Originally published in Broad + LIberty.
If you thought a statewide liquor store shutdown would keep thirsty Pennsylvanians from softening the impact of the COVID-19 crisis with an adult beverage, think again.
When Governor Tom Wolf cut off most alcohol sales in the state by closing Pennsylvania’s government-controlled Fine Wine and Good Spirits stores, Pennsylvanians flocked to border stores in New Jersey, Delaware, and other neighboring states to stock up. Some such stores were forced to close because folks from the Commonwealth cleared the shelves. All that business activity which could have happened in Pennsylvania was instead pushed over the borders. Even worse, Delaware police officers now stop Pennsylvania drivers who pile into the state to purchase liquor.
In response to huge demand and outcry against Governor Wolf’s decision, the Pennsylvania Liquor Control Board (PLCB) announced last week it would open rationed sales online for a limited number of brands. Unfortunately, poor planning and ineptitude resulted in a website that continually crashed as residents rushed to place orders. As of this writing the site has closed until further notice and Pennsylvanians’ cups are running dry in a crisis.
If Pennsylvania’s wine and spirit sales were in the hands of privately owned enterprises, disgusted customers of a non-working website would flee to better-organized competitors. Of course, the PLCB is a government monopoly and customers here have no other choice. In the Keystone State we are essentially reliving a Prohibition era which ended a century ago. The present alcohol shortage should be the last shove we need to jettison our state-run spirit stores, for good.
The alcohol sales reforms of 2016 significantly improved the situation for consumers in the Commonwealth by making beer and wine available in grocery stores for the first time in decades. Even this change, however, came with price controls and quantity limits. Moreover, internet sales remain taboo even as the web makes thousands of other goods available quickly and affordably. Local breweries, wineries and distilleries swim upstream against onerous PLCB rules while entrepreneurs outside of PA cash in on a growing taste for specialty libations and the ease of internet sales. The whole system remains strange and antiquated. Why?
The truth about the PLCB is that it skims from the private economy to fund the organization’s politically powerful union, providing cushy jobs complete with pension and generous benefits to select constituents. It’s a patronage program.
Lawmakers who support the state-controlled alcohol trade refer to it as an important source of revenue for the state. In reality, the state earns only about a 9% profit margin, which is pathetic considering the scope of its monopoly power and the lack of price breaks or other benefits for Pennsylvania residents. Tim Holden, chairman of the PLCB, proudly points to the $185 million net income transferred to the state’s General Fund this year, but multiples of that figure would flow directly to the citizenry under a free system — and sales taxes would rise by more than enough to make up for any lost government revenue.
Other states show the way forward. A 2017 study conducted in Washington state found that by switching from a state monopoly to private sales, the state saved $188 million in administrative and programming costs in just one year—close to a 77 percent savings. Washington’s population is half the size of Pennsylvania’s, meaning the savings in our state could reach half a billion dollars. And it’s not just money saved, but also better service. Customers reported greater satisfaction after the state relinquished control.
As intrepid Pennsylvanians cross state lines to slake their thirst, lawmakers should also get creative. Now is the time to embrace innovative ideas that allow for competition and choice in beverages, just like in every other lawful business in a free society.