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.)

30 years of progress – You’re kidding right?

The PLCB's "Store in a store" modernization idea: 
the Future through (the failures of) the Past

In the early 1980s the PLCB first came up with the idea of putting a State Store inside a real regular store. Boscov’s in Wilkes Barre and Joseph Horne Co., Pittsburgh were the two selected. It didn’t last as the Wilkes-Barre Store closed in late 1991 and the Pittsburgh one in 1993.

However, like most bad ideas that occur to the PLCB, the concept wouldn’t die, and on December 23, 2003 the PLCB started the first State Store inside a grocery store as part of the “modernization” of that time. Some of them are still around. The PLCB has managed to place about 16 stores within stores in over ten years of trying to convince grocery store owners of the value of this concept (and kept them in longer than the wine kiosks, but that's not saying much).

So here we are, 30 years after the original concept, ten years after the second attempt...and this kludgey idea is part of the PLCB's “modernization” plan. Thousands of grocery and retail stores ain’t buying it, and after 30 years of trying, at the rate the PLCB is getting stores in stores, it will take over 110 years to get up to just 10% of the state stores being 'more convenient' (unless they close more stores as they have been, that will make 10% easier to hit!), if you define 'convenient' as being able to walk into a different store and make a separate purchase.

Einstein's widely misquoted as saying that insanity is doing the same thing over and over again and expecting different results. No matter who actually said it -- and we know there aren’t any Einsteins at the PLCB -- the core is solid. That's what makes the latest 'modernization' idea from Representative Gene DiGirolamo to put 400 square ft. State Stores in grocery stores...a little nuts. But his plan is endorsed by the clerks union (even if the plan essentially is a wine kiosk without the automation, though there will still be a PLCB employee there to make the sales, just like there was when the wine kiosks didn't work). This goes to show how out of touch the PLCB really is.While national trends in alcohol retail are toward larger stores, the brain trust at the PLCB wants to do the opposite. Must be that lack of retail experience, or maybe the fact that they know we can't go anywhere else that lets them make these bad decisions.

Kind of what the store in a store would look like...minus the video.

I was told by a clerk that larger towns will have more selection and that little towns will have less selection and all I could think of is that a little selection in a little town beats NO selection in a little town.  With only 600 stores there are a whole lot of little towns without a state store and there are entire counties in PA with only one state store but but they have a number grocery stores.

However...remember that the PLCB and the Union threaten that if the State's monopoly were broken up and privatized, you will only see one aisle with only the most popular items in grocery stores and they won’t have the full selection of a State Store. Now I have to ask: if one side of a 50’ (which is short for a grocery store) 4 shelf aisle is a minimum of 300 square ft and you don’t have to have room for a cashier or baskets or office or safe...how is this "store in a store" going to provide any better selection? And you still can’t buy a case or a sixpack of beer there, so the three trip problem (that ONLY Pennsylvania has) is still there. Maybe they think that 2 1/2 trips are an improvement: go to the PLCB store in a store (with separate checkout), walk to a different part of the store to the 'cafe' to buy a sixpack (with a separate checkout), and then drive to the beer distributor to get a case. Such an improvement!

Here's a thought. How about we privatize the whole damn system and make it truly easier for the consumer by having just one place to go when shopping for a legal product? How about we get the state out of subsidizing the sale of alcohol like they do milk? How about if we take the totally unqualified board out of retail, since they know nothing about it anyway (none has any experience in retail and that has been true for decades) and turn it over to people who do know retail business i.e. private businesses? How about if we allow the people the freedom of choice that most citizens who don’t live in Utah or PA enjoy? If you are a legislator, how can you not want this for your constituents?

Real Modernization IS Privatization!

$73,102 a year for taking a shower!

No the PLCB isn't coming clean that would take far more space to write then what is allowed here.

Imagine if the government paid you $73K a year to do something you know how to do.  Pretty good deal right?  Actually you would be underpaid by PLCB standards.  The 2 board members make that every year (the Chairman makes even more) for meeting 21 times in total (2013) with no, I mean NONE at all*, experience in the liquor or retail industry or any business the size of the PLCB and they meet for less time then you spend in the shower every year. Pretty sweet gig and a prime example of why the PLCB needs to be privatized. (* Board Member Bob Marcus did sell cars but that really isn’t the same thing)

Imagine if the mayor of Pittsburgh decided to come in only 21 days a year for a couple of hours. A fair analogy since the Board and the Mayor both have almost exactly the same amount of full time employees working for them. How much and how well would things get done?  One only has to look at the ineptness of the PLCB to answer that question. The difference being that the mayor pretty much only affects Pittsburgh while the PLCB affects all 12 million citizens.

Let business people make business decisions, they at least have experience and aren’t political hacks who need a job.  Also, you can count on them to be on the job most if not all days too working tirelessly to expand the business.  See my post about “40 years of nothing” to see how effective the board is on that business principle.

Privatization IS Modernization.  Accept nothing less.

God Almighty only asked for ten...

Saw this over at City Paper; Drew Lazor's on the job. Ultimo Coffee/Brew bistro has opened their doors -- back in May -- but while their coffee has been nothing short of frackin' amazing (See? Was it really that hard?), there's still no beer in their big, beautiful coolers. How come? That would be the PLCB.

See, much as apparently almost everyone in the area (and this one fella, out here in Bucks) would love for that great beer to show up, one guy is holding things up by saying he doesn't want their license approved. According to The Almighty Liquor Code (Section 4-402), if anyone within 500 feet of the place objects within 15 days of the application, there has to be a hearing. Now, said 'one guy' apparently lives over 600 feet away, but remember the prologue of The Almighty Liquor Code:

This act shall be deemed an exercise of the police power of the Commonwealth for the protection of the public welfare, health, peace and morals of the people of the Commonwealth and to prohibit forever the open saloon, and all of the provisions of this act shall be liberally construed for the accomplishment of
this purpose.

So there you are. Although, as alluded to in the post title, God required Abraham to find 10 righteous men in Sodom; the PLCB is willing to hold things up for just one? And where does it say that setting up the hearing has to take six months?

The hearing will finally take place on December 11, and the 'one guy' (no relation to Berwick Brewing, née One Guy Brewing, of course) will get an opportunity to stand up and state just why it is that they object to the license. Assuming they show up...I'd love to hear what their beef is, and I'd really like to see if it's worth one person having held up a the business of a person who has demonstrably improved the Newbold neighborhood. Or if it's just hot air. Not that I'm pre-judging, or anything.

PLCB Playing Favorites in Philly

Philadelphia Magazine has a "Web Original Article" up about a simply amazing new PLCB initiative -- that's right, another one -- that has jaws dropping all over Philly. Restaurateurs' jaws, that is, at the stunning favoritism and clueless unfairness it demonstrates. Check this:

José Garces' ... new something involves the Pennsylvania Liquor Control Board. That’s right — as part of a wider effort to rebrand its image, the PLCB will be pairing up with notable chefs and restaurateurs to open a handful of boutique wine stores, aiming to give oenophiles a more personal experience. (The Philadelphia location will be the first.) The specialty stores, whose inventories will include a few hundred bottles of wines not available in traditional Wine & Spirits stores, will hold tasting events and have a highly trained staff to help you find that perfect Pinot.

Let's leave aside the easy joke -- that the "highly trained staff" must be the ones who already know how to say "Hello!" and "Thank you!" -- and take a look at this. Suppose you're a Center City restaurant owner, a similar cafe-type joint known for their wine selection: Tria, for instance, since that's the only wine bar kind of place I've ever been to in Philly (disclosure: I have taught three classes at Tria's Fermentation School). How do you feel about the PLCB opening a take-out store inside a competitor's restaurant -- bad enough already, when wine take-out is illegal for you -- that sells wines "not available in traditional Wine & Spirits stores," and the PLCB staff is going to hold tasting events for those take-out wines right there in that other restaurant? I'd feel pretty damned hard done by.

This is a government agency. If Pennsylvania was not a control state, and it was a private business doing this -- Moore Brothers, for instance, and wouldn't it be a happy freakin' day if the PLCB were to go away and Moore Brothers could come to Center City? (disclosure: I have done no business whatsoever with Moore Brothers, they don't know me from Adam) -- hey, no problem! Actually, given the arcane and pointless circumlocutions of liquor law across the country, it would probably be a huge problem getting it licensed, but ethically there's no problem. It's two businesses reaching an agreement, and Garces would either be paying Moore Brothers for the exclusivity or they'd be paying him for the floor space, depending on who got the jump on who. And if Jon Myerow at Tria wanted to cut a similar deal with Canal's, he could.

But the PLCB is a government agency with monopoly retail power. Myerow can't just find another company to make a deal with, or do it himself, because that's illegal. Illegal! He's got to go to the PLCB, hat in hand, and beg to be part of this new program. As would the folks at Chick's, or Southwark, or DiBruno Brothers, or any number of wine-friendly cafes and restaurants.

And the PLCB will either grant them the boon or not, according to their own agenda. A government agency that has an ironclad monopoly on retail sales has no right deciding to essentially grant that right to retail to one business and refuse it to another. The PLCB is totally out of touch with reality. They are "acting like a business" when they aren't a business. They are a 'business' with whom it is illegal to compete, a 'business' with the full force of government enforcement and coercion behind them, a 'business' that can interpret the law to suit themselves without fear of contradiction.

I'm going to have to quote Buddy "I married a PLCB manager" Hobart to express what I feel about this new initiative. "What I say to the skeptical," said Buddy Hobart, president of Solutions 21, "to those of us in the world who believe we've arrived and don't need to improve: Look up the word arrogant in the dictionary." When you find that page, I believe you'll find the PLCB logo next to that definition.

Two notes at the end. First, I'm not pissed at José Garces, not in the least. I don't blame him for doing this, it's a sweet deal, and he would have been a fool not to take the PLCB up on it. And I do look forward to the opening of his new Village Whiskey, which is, yes, a whiskey bar, coming soon, probably May, at 20th and Sansom.

And of course, I'm shocked -- shocked, I tell you! -- that PhillyMag would run this story without a word about how this might unfairly impact other city businesses. What's that you say? Why yes, that's the same PhillyMag that co-sponsors the Philadelphia Whiskey Festival with the PLCB (which also runs one of these mini-stores right at the festival, while not allowing brewers to sell at beer festivals), and not a word of disclosure in the story. Good separation of advertorial and editising departments there.

Reason #15: The Case Law is Stupid

About fourteen years ago, I worked beer retail for a while at the distributor* that Matt Guyer would later buy and turn into the acclaimed Beer Yard. It was called the Beverage Store at the time, though some people still called it Kiley's. Not important.

Anyway, we were not far from Villanova, and about once a week we'd get some kid in who'd walk around, look confused, and finally walk up and ask where we had the sixpacks for sale. I was usually relieved, because this meant we wouldn't have to go through the bullshit of "What? I left my ID in the car!" (as if anyone ever really does that) or "Look at me, man, I'm 21!" Instead, I'd just say, "Sorry, we can't sell sixpacks; this is Pennsylvania. You'll have to go to a bar." And the look on their faces was always so worth it: jaw-dropped, flat-out, 'Say frickin' what?!'

Sad part is, they were right. It's ridiculous, but in Pennsylvania, when you go to a beer store*, you can't buy one bottle, you can't buy a four-pack, you can't buy a six-pack, an eight-pack, a nine-pack, a 12-pack, or even an 18-pack. Cuz that's illegal. You have to buy a case. Unless, of course, you really want to buy less, in which case you can go to a tavern (or a place with a so-called "deli license"), where you can buy a six-pack, or a 12-pack, or two six-packs...but no more than that. Cuz that's illegal.

Say frickin' what?!


Reason #15:

The Case Law Has No Reason To Live


Here it is, in all its dopey glory (The Almighty Liquor Code, Article IV, SECTION 441):

DISTRIBUTORS’ AND IMPORTING DISTRIBUTORS’ RESTRICTIONS ON SALES, STORAGE, ETC., paragraph b: No distributor*or importing distributor* shall sell any malt or brewed beverages in quantities of less than a case or original containers containing one hundred twenty-eight ounces or more which may be sold separately: Provided, That no malt or brewed beverages sold or delivered shall be consumed upon the premises of the distributor or importing distributor, or in any place provided for such purpose by such distributor or importing distributor. Notwithstanding any other provision of this section or act, malt or brewed beverages which are part of a tasting conducted pursuant to the board's regulations may be consumed on licensed premises.

The scary thing is, the bare bones of the Case Law aren't all of it. For instance, the two six-pack limit in the bar? What most of the six-pack shops in places like State College won't tell you when they're telling you that you are only allowed to buy two six-packs...is that you can then step outside the door of the licensed premises, step back in, and legally buy two more (assuming you'd want to pay bar mark-up on a case).

Want a really weird one? Check this out. Used to be, if a case at a distributor's* got damaged, like if the pallet jack caught the corner or someone dropped a case, the remnants of the case could be combined with another damaged case and sold, a "mixed" case. Big deal, right? Well, check this out from Paragraph f from the same section of The Almighty Liquor Code:

(1) To salvage one or more salable cases from one or more damaged cases, cartons or packages of malt or brewed beverages, a distributor or importing distributor may repackage consequent to inadvertent damage and sell a case, carton or package of identical units of malt or brewed beverages.
(2) Repackaging is permissible only to the extent made necessary by inadvertent damage. Repackaging not consequent to damage is prohibited.
(3) The term _identical units_ as used in this subsection means undamaged bottles or cans of identical brand, package and volume. (added May 31, 1996, P.L.312, No.49)

So...some distributors were "damaging" cases and combining them, because customers had gotten so interested in trying different beers (and not wanting to buy a whole damned case at a time of ONE). Big flippin' deal, right? Wrong. This practice scared and pissed somebody so much that just 13 years ago, they managed to get The Almighty Liquor Code changed to specifically outlaw it. (The legislator who put it in there retired; last I heard he was lobbying for the health care industry.) That's crazy, that's not just stupid, that's plain mean-spirited.

Why do we even have this uniquely stupid law? It originated in Repeal. It was part of a model law written up by the beer wholesalers and presented to the Legislature after Repeal; they figured that they'd try to get what they wanted in Repeal by saving the legislators the work of writing law. They put the case law in there to increase sales and decrease work: nobody's got to break up a case, and you have to buy at least a case at a time (and you had to pay cash on both sides of the transaction, too). The State went for it (with all the other dumb shit they put in The Almighty Liquor Code, are you surprised?).

But why is it still there, over 70 years later, when Pennsylvanians almost uniformly hate it? I've seen results of a poll asking Pennsylvania voters about a variety of issues: over 80% of them said they'd like to see the case law go away. MADD doesn't want it, Bible-thumpers don't care about it. So why has the Legislature fiddled and diddled with a variety of ways to change the case law but never yet done a damned thing?

What's that? Money must be involved? Aren't you the smart one! Bar owners don't want the case law to change because they've got a monopoly on six-pack sales. Some people have made the investment in a bar license just to sell six-packs. Distributors don't want to rock the boat: selling six-packs would mean completely re-designing their stores, putting in coolers and maybe carpet (most distributors' stores have all the charm of a garage). And everyone in the business is sure that breaking the case law will mean beer sales in supermarkets.

As a beer buyer, you're probably asking what the down side for you is on all this. The answer would be, not much, although it is an unknown. There is a chance that six-pack sales would change the draft beer scene, that six-pack sales would change the dynamics that keep small distributors in business, that they might even make it harder for craft brewers to stay in the market (though I think that last one is pretty iffy). But balance that against being able to buy beer like normal people: as little or as much as you want.

This is not actually a Reason to Abolish the PLCB. This is not an issue central to its existence. But take a look up there at the description of the blog: One person's reasons why the Pennsylvania Liquor Control Board should be abolished, and The Almighty Liquor Code completely overhauled and rewritten... This is certainly one bit of The Almighty Liquor Code that needs to be re-written. Therefore...

The Almighty Liquor Code should be re-written to do away with all restrictions on beer sales by amount. No more case law, no more two six-pack limit, no more no re-packing cases. And when we get rid of it, let's have no deals, no complicated balancing acts, no bullshit. Just excise that part of the code. And when it comes to sales and percentages, let the individual businesses compete on their merits, and how well they serve the customers' needs.

Simple. Radical. Do it now, we can get around to the abolishing later.



*In Pennsylvania, we call the beer stores "distributors." You know, the place that sells cases of beer, because that's the only quantity they're allowed to? I don't know why they're called that.