All the arguments against privatization — job losses, revenue losses, public
safety endangered, less selection and higher prices, less convenience, and
worse service — are addressed and refuted below, with facts and common sense. Arm yourselves
with knowledge, and pass it on to your legislators.
Jobs - Everyplace
in North America that has privatized some or all of their liquor distribution
system has seen an increase in
employment. Jobs in the industry tripled
in Washington State and Alberta, Canada, the last two places that fully
privatized. They doubled in Iowa,
which kept wholesale sales but privatized all retail. Are the jobs exactly the
same as what they replace? Probably not; are all jobs the same at every store
where you shop now? Why would alcohol sales be any different?
Revenue and Border Bleed - Sales
have gone up in privatized systems, every single one; how much is dependent on
taxation more than anything else. Case in point is Washington State, which
already had the highest liquor taxes in
the country before they privatized and added
new fees. Sales have still gone up in state, and the fee-driven increase in
border bleed has increased sales out of state. If they hadn’t raised taxes,
in-state sales would have increased even more. Washington State’s border bleed
is nowhere near the border bleed rate in PA. The border bleed increase for an entire year in Washington is about a weeks worth of the border bleed PA sees. While privatization will not eliminate border bleed in PA, it will,
just from a convenience standpoint, decrease it. A privatized PA will still not
be able to equal pricing of states with lower taxes, but it will make it easier
to buy locally. People pay more for convenience all the time, even when less
expensive alternatives exist reasonably close. Case in point is buying almost
any food or dairy item in a convenience store — “a damn Sheetz,” as Senator
Ferlo would snarl — instead of a grocery store. The key is to not raise taxes.
Revenue 2 – Iowa
actually decreased their taxation
and still reported making more than they would have if they kept their state
stores.
Revenue 3 - It isn’t only direct
liquor taxation that has to be taken into account. For PA, there will be
business taxes that the current system doesn’t pay. There will be more income
taxes from owners and workers, since there will be more of each. There will be
new jobs created that do not exist under our current system, delivery to bars
and restaurants being one example, and increases in current jobs to accommodate
new business. Again, just one new warehouse in Washington State employed 1,100 workers, which was more than the entire state store workforce of 937. In
the long term, money will be saved
by not having taxpayers responsible for future retirement and medical
shortfalls. The current amount the taxpayers
owe for PLCB pensions is $550
million and is expected to go up to $600 million by the end of this year.
Safety – Under
the current system PA has more DUIs, DUI fatalities, underage DUI, binge
drinking and underage binge drinking than 4 of the 5 privately run states on
our border, and is just average compared to the rest of the country. Washington
State has seen an 8% reduction in DUI crashes and DUI fatalities since
privatization. While some may claim that is because there was less policing,
policing has no effect on the decrease in DUI fatalities. Alberta, Canada has decreased their DUI fatality rate to
one of the lowest on the continent (37% lower than PA) since they privatized,
even though they have over 1,300 retail liquor outlets now for a population of under
4 million. Is there a connection? No way to say without further study, but it’s
plain to see that privatization
didn’t make the situation worse.
Safety 2 –
Limiting underage access has always been a point for those opposed to
privatization. While the true rate
of underage purchases in PA State Stores is not known, since they are never independently checked (or policed
in undercover sting operations, as privately-owned liquor stores in other
states are) it would follow that it should be about the same as other
localities which have similar requirements. Washington State was at
approximately 93-94% compliance before privatization and is at about 92% now. Another
thing we can learn from Washington State’s experience is how to limit direct
unobstructed egress to cut down on shoplifting.
Selection - Under
the PLCB, urban areas essentially subsidize
rural areas for alcohol selection, something that would seem to go against
their stated mission of limiting access. This is the retail equivalent of PENNDOT
making sure there is a Jaguar dealer in every
county, because without government intervention they wouldn’t be there.
Where the population can support them there will be larger stores, and in areas
that can’t support those, there will be smaller stores. This is the retail
model found almost everywhere. It is not
the government’s job to make sure you can buy a wide selection of booze,
especially when they say it’s detrimental (but they still want to sell you more
of it). It is their job to make sure that a business climate exists which will
allow retailers to try to sell
whatever they want within the regulations and restrictions. To date I have not
heard a reasonable explanation as to why the state should subsidize alcohol like they do milk.
Selection 2 -
That in-store selection will increase
is not in question. One only need to look across the country to stores like
Bev-Mo, Total Wine, Roger Wilco, Binny’s, HighTime, B-21 and hundreds of others
to see what the private sector can
provide. They provide it based on consumer
demand, not by what a bureaucrat or committee with unknown or non-existent
credentials selects for them in a small capital city, far from major markets.
What is in question is what variety
will be available in rural areas.
The answer is the same as it is for any other product. If the demand is there,
the market will provide it, just as it does in rural grocery stores and
hardware stores. If what you want is not available locally, chances are you
will be able to order it, the same as now, only you probably won’t have to buy
a case at a time as it is with a good portion of the current system. The entire
state of big, small, specialty, urban, and rural stores will be open to you. Not
that every store will ship but it will certainly be more than now, because real
businesses strive for customer service since their existence depends on it and
not state police enforced monopoly power.
Prices – There
are no absolutes in pricing. So much would depend on the system that is
selected. Do we continue with the three
tier system or do we eliminate one tier and allow more direct buying? Are taxes collected at the wholesale or
retail level? Will the taxes increase
or remain the same? Depending on what combination is used, you can say that
prices should go down or prices should go up. The one thing you can say with
certainty is that in a competitive
market prices are lower than they would be given the same circumstances in a
non-competitive market. As the third largest retail buyer on the continent
one would expect the State Stores to have some of the best pricing available in
the country. However, this is not
always the case and the differences are more than taxes alone can account for.
Convenience – Since closing 20% of their stores in the past
40 years and having the lowest amount of
stores per capita in the country (even lower than Utah!) there is no doubt
the current system is inconvenient. Quite simply, anything that doesn’t open
hundreds, if not a couple thousand more locations will not provide convenience
seen in other states, and is a Band-Aid at best. It is obvious the PLCB cannot
begin to compete in this area because they
can’t afford it based on their business
model of having everything the same store everywhere. Don’t let them
buffalo you: the PLCB chooses the number
of stores to open, not the legislature;
the number of stores is not enforced by
the Almighty Liquor Code (with the exception of the number of stores
allowed to be open on Sunday). So while the population has increased over the last four decades, the number of State Stores
has decreased
from over 750 to about 605 today. Just to reach the national average, Pennsylvania should have about
four times that number. “Modernization”
does not begin to answer that issue,
with one proposal saying they want to put 400 sq. ft. “stores” inside other
stores, which they are already allowed to do now, and have been
for at least 30 years. What exactly does that do for the consumer that the same
size private store (which they claim wouldn’t provide the selection) would,
besides remove that business opportunity from the citizenry?
Service – Unlike
other retail stores, if you don’t like the service you can’t go anywhere else.
You are stuck with the same training, the same attitudes, the same level of
passion. In the world of private stores, if you don’t like the service you can go somewhere else and reward them with
your business. The stores with bad service will eventually fail, and if
somebody else sees the opportunity another will open. In the private sector you
will find stores with a sales staff of well-trained professionals along with stores whose sales staff can
barely tie their shoes. You have the choice
of what level you require. Same size fits
all is not a tenet of retail, although it seems to be gospel for the PLCB. There
are private stores who have sommeliers on staff. The whole of the PLCB, 600
retail stores and an entire state’s
wholesale wine trade, doesn’t. To be
fair, the PLCB does have a sommelier as a part-time
consultant. One. Part time. For the
entire state. The third largest retail wine buyer on the continent does not have a full-time top tier wine
person. I can’t be the only one to think there is something wrong with the
system that not only allows this, but doesn’t care.
Privatization does
create winners and losers. The winners are the citizens who now have access
to a free market; the losers are those who can’t adapt to the free market
system. While no system is perfect, looking at the rest of the country it is
easy to see which one is preferred by consumers and businesses whenever there
is a choice.
TELL YOUR LEGISLATORS YOU WANT THAT CHOICE!
