Tuesday, January 18, 2011

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.


Anonymous said...

I have to remain anonymous, as I'm a current PLCB employee. The thing that irks me most about other PLCB employees defending their jobs is when they pull the "privatization will increase alcohol abuse and alcohol-related crime." That's an inane argument. When I find myself in the position of defending my job, I'm usually left with nothing. The PLCB has taken everything I could possibly use as a defense, sabotaging themselves at every turn. And now that I've invested a sizeable portion of my life in it, now it seems I'll be joining the legions of the unemployed.

jefffrane said...

No. Cut the payroll, cut the never-ending pension benefits (how many of you have a guaranteed-benefits pension?

Uh, yeah, me. Over the last years, as good unionized jobs dry up and as times get tougher for working people, this sort of resentment has become more common. "Why should he get benefits when I don't?"

These are the sorts of benefits that the Greatest Generation learned to take for granted, back when families could live with one earner. What appalls me is that good benefits and pensions have been systematically and deliberately destroyed over decades; people who've lost those benefits or never got them can't stand the fact that others do.

Libertarians like to argue about public workers' salaries, but the reality is that many (of us) were willing to sacrifice higher wages for simple security--good health care and retirement packages.

Those employees are no more deserving of being screwed over after 20-30 years than you would be.

Lew Bryson said...

Jeff, you cut off the quote. I'll finish it for you: Know any retail clerks that do?
This is not a job that gets pensions. This is an anomaly, one of the reasons this state retail system is absurd. They are retail clerks that are, in their boss's own words, "not incentivized to sell." Bizarre.

And as far as being screwed over, I got screwed over several times in private business, so I went freelance, and was lucky enough to make it work. I've been contributing to my own retirement account. Did it take a hit two years ago? Yes, it did. Am I calling for all government/union pensions to be done away with as some kind of odd revenge? No. But I do believe that overpaying retail clerks is not a function of government.

jefffrane said...

I don't disagree that your clerks are wildly overpaid or that it's unfortunate that the State is on the hook for it. I have intimate connection to a very similar piece of stupidity--but what's done is done. I just don't think that people who have been working for decades based on a contract -- no different than any contract that you might have negotiated with a private party -- need to be thrown under the bus, as it were.

Lew Bryson said...

Oh, wait! We may have a simple misunderstanding. I don't want to take away the pensions. I want to end these jobs that come with them. Give them all kinds of preferences for pensioned jobs in the state, by all means, or give them the option to lump-sum out, or something. I do NOT mean we should just strip them. I don't want more of it going forward.

Unknown said...

I hope that anybody with half a brain knows that the $2B figure is complete BS. Virginia is trying to do the same thing as PA. They are going to auction off up to 1000 licenses, and expect to get slightly less than $200M out of the deal. Yet, Turdzai says that PA can get $2B from 850 licenses.

Link to Wash Post article.

Nathan said...

I was under the impression that the $2b figure was based on the estimated market value of not only the newly-minted licenses but also the existing assets of the state-owned retail system. The state has more than $300m tied up in product inventory alone, plus all of the fixed assets it takes to run a retail operation of this size. So the $2b estimate may not be a complete fantasy.

Anonymous said...

Im was just thinking even if we sell the stores wouldn't we still be on the hook for the current employees pensions and benefits as well as the retired ones? We would not have the income from the stores to pay for the pensions and buying them out would cost alot of that 2 billion we are suppose to get! I guess we would only save on the fact we wouldn't be paying them every 2 weeks unless they went on unemployment?

Lew Bryson said...

You know, that's funny, because every union member I've heard talk about that claims that the pension is completely funded by the PLCB. It's not, of course: it's part of SERS, like the other state employee pensions. But if we cut it off now, we won't be paying into the future, just paying the employees who were in it. That money's not coming out of PLCB revenues anyway, far as I can see from the audit numbers...so we're on the hook for it anyway. It's a wash.
As for unemployed state workers...why does everyone assume that these people won't be snapped up by the new private liquor stores? Someone's got to staff them, right? And I understand there will be tax incentives to hire them. Sounds like if they want to work, there will be work.

Unknown said...

PLCB clerks are like any other clerks - some of them have a clue and others can't do much more than make change. Even if state stores are privatized, I don't expect to see clerk knowledge increase. about their products, as the whole retail industry has moved away from customer service.

The state should not have a monopoly on any business. In particular, it should not be in the booze business; it should be in the public service business.

We need to approach the privatizing argument with facts.

One fact I'd be curious to uncover - What is Pennsylvania's alcohol-related accident/death rate compared to similar states like Ohio or New York? Both states have more rational liquor laws than Pennsylvania. So is Pennsylvania "safer" due to the state monopoly on alcohol or not?

Lew Bryson said...

Absolutely agree on approaching it with facts. But I'd disagree on service; I go to booze stores in Mass, NJ, and DE regularly (um...for consumption when I'm in those states, of course) and the staff have rarely disappointed; if they don't know about what I need, they quickly find someone who does. That's just my experience, of course.

Anyway, the figures on problems? Depends on which figures you find; the State Store clerks' union seems to come up with figures that say we're wonderful, but the PLCB's own biennial report on problem drinking and underage drinking has, the last two times, found that PA is right about in the middle. Average. So what's control do for us? Annoy us.