Monday, September 28, 2015

Who can answer this?

As reported by numerous papers...

If, as Governor Wolf is suddenly proposing, leasing the State Store System to a private management firm "is a way to make the liquor stores more profitable and provide better service to consumers"...can the Governor answer the following seemingly obvious questions about this latest example of Wolfonomics?

Wouldn't a fully private system provide even better service to consumers?

Wouldn't a private system that puts wine and liquor INTO grocery stores -- on the shelves -- be even better than a system that puts it somewhere in the vicinity of grocery stores?

Wouldn't a private system that allows for different levels of service -- small neighborhood stores, wine or whiskey specialty stores, huge discount mega-stores -- be even better than only one that provides only one level of service, for every store, in the entire state? (Keep in mind: it would still be illegal to go across the border.)

Wouldn't a private system that stocks more items than the entire State Store System stocks (and actually has them, instead of just listing them online) now be even better for consumers?

Wouldn't a private system that at least triples employment (as shown by the experience in Washington State and Alberta, which both fully privatized their monopoly systems) be even better for the state and the citizens that are employed than a system that limits employment and doesn't allow any small businesses?

Wouldn't a private system that triples or quadruples convenience (as measured by number of stores) be even better for the consumer than one that will still limit convenience to fewer stores than there were 40 years ago?

Wouldn't a private system where many suppliers try to bring their product to market be even better than one person or department selecting for the entire state? (In case you missed it, this is what happens when one person has that police-enforced monopoly power.)

Wouldn't a private system be even more responsive to consumers needs and wants, since the individual stores would have to compete for your business, rather than you still having no other choice than the monopoly State Store System...whatever the new name they slap on it is?

Wouldn't life just be far better if Pennsylvania had a normal liquor retail market without the state being involved in retail and wholesale at all?

You bet it would.

Tuesday, September 22, 2015

Could Border Bleed Actually be $500 million?

Everybody thinks that border bleed — Pennsylvanians going "out of control" to buy booze in other states, spurning the State Store System...which is illegal — only happens on the southeastern border of the state*, when in reality it occurs across all of Pennsylvania's borders and for a number of reasons.

Why do Pennsylvanians break the law just to buy booze? Why, for everything from spur of the moment decisions to deliberate shopping for lower prices, more convenience, different products not carried by the state stores, or just plain better service that a non-monopoly store can only provide. A private store depends on pleasing their customers; a monopoly store knows you have nowhere else you can legally go.
Back in 2004 a study prepared for the Pennsylvania Food Merchants Association (long-time foes of the state liquor monopoly for perfectly self-interested reasons: they'd like to sell wine and spirits themselves, like stores in other states) determined that 29.4 percent of the Commonwealth's consumption of wine comes from cross-border sales, as well as 20.8 percent of distilled spirits. Has much changed since then?

Let's extrapolate, shall we? In 2004, there were about 640 state stores. Now we have 605, so convenience certainly didn't increase. 29.4% of wine sales would have been $248,460,768.80 in 2014 (Can't use current numbers, because over 11 weeks after the end of the fiscal year the PLCB still hasn't released them). 20.8% of spirits would result in $243,569,926.08, for a grand total of  $492,030,694.88.  Not quite $500 million, but then I'm using numbers from two years ago. I'll bet it would be over the threshold if the PLCB ever decides to let us know how they did last year.

In 2010, a study that was made by the Wine and Spirits Wholesalers of America, they found that 23.6% of wine sales were done out of state or just over $200 million for wine alone. Using the current ratio of wine to spirit spending that would mean $276 million spent for spirits or a total of $476 million in total border bleed (within 3.25% of the extrapolated 2004 numbers). Close enough for PLCB work, as they say.

The PLCB Neiman report of 2011 had it over $230 million and that was for just 8 of 67 counties and didn't sample any Maryland sales at all. As I pointed out in my report in February, that number is certainly well above $300 million now. Do the other 59 counties spend $150 million out of state? I can't prove it using just the Neiman report, but the other studies indicate they probably do.

Has anything changed since 2010-11? Is the economy more like 2004, or even better now?  Have gas prices come down somewhat? Do people travel more? Of course, the answer to all those questions is yes. The Neiman report showed that even during the recession people that shopped both PA and out of state stores spent more money out of state than in state in those counties and at almost all levels, but especially higher levels, than they spent at state stores. And they did it for the same reasons they always did:

Travel out of state for a broader selection and better price (Neiman report pg 28)

Go out of state to get better prices and stock up on personal supply (Neiman report pg 36)

Recapturing some of that $500 million potential through privatization means more jobs, more taxes collected, more businesses, more selection, more choice, and more benefit for the citizens by not having government interfere with retail. Painting your PA liquor jail cell and extending visiting hours (or selling the jail to some outside firm, Gov. Wolf's latest dim idea) might be better than what you have now but it isn't the same as being a customer in a free market.

Don't "modernize" it or lease it, and don't leave it as it is: NORMALIZE IT. 

*This is probably because Philadelphia-area citizens are so blatant about it; we just don't care at all.

Saturday, September 19, 2015

Wiretaps - The most fun you can have with the PLCB

Wiretaps are a wonderful thing.  How I envision the FBI caught the PLCB Marketing Director and who knows how many more. 

MD = Marketing Director
S = Salesman

S: Uh,,,,hello.  Is this the marketing director of the PLCB?

MD: It is, how may I help you?

S: Well, I've got some wines I'd like to talk to you about.

MD: What type of wines?

S: These are pretty good wines that I'm sure you'd like if you tried them.

MD: Sir, there are forms to fill out and deposits to be made.

S: I understand that but if YOU were to try them then I think we could reach an agreement.

MD: I'm not against giving new businesses a chance.  Do you golf?

S: Not well

MD: I'm sure we could meet up on the course to discuss your wines and then sample them after a round or two.

S: That would be great!

MD: I know of a nice little course down in South Carolina that I have been to before. Would that be OK?

S: Ahh....Sure, they have some great courses down there.

MD: Have your driver pick me up at 8 Thursday next week and I can leave from Philly, First Class of course.

S: Of course. We'll have a car and room waiting for you too.

MD: Can I bring a guest? My boss might want to come.

S: I think we can handle that.

There will be some expenses too I'm sure.

S: No Doubt, Will a thousand or two cover it?

MD: Two should cover them.

S: We'll settle that up on the course then.

MD: Good, I'm sure that the PLCB will welcome your addition to our inventory as soon as I get back. Oh, and I'll need a couple of cases to stock our "Tasting Room" with so the Board and other Directors can try it too.

S: Just let me know when.

Bursts of laughter are then heard on the tape presumably from the agents involved.

Corruption causes prices to be higher then they would be otherwise.  So if you don't see prices going down at the local state store - guess what.......


Friday, September 18, 2015

Governor Wolf proposes liquor privatization compromise


Governor Wolf has proposed an historic liquor privatization compromise with Republicans. Patterned after Governor Corbett's extremely successful Lottery Privatization scheme, Wolf's proposal includes:
  • Keeping the PLCB wholesale and retail monopoly in place
  • Keeping and expanding the State Store System as a state jobs program
  • Increasing the number of State Store System workers
  • Keeping the same conflict of interest of the government selling and regulating alcohol
  • Keeping a single person or department who selects what the entire state is allowed to buy.
  • Adding another layer of fully-funded bureaucracy to the liquor system
  • Trading a state-controlled monopoly for another state-controlled monopoly (with a different name)
  • Dangling the possibility that this could someday maybe possibly somehow a long way off lead to wine at supermarkets and beer in convenience some manner
  • Other yet to be named and explained items

Some Republican leadership said they would have to study the proposal to figure out exactly what, if anything, this would change, or if the Governor was pulling another joke on them, like his trying to raise taxes by $4.7 Billion this year. Others simply refused to believe that this was a compromise and flatly rejected the notion as they should.

Stay tuned to this blog for further developments!

(Please note: we've added a new tag: "You've Got To Be Kidding." If Governor Wolf continues on his current path, it's going to see a lot of use; watch for it!)

Thursday, September 17, 2015

Ex-PLCB official pleads guilty to taking kickbacks, bribes

Was There any Doubt?

"Ex-PLCB official pleads guilty to taking kickbacks, bribes"

Now...Who's Next? 

FBI continues investigation

Will it be Joe Da CEO? His Pal PJ? Will we actually see some legislators caught up in this? 

Stay tuned...the Grand Jury will return.

(Edited to add FBI link.)

Friday, September 11, 2015

Still waiting on the PLCB and their computers

Here is is 2 months and almost 2 weeks after the close of the fiscal year and still nothing from the wizards in Harrisburg about how well they did or didn't do. Maybe covering their butts from Federal charges is taking up their time....who knows?
But you know what really hurts? Other control states already have their numbers in. Let's look at New Hampshire and see how they did. With a population of only 1,327,000 they somehow sold $652,000,000 in wine and spirits (or just over $484 for every man, woman, and child in the state) and at prices that are usually lower than our State Stores. Pennsylvania has a population of  12.8 million and sold $2,240,563,426 worth of wine and spirits. or $175 per person (2014 numbers because, you know, we're still waiting...).

The expected response from our fine Liquor Corruption Board workers is that New Hampshire residents are all "chronic alcohol users,"  because that's what they always say when confronted with anything that shows the state stores up, be it better selection, more sales, better staff...whatever. Let me put forth a different theory. People go to New Hampshire to buy liquor; and they leave Pennsylvania to buy liquor. New Hampshire makes shopping worth the trip by having better prices, better stores, and a larger selection than nearby competition. The majority of that competition is in Massachusetts, right on the border and the largest state in New England; they also have substantially higher booze taxes than New Hampshire...which has none.

What does PA have? Certainly New York has more people, and higher sales taxes with liquor taxes being pretty close, but we don't see that influx to make any real change in the Corruption Board bottom line. Ohio and West Virginia are control states too, so not much difference there. Most of Maryland is a free state with higher sales tax, lower liquor excise tax and higher beer tax than PA but still draws people across the border because competition drives prices down.

Delaware, as we all know, has no sales tax so that makes them less expensive right off the bat. But they also have stores with far greater selection than anything in PA to draw people in too.

New Jersey has a higher sales tax but a lower liquor tax. Mostly people go because of the selection and prices, again due to competition. The large stores across the river -- Joe Canal's, Total Wine, Moore Brothers, Roger Wilco, etc. -- are not there because of people living in New Jersey. They are there because of the people from PA who find better price selection and service even if they have to pay a toll to get there.

$300 million leaves the state every year and it isn't going down.
Border bleed is real and large and Governor Wolf's proposal to raise the sales tax here is not going to help reduce it, Putting in baskets and changing the name of the state stores is not going to help reduce it, "modernizing" is not going to reduce it, thinking about raising the markup when private stores think about cutting costs is not going to reduce it, and having one store for every 21,000 residents is not going to reduce border bleed either.

Privatization will.

Wednesday, September 9, 2015

So how's Wendell doing?

On August 25th, UFCW 1776 "President For Life" Wendell W. Young IV sent a letter to the Morning Call. Go read it, I'll wait.

Got it? I felt it called for a response. The Morning Call doesn't allow people to respond at length to letters, so I thought I'd post my entire response here. Have a look.
Wendell "Say Anything" Young
Wendell is talking; Wendell is spinning

The PFM report says Operational and Transition costs; the operational costs are the normal expenses of keeping the stores open, no different from every day, and they pay those whether they're closing down or not. This Operational part is almost $1.2 billion. The same report also shows that keeping the state stores will cost over $2.4 billion. But none of that matters, since the report was done in response to a privatization proposal from almost 3 years ago that is no longer in play. So the $408 million that Wendell mentioned doesn't apply either, because current proposals have different income structures. He knows this, but he won't tell you the truth.

The PFM report also called privatization in Iowa a success. Iowa reported more revenue after getting the state out of retail. Of course, Iowa has twice as many stores as PA now with less than half the population, and a lower binge drinking and DUI rate too. Yes, liquor prices in Washington went up; we know that, but we also know why. The legislature added 27% in new fees. Privatization didn't cause prices to go up. Politicians did.

Again the PFM report's unemployment estimates are meaningless, because they aren't for the current plan. What isn't worthless is the fact that every place that has privatized some or all of their liquor system has increased employment.  The province of Alberta fully privatized, and tripled employment in the industry so did Washington State. What Mr. Young doesn't tell you is the PLCB prevents those increases here. Maybe they would be union jobs, maybe they wouldn't; I guess that depends on how convincing an organizer Mr. Young is.

A quick look at the numbers — real numbers, not guesses — will tell you that after almost 40 years since the "store in a store" concept was proposed and 35 years since it was implemented, it has been a failure. The program never got more than 16 grocery stores to agree, out of the thousands in the state, to put a State Store within their walls. That number is now down to 15. "Modernization" is not going to suddenly change that.

By the way, ask Mr. Young where the extra "modernization" money is going to come from. The answer is your pockets. Ask him what states have agreed to "buy in" with PA as the modernization plan he touts suggests? (Not one.) While you're at it, ask him about how Sunday sales will have to increase by over $350 million alone to make the modernization goal. "Modernization" means "get Pennsylvanians to buy a LOT MORE BOOZE!!!" So much for "control."

So if Wendell's all wet, what should we do? We are the owners of this system, this "valuable asset," as Wendell keeps saying. Well, in every scientific poll taken over the past 40 years, "the owners" have said we want to be rid of the State Store System. We not only have the right to sell it, but the want and desire to sell it. It isn't his call.

Privatization will bring competition and contrary to Wolfonomics, competition causes lower prices and increased convenience like the State Stores can never provide. Privatization will bring overall increased employment: warehouse jobs, delivery jobs, retail and manager jobs. Privatization brings choice to the consumer. Private store managers stock based on their knowledge and what the consumer wants, not what some bureaucrat in Harrisburg tells them to stock.

But we've got to do it right. Worried about higher prices, or "big box" stores taking over, a new monopoly to replace the old? Learn from other states: don't raise taxes, limit total license ownership to 3 to 5 stores, so nobody can corner the market. Worried about tax collections? Collect the taxes at the wholesale level like is already done for beer. Concerned that license costs will make it too hard for small stores to open? Base license costs on size, or sales volume, so a small 1,000 sq.ft. wine boutique can open down the road from a 30,000 sq.ft. superstore. After all, we don't have either in PA now. Make more licenses available at more reasonable prices, too.

Governor Wolf wants booze in grocery stores? So do the rest of us; allow it! We can become a reciprocal state for wine shipping instead of the Eastern Bloc Control model that is being proposed. Give us a normal system, and we will buy in Pennsylvania instead of running to New Jersey, Delaware, or Maryland, because we'll have those big stores, with big selections, and they'll be convenient.

Privatization solves the problems. The PLCB can't.

Painting Pennsylvania's liquor jail cell nice bright colors, putting up new drapes, and calling it "modernization" will not change the way the system works. Privatization will.

Yes I am a proud privateer. I'm a citizen who sees how backward, graft-filled, nepotism-plagued, anti-small business and anti-consumer, inconvenient, and incompetent our system is.


Wednesday, September 2, 2015

PLCB - The Avis Of PA Corruption

Pennsylvania Liquor Control Board Celebrates the First Federal Charges of the decade!


Harrisburg: The Pennsylvania Liquor Control Board today welcomed local officials and the public to the grand sentencing of the former Fine Wine and Good Spirits Premium Collection Store Marketing Director Jim Short. After the guilty plea, refreshments selected by Mr, Short himself will be available at many State Stores.

Jim's new address offers a warm, welcoming atmosphere for convicts to browse the extensive selection of PLCB Wine and Spirits magazines. The focal point of his new residence is a large center table in the mess hall, where convicts can always find staff to answer questions or provide recommendations. Jim is looking forward to seeing his old friends, Joe "Water Heater" Conti and Pat "PJ" Stapleton soon. Perhaps even Jerry "Muddy" Waters will stop in too.

The PLCB only has us in Liquor Jail, we have them in REAL Jail
Rotten at the top, rotten at the core..
Just like the old AVIS commercial that said they try harder, the PLCB is shooting to be the most corrupt agency in PA, displacing the Turnpike Commission, which held that distinction for years.

This is the brain trust that started "modernization," wine kiosks, spent millions to come up with "Fine Wine And Good Spirits," went into competition against Pennsylvania's wineries in their own state (though strangely all the paperwork has gone missing and nobody can remember who came up with that idea). Did I mention the wine kiosks?

This is what the PLCB has been like for decades, a good ol' boy network of political hacks and has-beens doing favors, taking bribes, arranging sweetheart deals, swimming in nepotism, and generally not giving a crap (until their position is threatened, that is).

Is this what Pennsylvania needs? Or would we be better off with the free market that is proven to work in the 42 other states that don't sell alcohol to their citizens?  What do we really get for this system? Are we safer? Not if you look at the national statistics. Are we better served? Let's ask the people who spend upwards of $300 million out of state: regularly. Are we satisfied? In 40 years of scientific polling there has never been one in favor of the state stores over private retail. I guess the citizens know what works since private retail is how you buy everything else in the state!

This isn't the time for new paint and baskets, this is the time for real change. Change to something that works and has worked since the founding of the state: the free market. The time for 1930's thinking is past and has been for a long time. It is time for the PLCB to be tossed on the junkpile.


Tuesday, September 1, 2015

2 years in - time to say thanks

Here it is, 2 years since I started writing the blog thanks to Lew's kind offer.  Hard to believe there could be so many things wrong with the PLCB that I could write almost 140 posts in that amount of time. I hope I've kept up the standard Lew set when he started this blog.

2 down, less than 1 to go with luck!
I couldn't have done this as well as I hope I'm doing without all the clerks and office workers passing along tips and information; in a number of instances, things I would never have found out about by myself.  I'm sure our local union stalker would love to root out who they are, but I delete their emails and chats so their identities are protected.

There are a number of Legislators that need thanking. They know who they are, and I appreciate them helping to further the cause. And of course, the readers, to whom I hope this has been a source of information and thought. I know we have PLCB employees who read this but never act on what is brought up. They still can't get all the "Jack Daniel's/Jack Daniel/Jack Daniels" entries correct and I've mentioned that three or four times just this year. 82 years isn't long enough, I guess. (Guys, a tip: put a sticky note on the side of your monitor: "It's Jack Daniel's") Of course, thanks to the FBI for proving what we all knew.

I know we have Legislators on both sides who read us too, some of them want to do what their constituents want and some do not, and some do but aren't allowed by their party, and there are some who don't have a clue what this is all about. Horse, water - you know the rest.

My standard has always been to be able to back up and prove all the factual information I post and to accept anything that disproves it. So far I've not had any takers. I intend to continue that policy, because factual information is the basis of any reasonable discussion.

Here's hoping that year number 3 will be the last, because the State Store System will be a relic of the past.

On a side note to another story, it has now been two months and the PLCB still hasn't figured out how to use those computers enough to put out unaudited numbers for the year.