Tuesday, January 25, 2011

Privatization chances handicapped by experts

See that quote over to the right, from former PLCB chairman (1995-2002) John Jones? He's talking about Tom Ridge's attempt to privatize the PLCB in 1997, and why it didn't work: lack of support in the legislature and the public. Read it again:
"...there was [in 1997] no overarching passion within the General Assembly, or in the public at large, for privatization. Unless and until there is a general hue and cry, it is very unlikely there will be a privatization initiative that succeeds."
Jones and other former PLCB members are quoted at length in today's Scranton Times-Tribune, giving their impressions on the chances of privatization succeeding this time around. I found these quotes by Jones's predecessor, James A. Goodman, who served from 1987 to May 1995, to speak directly to Jones's previous statement.

"Since the system has been in existence, there have been bills in the Legislature" to privatize state-run liquor stores, Mr. Goodman told Times-Shamrock Newspapers on Monday. "But I would consider this to be the most serious threat for it to happen. You have the governor and you have the majority leader (state House Republican Majority Leader Mike Turzai, R-28, Pittsburgh) as the prime sponsor of the bill. That's a lot of juice. And you have newspapers ... editorializing in favor of it all over the state."
Don't think that means Goodman is in favor of privatization. He said he opposes it, apparently (the paper didn't quote him directly) because the system funds alcohol education and enforcement efforts. Well...given the problems we've had with enforcement efforts, maybe they could use some shaking up.

Here's something I just don't get. One of the arguments against privatization is brought up by John Reiley, who was the PLCB secretary for 29 years (WTF? Really?!): "One driving force behind the effort is "big business trying to latch onto those profits" that the state now sees through its monopoly on liquor sales, Mr. Reiley said." Well...yeah! That's what retail business does. It's called capitalism, and the profit motive, and that's the reigning model in the United States, has been since 1776. Supporting the PLCB against privatization is anti-business, plain and simple...which smacks of anti-Americanism.

One of the biggest balls of bull that's being batted around (on both sides of the debate) is the number on what the State might net by auctioning off liquor store and wholesale licenses (and real estate, and stock, and fixtures, and all that jazz). It's all either pie in the sky numbers from those in favor, or lowballs from those opposed (mostly the union, but also religious groups and anti-booze groups, who are really drinking the "control" Kool-Aid). We need real numbers; and the paper also has a report on a possiblity that the House will contract for an independent study on that. Good. We need real numbers.

Because this is important. Turzai is pushing to have a bill through the legislature by Memorial Day. To move that fast, we need real information, and we need real alternatives. My major issues with Turzai's legislation? Not enough licenses (we really ought to have at least 1,200, not 750), and not enough limits on who gets them (I really like the idea of no company getting more than three, but 10% is too many; and I'd really like to keep any current or former legislators out of ownership). And maybe some other stuff. Discuss!!!

Tuesday, January 18, 2011

A recent State Store experience

Forgot to tell you about this one. We had a nice bottle of wine back in the spring, an Alma Negra Bonarda Malbec, a dark Argentine red. It was so good I remembered it, and come December, when we were shopping for Christmas presents, I wanted to get a bottle for someone (and a couple for myself). I went to the State Store here in Newtown, and started looking.

No luck, so I whipped out the iPhone, and went to the PLCB's product search website to see if they even had it. They did, and when I drilled down further, I found that the local store (good old Store #0909!) had -- at that time -- 126 bottles of it. Couldn't find it in the Argentine section. So, against my better judgment, I asked a clerk. I'm looking for an Argentine Malbec called Alma Negra, I said (I'll admit my ignorance: I didn't know that Bonarda was a varietal. Malbec was all I recognized), could you help me find it? His very first words were "Oh, no, we don't have anything by that name." Very helpful!

Luckily, I still had the iPhone out, and I told him, Actually, the LCB website says you have 126 bottles of it! Maybe it's up front; it's a Chairman's Selection. And the guy says, "Oh, no, that's not a Chairman's Selection. We don't have any Argentine Malbecs as Chairman's." I was stunned, a bit, but rallied: Yes, it is, it says so right on your website. And I went towards the front of the store -- and almost tripped over the stuff. It was sitting in the middle of an aisle (among the domestics, far from the Argentina section...), four cases of it topped by an open case, with a Chairman's Selection sign on it.

Here it is, I said brightly, thanks! And he comes up, picks up the bottle, and points to the label, and says, "Oh, you see: it's a blend. It's not a Malbec." So I grinned, and said, You're right, I'm sorry. What else was I going to do? I was really, really sorry that I had to buy wine from people who clearly knew nothing about their stock -- and the guy's been working there for years -- and couldn't care less about helping a customer find a product.

See, this is why I grit my teeth when I read letters to the editor and comments on blogs where people talk about the wonderful service they get at the State Stores. Because while I'm sure there are at least some SS clerks out there who really want to help, and really know the products (there was a younger guy at #0909 who actually knew something about whiskey, although he was obnoxious about it), I have not had those kinds of experience. Cash register service? Just fine, no complaints. But advice? Guidance? Even common courtesy out in the aisles? You get better service at Home Depot.

And if this system went away, and we got private stores...I could just go somewhere else. But in PA? There's no point. And I'm literally forbidden by law to shop in New Jersey (and bring anything home, that is).

The Fight for Privatization Starts Today

Well. I've been silent, and I regret it...but I've been really busy (and, I'll admit, doing more on Facebook and Twitter than here, which was probably a mistake and all my blogs have suffered for it). Still and all...

Hot damn! We appear to have hit the election jackpot, if only in terms of the abolishment of The State Store System. It's been a wild time since election day. Here's what's happened.

                     Governor-elect Corbett (who is inaugurated today) confirmed that he is not only in favor of privatization, he's in favor of rapid privatization;
                     Senator Dominic Pileggi and Representative Mike Turzai both confirmed that privatization was at the top of the legislative agenda;
                     Turzai, who has the most comprehensive privatization legislation on the table, was elected House Majority Leader; Pileggi, who supports privatization, is Senate Majority Leader.
                     Almost every newspaper editorial staff in the state has come out in favor of privatization;
                     The groundhogs at the PLCB stuck their noses out into the harsh new light and decided that they didn't really need to put through that across-the-board price increase they'd told us they needed;
                     And...the wine kiosks blew up, and the PLCB finally had to admit there were problems and took them offline right in the middle of the holidays, possibly the biggest impulse-buy season for wine in the whole year.

Whew. It's enough to make a man weep for joy. But you know...it wasn't complete until Wendell W. Young IV (president of United Food and Commercial Workers Local 1776, the PLCB employees union) came out of his cave to shake his booga-booga stick and warn us of all the terrible things that will happen if we privatize.

That's how I knew this was serious. Okay, serious in a funny kind of way, because the only players in this whole spectacle that are goofier than WWY4 are the loonies at the Independent State Store Union, the union that represents the PLCB managers (is it just me, or is the idea of a union for managers just so indicative of what's wrong with this whole clusterf – er, mess?). They babble and hoot, and release their manifestos about the evils of alcohol and long hours at the State Stores (guys...if you don't like alcohol, maybe you should consider a different line of work?), and sound a lot like late-night AM radio preachers.

But WWY4 at least plays it a bit serious, trotting out scary (irrelevant and incorrect) numbers, savage (ad hominem) arguments, and managing to insult the motives of everyone in favor of privatization. You can tell it's going to be ugly – he's decided to call people who support privatization privateers, get it? Like pirates? If that's the way it's going to be, get me my letter of marque, and give me clear seaway, I'm after some prizes.

One of his biggest arguments is that the sale of the system -- which is really the sale of retail and wholesale licenses; the stores and two of the three warehouses are leased -- won't really raise $2 billion as Turzai claims. Over and over, he repeats (and so do his UFCW drones) that those licenses will cost $2.3 million if Turzai's going to get $2 billion, and that's going to shut out mom and pop stores, and big box stores will get a monopoly on liquor and wine sales in PA. 

Okay...first, I don't really care about the money. It's about getting rid of a ridiculous state retail monopoly that doesn't work. It's about service -- Joe "CEO" Conti was recently quoted in the New York Times as pleased that State Store employees “aren’t incentivized to sell”, and by God, he's right -- it's about selection, it's about this is ridiculous in 2011.

Turzai agrees. “The fact is, government is not private business. It simply cannot compete with private industry by pretending it is something that it is not. When it comes to the PLCB selling wine and spirits, we all need to ask: ‘Should Pennsylvania really be in the business of selling alcoholic beverages?’ How can the government agency charged with educating the public and regulating the industry, be in charge of maximizing sales of wine and spirits in the Commonwealth?”

But look. Say those licenses go for $400,000 each; not unreasonable, and a once-in-a-lifetime opportunity to get part of a former monopoly. The 620 stores we have now are not enough; you can see that by looking at other states (that have no better or worse a record with alcohol problems than Pennsylvania). So let's say a nice round thousand stores. That's still half as many -- proportionally -- as they have in New York, and the alcohol problem stats there are about the same as in PA. So, a thousand stores at $400,000 each is $400 million, plus 100 wholesale licenses is another $100 million. $500 million. It's not $2 billion. 

But instead of making them pieces of property -- like we did with tavern licenses, which is stupid -- make them non-transferable. The license is issued, and you have to pay a reasonably substantial fee every year to maintain it -- $10,000? $20,000? -- and if you sell the business...the new owner pays the state for the license. Not you. The state charges for the new license whatever the going rate was in the initial auction, plus inflation.

Don't want big box stores owning all the liquor licenses? Simple: Massachusetts says no one/no business can own more than a small number of liquor store licenses (can't remember if it's one or three off the top of my head); do that here. Why not, the 21st Amendment says we can! That keeps mom and pop in the running.

Here's one that Wendell and his minions trot out all the time, flash it by you fast so you don't think: 
"If the privateers do their homework, they'll see that selling the Wine and Spirits stores can't replace the nearly $500 million a year they generate for Pennsylvania taxpayers. And they'll see that selling the state stores would be a onetime money grab at the expense of an asset that generates reliable, growing revenues."
The Wine and Spirits stores don't generate nearly $500 million a year. They collect about $400 million in taxes; they 'generate' about $100 million in profits. The taxes -- not in exactly that form, but still about the same amount -- will be collected by private stores, and the loss we're currently experiencing in "border bleed" will likely go away, resulting in higher tax collections in-state. I mean, if Canal's opens a store in Fairless Hills, I'm not going to Jersey any more (which, by the way, means I won't be buying gas in Jersey, or lunch, or groceries while I'm at Canal's...)!

The point he brings up that's honest is about the union jobs that will be lost: over 4,000. That's what he's really concerned about, and he should be: that's what he's well-paid to do (about twice as much as Joe "CEO" Conti gets, BTW). I get that, but...those jobs should never have existed. The state should never have been in retail. A bad decision 75 years ago, and we should keep paying for it forever? 

No. Cut the payroll, cut the never-ending pension benefits (how many of you have a guaranteed-benefits pension? Know any retail clerks that do?), cut that all out. Give them help finding work (and Turzai's bill does that), and if they're any good at what they do, they should be able to easily find work in a new private system -- good-paying work, with their years of experience -- or even open a store themselves. But running this big a jobs program for unnecessary work makes no sense in 2011.

Wendell smears the motives of everyone in favor of privatization: we're all in it for money. As a citizen, I take that as a deep personal insult. I want nothing more than to be treated like an adult, to have the simple freedom of being able to buy something in a store 15 miles away and bring it home without fear of arrest, to be able to shop in my home state in a way I can currently only do in another. I want to support local business, not a government fossil.

Today is inauguration day. Privatization starts today.