Tuesday, August 26, 2014

The PLCB value to PA.

A fairly short look at another reason the PLCB is bad for consumers.

First we have to understand what "value" is. Value is not something defined by any organization but by the individual who decides to buy "X" instead of "Y." Does that $10 bottle of wine have more 'value' to you as an individual at this time then that NY Strip Steak? This time it may, next time it may not, depending on the scarcity and availability of the item or suitable substitutes. Value is not solely price-driven either, since for every purchase the consumer considers what they won't or can't buy if they do get the product under current consideration; be it that steak or a new car. You can see this individual idea of value in people who may have expensive shore homes with little furniture, driving a 10 year old car; or the opposite, with people who have an expensive car, but live in a place that needs more than just a fresh coat of paint.

Society also places value on things. Roads, Schools, Police, etc., etc. It also places value on labor. Obviously some skills are worth more to society than others, so their value is higher, and thus the compensation received is higher. One can get an idea of how society values a profession by the compensation given within that geographic region. But in Pennsylvania, alcohol retail labor prices are not bound by market forces, and are therefore not reflective of the scarcity or societal subjective valuations of such work.

The presence of extreme unionization further shows the manner in which wages and benefits have been manipulated to unsustainable levels, and how the State creates dependent constituents who will support the government entity because they alone benefit from it. What emerges is a wage rate and level of benefits that are not found in any other retail industry, supported and defended by a large workforce of unionized bureaucrats, who will fight privatization at all costs in order to protect their artificially high wages and benefits.

These artificially high wages and benefits lure workers to the PLCB. In effect, the high compensation tells potential workers, "This is where you are needed, there is a scarcity of this kind of worker and because of that we value you greatly". However, this is false because they are not brought about by market exchange and competition, but instead by government coercion, restrictions, and taxation. They mislead the worker, and draw them into the self-sustaining bureaucracy. If it were not for the PLCB with its artificially high compensation, these workers would've been drawn into other productive industries, where their wages would have indicated a true shortage/valuation of workers and would've been put to productive uses more highly valued by the consumer.

If you believe the PLCB is a worthwhile endeavor because it provides a revenue stream to the state, then these artificially high wages and benefits reduce that revenue stream, thus providing less benefit than if labor were priced at market rate . If you believe that the PLCB should not be selling retail or wholesale alcohol, then the artificially high wages and benefits cause prices to be higher than they otherwise would be along with limiting entrepreneurship, job creation, and competition . In either case the current labor structure is not optimum for the citizens except for the 0.04% of residents who work for the PLCB.

"No government enterprise can ever determine prices or costs or allocate factors or funds in a rational, welfare maximizing manner. No government enterprise can be established on a business basis even if the desire were present. Thus, any government operation injects a point of chaos into the economy, and since all markets are interconnected in the economy, every governmental activity disrupts and distorts pricing, the allocation of factors, consumption/investment ratios, etc." (Murray Rothbard - S.J. Hall Distinguished Professor of Economics, UNLV)

(I'd like to thank Joe Norton for his invaluable help with this article.)

17 comments:

Anonymous said...

Albert- Nicely done and on point.

Albert Brooks said...

Thank you, hope you liked some of the others too.

Anonymous said...

Even though state interference in Louisiana alcohol sales is minimal, I found a liquor store on Royal Street in New Orleans (which seems to be a very touristy and safe part of the city) with no self service! All items were kept behind the counter and were handled only by an attendant before being paid for! Now what would explain a private owner wanting to do that?

Also, in three states (New Jersey, South Dakota, and Florida) I've found supermarkets with a full selection of alcohol, yet all of it was kept in a room by itself, with cashiers requiring it to be paid for separately from all other items. What's up with that?

Albert Brooks said...

You should have asked them while you were there. I can't explain the decisions of an untold number of store owners. However, because they aren't run by some unqualified group of cube rats in the state capitol you did have the option of going somewhere else unlike in PA.

Geno Washington said...

In Newtown Square, Delaware County, the PLCB has two stores in the SAME shopping center! One is inside the Acme supermarket anchor, while the other is a much older store hidden in back of the rest of the center. What could possibly explain the need to have kept the old one open when the Acme one opened? I shopped at the older store for many years but switched to the Acme version when it opened, because for over a year I assumed that the older store had closed!

Also in the past decade, why did the PLCB do relocations of a number of older stores and yet the new stores weren't any bigger than the old ones? Many were relocated to larger stores with the then-new premium collection wines, but several were replaced by new stores that were just as minimal as the old ones. For example, both the old and new PLCB stores in Parkesburg (Chester County) were under 5,000 square feet. Same with the Woodlyn (Delaware County) store and its replacement in nearby Eddystone.

One other question I have for any of you: why has the PLCB felt the need to create the Fine Wine & Good Spirits concept? It seems to make the earlier breed of the "new and improved" PLCB stores (I'm thinking of the older premium collection stores) look out of date, even though some of them actually were quite nice as far as appearance is concerned, with artwork on the walls, etc. I think the new "fine good" stores as I call them are a huge step backwards. But it seemed that from 1990 to 2010, the new PLCB stores kept improving gradually. Of course the only true improvement would be privatization, but let's focus on modernization in this conversation.

Anonymous said...

I'm not really sure why you constantly take shots at Plcb store clerks. As I am one you continue to constantly offend people you don't know. I'm sorry if the clerks in your area are subpar but we are not all like that. Some of us work very hard and earn every cent of what we earn. We are nowhere near over payed. For just over 11 dollars an hour I must unload trucks at least 1 day a week (sometimes more) sometimes by myself of 300+ cases weighing up to 50 lbs. we stock shelves, clean, run registers take wine courses. We are always doing something and I have cashiered at other places and for 9 an hour just stood at a register. The Plcb is not like that. There is always something to do. While I understand your opinion on privatization I wish you could lay off us clerks and just stick to your fact findings!

Albert Brooks said...

Geno,

I've asked many times that you pose your questions on the Facebook page unless they pertain to the subject in the blog thread. Many more people will see it and you might get answers that I don't have. There are PLCB employees that read the FB page much more often than the blog and they may be able to give you some answers...or not, you never know with them.

Albert Brooks said...

Anonymous,

This piece isn't about if clerks are good, bad or otherwise. Nor if they work hard or not. It is about the value that society places on that kind of job in the free market. The PLCB and by extension the unions distort that value as explained in the article.

You can be the best ditch digger in the world but your value and place in society won't change very much until you learn to use a backhoe.

In other words, skills are rewarded but not in the PLCB. There is nowhere else you can go to put your skills to work and only limited openings usually based on seniority. This holds back those with new ideas, different ways of doing things and all the entrepreneurs that might have gone out on their own. There is nowhere to go and they aren't allowed to do it.

Going into management won't help because PLCB managers have no skills the real world wants. The hardest thing they do is make up a schedule. They aren't responsible for store layout, ordering is done by the cube rats in Harrisburg (for the most part), you can't change hours, you can't get new products on your own. you can't hire or fire. You are pretty much a drone with higher pay who knows they have no place they can go and so just hangs out for their 30.

Anonymous said...

As I do respect your opinion and in some parts agree. My issue is with you grouping us all together. I and many of my coworkers are good employees and so make income based on similar jobs. I worked in shipping and receiving making 14 an hour (less than I make now) and I do receive plenty of shipments. I stocked shelves at lowes for 11.30 an hour (just shy of what I make at Plcb). So that being said I do feel I and some of my coworkers make what we deserve. And if I stay with the Plcb (givin no privatization) I expect to be compensated for my time with them. As any good employee would expect after working with any company for long periods. All I ask of you is to not group us all together. Some of Plcb employees dont deserve half
Of what they make, but some of us deserve every cent!!

Albert Brooks said...

I'm not sure how you can say in one sentence that $14 an hour is less than what you make now and in the next sentence say $11.30 is about what you make at the PLCB. It can't be both.

Anonymous said...

I'm not exactly sure what your not understanding. I used to work at a job making 14 an hour and now I work at the Plcb making about 11.

Anonymous said...

I'm sorry. I just re read what I wrote. I meant to say I make less than 14.

Albert Brooks said...

I wasn't understanding how $14 could be "less than I make now" when you said you make about $11.30. It would make sense if you had said "I make less now" in your parenthetical statement.

We are both on the same page now though.

Anonymous said...

While you're idea of a private alcohol market in PA is almost in line with reality, the fact is we are under constant pressure to not only make sure that all sales are to legal aged, non-inebriated patrons, but also to legal aged patrons that aren't providing alcohol to minors . We face unemployment and legal action as a result of not fulfilling these duties. These responsibilities make it much harder on both minors and legal aged people to furnish alcohol to minor/drunk consumers. More than one person has been imprisoned by making a bad sales choice, but many more consumers have been stopped from completing such irresponsible acts by our "bureaucratic" policies. Please tell me that the clerk at you're local 7/11 or getgo would be so discerning. As far as pricing goes, the plcb is one of the nation's largest wholesalers of alcohol. Try looking at the prices of the east coast for comparison.

Anonymous said...

Sorry west cost... distracted by the pens game

Anonymous said...

Not to mention the fact that plcb has made what are the equivalent of millions of dollars in donations to the state, even at the behest is governor corbett, that where wholly for the good of the state. For a man so against this entity he is awfully shameless in asking for their help. Privatization is meant to put money into the pockets of those wealthy enough to obtain a liquor license, (which can cost upwards of 100g) while taking away any profit for the common PA resident. What private business owner contributes hundreds of thousands of dollars to the state, willingly?

Albert Brooks said...

Let's see how your statement holds up. Can a PLCB store be shut down because of minor age sales? No.

Can a PLCB manager or Board Member be held criminally responsible for the actions of their employees? No.

Can a PLCB store be fined for underage sales? No.

Can a PLCB member be fired for underage sales? Can it happen - yes, does it happen equally to the private sector - no.

Can a PLCB store be closed due to underage sales? No.

The private sector has far more to lose then anyone working in the public sector. They have to follow the laws.

As for being much harder for minors and legal age people to furnish alcohol - you obviously didn't give that statement much thought. There is no proof whatsoever that state store clerks do a better job than private store clerks. Why? Because the state stores are NEVER CHECKED. In states that did check their state stores for underage sales private stores perform within 1-2% after privatization. PA has no such baseline for comparison once we are rid of the current system.

The PLCB has no more enforcement of adults selling or giving alcohol to minors than any other state. Besides reporting what they can see out the store window there are no undercover PLCB employees trying to trap teens into buying alcohol. Your statement is ludicrous.

So lets look at the prices of the west coast. Washington has the highest taxes in the nation and Oregon is second. Are you claiming that the PLCB prevents the legislature from raising taxes? How about we look at California. How well do you think the PLCB would do compared to private stores there? After all they don' that that buying power the PLCB has to get the best deal. Take a look at the top 10 sellers.

1 Captain Morgan 750ml
PA - $16.99 CA- $12.99
2 Jack Daniel’s 750ml
PA - $23.99, CA $16.99
CA doesn't sell Nikoli (#3) or Vladimir (#4) or Jacquins (#6) vodka but does have crap vodka for less.
5 J├Ągermeister Liqueur 750ml
PA $19.99, CA $15.99
7 Captain Morgan 1.75L
PA $30.99, CA $19.99

PA continues to lose compared to the private market. Does Ca have lower taxes, sure but not enough to make up for the differences in price.

For a $2.2Billion dollar business donating 1% of sales is rather meager compared to other businesses of that size. Total Wine donates more and they are smaller, Southern Wine donates more and they are larger just to keep it in the industry.

BTW, the PLCB didn't "donate" anything to the state at the behest of the governor. They had a legal requirement to pay the amount but they did pay it early.

Liquor licenses in PA can already cost over $100,000 and that too is because of the PLCB regulations. Oligopolistic distributor limitations, not allowing licenses within proximity to other licensed establishments thus limiting entertainment and dining choices.However, if you had been keeping up you would see that no proposal for a liquor store license ever got close to $100,000 - it is just some number you made up.

The PLCB doesn't contribute anything willingly, it is required by law and we already covered charity which shows that a number of businesses contribute to the state willingly and in greater amounts.

The PLCB is not the cash cow but a cow turd stinking up the state with its 1930's existence.