Suburban Philadelphia.

Discussion

One thought on “State Stores Should Not Be Allowed to Compete If PA Liquor Stores Are Privatized

  1. The Philadelphia Inquirer has put out an interesting op-ed on this subject. You can read it at:

    http://articles.philly.com/2013-03-26/news/38043606_1_wine-and-liquor-state-liquor-liquor-control-board

    Posted by Josh Quinter | April 1, 2013, 9:52 am

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