If You Put Your Thumb on the Scales Hard Enough, It All Makes Sense

The governor of Pennsylvania demonstrates a Euro-like understanding of the workings of the market. There hard liquor sales are run through state alcoholic beverage control centers, which set prices and determine how much you are allowed to buy. The legislature moved to privatize hard alcohol sales, but no. The governor vetoed the bill with this statement:
This legislation falls short of a responsible means to reform our state liquor system and to maximize revenues to benefit our citizen,” Governor Wolf said. “It makes bad business sense for the Commonwealth and consumers to sell off an asset, especially before maximizing its value. During consideration of this legislation, it became abundantly clear that this plan would result in higher prices for consumers. In the most recent case of another state that pursued the outright privatization of liquor sales, consumers saw higher prices and less selection.
Turns out he's right about the last case, which was Washington state. Prices did go up after privatizing the market -- because the government slapped a huge tax increase on the stuff at the same time.

5 comments:

Eric Blair said...

I told people that was going to happen with Gov. Wolf. Beholden to the unions, he is.

Texan99 said...

Even my wildly liberal sister hates the state-run liquor stores in Pennsylvania. Sounds like the legislature should have gotten its act together to pass this law before they lost their Republican governor.

If there's one thing that annoys me, it's progressive politicos trying to speak marketese.

jaed said...

I do think you traduce the Europeans. They would have made the same decision, but they are not dumb enough to think that a free market will lead to "higher prices for consumers".

(The state liquor stores in Oregon are not only pricey and inconvenient, they have an ambience that makes anyone who enters feel like a crack whore; my belief is that this is deliberate. I am expecting the legalization of marijuana here to not have as much effect on black-market pot as I'd like, because it - of course! - calls for the state to set up a similar system of sanctioned pot stores. Doubtless they will resemble the liquor stores. These people never, never, never learn from experience.)

Grim said...

I was thinking of Tex's post from last week about the Italian bonds and 'natural monopolies.' That struck me as a similar kind of confusion.

The state-run ABCs I've been into are as you describe them. On the one hand, the prices are published quarterly, so you know you'll get the same price anywhere in the state. On the other hand, the closest one is 40 miles away, and nobody's going to open another one closer because the state doesn't feel like it and nobody else is allowed. It's open as late as 8 PM, though, so if you get a good foot under you....

douglas said...

Homebrew. Home winemaking. Problem solved.