Privatize PA-LCB, Please!

[Jeff L]

At no other time in recent memory, even during the Ridge administration, do we find ourselves in a better position than right now to privatize the LCB system.

The political will is there, the Republicans are in total control, the one time cash infusion has been quoted at around 1 Billion Dollars (not to mention ongoing savings in salaries and benefits of all the state employees) This would make a really sizable dent in the state's deficit this year. I really think that most people would rather have this industry in the hands of private companies who can deliver a far superior service with much more competitive pricing. I mean, when was the last time you saw a government agency do a better job at anything than the private sector?

I know a lot of you feel the same way. Any ideas out there how we communicate this to the administration?

[Mjx]

. . . .when was the last time you saw a government agency do a better job at anything than the private sector?

. . . .

I hear this argument a lot, and without actually finding myself favouring either side of it, I do have to say that if I haven't seen any instances of government agencies doing specific jobs better than the private sector, I haven't noticed the reverse to hold true either, although, competiveness notwithstanding the cost generally goes up.

I honestly have no idea how this would play out in this particular instance, but having spent time in a country in which part of the postal service has been privatized, I have to say that, if nothing else, the results of privatizing can be underwhelming in some unpleasantly surprising ways: Unless the entity in question enters a situation that is genuinely competitive, there's little incentive to deliver more than 'just what it was'.

[mkayahara]

I mean, when was the last time you saw a government agency do a better job at anything than the private sector?

Speaking as a Canadian who greatly appreciates his public health care system but greatly despises many of his liquor control board's decisions, I feel like this kind of blanket statement is unlikely to win over as many supporters as you might get otherwise.

[gfweb]

One only need to compare choice, convenience and price in neighboring Delaware to see how much better it can be.

[lancastermike]

I'm a PALCB customer as well, Jeff. I am less confidant than you and the new Gov. that things will be better than they are now in terms of selection and pricing. All of us who have shopped across the state lines see what privatly owned stores can do. People often refrence Moore Brothers.

I fear that if they sell the stores they will be bought up by big chain operations. maybe at some places you will get good service and lower prices. What do you think may happen in Tioga County? The discussion that was floated was to sell the stores that existed, not to open the stae up to anyone who wanted a license. If they just sell the current stores, how much competition would there be? Maybe in Philadelphia there would be enough business to support a competitive retail enviorment. In other parts of the state I would fear there would be even less selection and certainly no better service.

If we can get them to give Katie Loeb a license for her to run a store it would be the best in town. But could she afford it? Big governmentmay suck, but big business is no day at the beach either.

It may be a good idea, but it may not. They will have to convince me.

Edited March 10, 2011 by lancastermike (log)

[Burnin' It]

\I mean, when was the last time you saw a government agency do a better job at anything than the private sector?

In the US, the post office, the military, utilities, airlines before deregulation. In fact, I have yet to find a single instance where privatization produced lower prices and better service.

Correct me if I'm wrong, but doesn't the PA LCB pretty much only exist to enforce the alcohol sin tax? Make up for the tax revenue and get rid of the LCB. You could tax the rich or corporations. You could even tax foreign currency exchange which does absolutely nothing to help the real economy. You could tax the crap out of those guys at PNC who took TARP money, and instead of using it for loans like they were supposed to, bought another bank with it. But I doubt that we have time for rational solutions.

But yeah, LCBs in any state are pretty much an anachronism. I'm not too worried about rum running these days. Alcohol education should be paid for by the suppliers, not by a regressive tax on the consumers.

Is this about cooking and baking? I think the thread started out political. I apologize if I am too far off topic.

[nolnacs]

I'm sorry, but I previously lived in rural/suburban areas (in Indiana) and in a large city (Chicago) and I couldn't believe the asinine, antiquated alcohol laws that Pennsylvania has when I moved to Philadelphia and I say this as some one who DOES NOT drink. I just occasionally want to buy some wine or hard alcohol to cook with.

First off, simply selling the stores to a private company is a horrible idea. You are just replacing one monopoly with another. They need to open up the alcohol market to competition. As far as chains taking over, in the suburbs the nearby liquor store was one of the few businesses around that was not a chain! As far as sufficient competition, let grocery stores sell wine and beer as well. That helps a great deal with providing competition in smaller towns/cities.

I can't believe how passionate this issue makes me when it really does not affect me very much. It just irks me that I can't buy some cheap wine to cook with at Trader Joes.

[Edward J]

I'm assuming that's Liquor Control Bord, and not Le Cordon Bleu....

1) Booze is probably one of the bigger cash cows for your State, give it up and what are "they" gonna do for cash? Friendly neighborhood casino on every street corner? Increased property taxes?

2) Who sets the prices? Currently you're probably paying, what, 50-70% mark-up per bottle? If booze were privatized, who would set the prices, who would control booze coming into and going out of the State?

[cdh]

There are plenty of things to complain about with regard to the PLCB. BUT we've seen right here on eG's old PA booze thread that when the right guy is running it, it can do great work and provide great values. Not every chairman of the Board is a Jonathan Newman, however. The way things are set up, all of Pennsylvania's boozy eggs are in one basket, and when a chairman doesn't do a great job of making the system work, it starts to annoy everybody everywhere.

If we go ahead and privatize, I hope it gets done right. I worry a bit about the far reaches of the state, as an unfettered market with an artificial cap on the number of retail outlets, as seems to be the current idea in the legislature, creates a huge economic incentive to cluster all of the outlets in the densely populated areas of the state, leaving the rural folks with long trips to potentially indifferently run stores that might be worse than what we've got today.

[KatieLoeb]

If we can get them to give Katie Loeb a license for her to run a store it would be the best in town. But could she afford it? Big government may suck, but big business is no day at the beach either.

Mike:

You flatter me. And you're right, I can't afford to just go out and buy a store. But there's another alternative I'm waiting to hear back about. I've been floated as a possible member of the Southeastern PA "Regional Advisory Panel", one of three that are statewide. The idea is that actual professional functioning members of the community provide feedback to the PLCB on existing PLCB operations and on proposed changes and modernizations. So I can actually get our complaints heard. In theory. I would be delighted to give them an idea of just how difficult it is to function as a professional craft bartender/spirits enthusiast in the current environment. I suspect the bureaucrats don't really have any idea how it works at the other end of the food chain. I'll keep you posted on whether this pans out or not.

My real suspicion is that this will go the way that all rumblings about privatization of the liquor stores in the Commonwealth have gone before. The way of the dodo. And some valid points have been made about stores in the hinterlands of Pennsyltucky getting short shrift. I still think there are too many union employees and folks with heavy benefits and light work loads that have no intention of giving up their jobs and pensions...

[lancastermike]

There are plenty of things to complain about with regard to the PLCB. BUT we've seen right here on eG's old PA booze thread that when the right guy is running it, it can do great work and provide great values. Not every chairman of the Board is a Jonathan Newman, however. The way things are set up, all of Pennsylvania's boozy eggs are in one basket, and when a chairman doesn't do a great job of making the system work, it starts to annoy everybody everywhere.

If we go ahead and privatize, I hope it gets done right. I worry a bit about the far reaches of the state, as an unfettered market with an artificial cap on the number of retail outlets, as seems to be the current idea in the legislature, creates a huge economic incentive to cluster all of the outlets in the densely populated areas of the state, leaving the rural folks with long trips to potentially indifferently run stores that might be worse than what we've got today.

Almost assurdly there will be some sort of limit on the number of licenses issued. PA will never have every gas staion, mini-mart, drug store and grocery store selling beer and liquor like I saw in Califorinia. If they just sell the stores that exist now, the one on Chestnut Street in Philadelphia is worth a lot more than the one on N. Queen St in Lancaster and that one worth more than the one on E 4th Street in Emporium.

The issue is not easy, I'll wait to see what plan Corbert's panel brings forward.

[lancastermike]

If we can get them to give Katie Loeb a license for her to run a store it would be the best in town. But could she afford it? Big government may suck, but big business is no day at the beach either.

Mike:

You flatter me. And you're right, I can't afford to just go out and buy a store. But there's another alternative I'm waiting to hear back about. I've been floated as a possible member of the Southeastern PA "Regional Advisory Panel", one of three that are statewide. The idea is that actual professional functioning members of the community provide feedback to the PLCB on existing PLCB operations and on proposed changes and modernizations. So I can actually get our complaints heard. In theory. I would be delighted to give them an idea of just how difficult it is to function as a professional craft bartender/spirits enthusiast in the current environment. I suspect the bureaucrats don't really have any idea how it works at the other end of the food chain. I'll keep you posted on whether this pans out or not.

My real suspicion is that this will go the way that all rumblings about privatization of the liquor stores in the Commonwealth have gone before. The way of the dodo. And some valid points have been made about stores in the hinterlands of Pennsyltucky getting short shrift. I still think there are too many union employees and folks with heavy benefits and light work loads that have no intention of giving up their jobs and pensions...

I hope you do indeed receive this appointment. I would love to be able to walk into a store and pick up a bottle of maraschino or Benedictine or have a larger selection of rye and gin. Places like you run would love to have delivery available and the ability to establish a cash flow situation with an establishment instead of having to pay cash on the barrel for every order. And if they sell it off maybe that stuff can happen, but i would not bet on it.

I would expect the union to fight it and they should do all they can to protect the jobs of their members. But the nationwide wave of blaming public employees for the financial ills of the several states may be able to sweep through PA as well. The public employee unions are much stronger here than in some other states.

Let's hope this all works out to benefit all of us. Until I can see the details, I remain skeptical

[gfweb]

They also need more stores that aren't just convenient to large populations. If a supermarket chain can make money in the country so can a state store.

[lancastermike]

They also need more stores that aren't just convenient to large populations. If a supermarket chain can make money in the country so can a state store.

Not exactly sure I understand this. I'm not suggesting that a privatly owned liquor store can't make a profit in Ridgway or Dushore, but to think the selection or service would be better than exists now I do doubt

[cdh]

They also need more stores that aren't just convenient to large populations. If a supermarket chain can make money in the country so can a state store.

Not exactly sure I understand this. I'm not suggesting that a privatly owned liquor store can't make a profit in Ridgway or Dushore, but to think the selection or service would be better than exists now I do doubt

I'd still question whether there'd be a store there at all. Doing the math based on my understanding of what's been proposed, they expect to pull in $1.5 Billion from selling 750 licenses to operate liquor stores throughout the commonwealth. That comes out to $2M per license. I'd wager that there are large swaths of PA where the profits from liquor sales would have trouble getting a shop owner to breaking even after financing a $2M license and all the standard business overhead.

Edited March 11, 2011 by cdh (log)

[lancastermike]

They also need more stores that aren't just convenient to large populations. If a supermarket chain can make money in the country so can a state store.

Not exactly sure I understand this. I'm not suggesting that a privatly owned liquor store can't make a profit in Ridgway or Dushore, but to think the selection or service would be better than exists now I do doubt

I'd still question whether there's be a store there at all. Doing the math based on my understanding of what's been proposed, they expect to pull in $1.5 Billion from selling 750 licenses to operate liquor stores throughout the commonwealth. That comes out to $2M per license. I'd wager that there are large swaths of PA where the profits from liquor sales would have trouble getting a shop owner to breaking even after financing a $2M license and all the standard business overhead.

that is what they talked about, Chris. And you are 100% correct. That is why the total revenue number they were tossing around was a bunch of hooey.

[nolnacs]

They also need more stores that aren't just convenient to large populations. If a supermarket chain can make money in the country so can a state store.

Not exactly sure I understand this. I'm not suggesting that a privatly owned liquor store can't make a profit in Ridgway or Dushore, but to think the selection or service would be better than exists now I do doubt

I'd still question whether there's be a store there at all. Doing the math based on my understanding of what's been proposed, they expect to pull in $1.5 Billion from selling 750 licenses to operate liquor stores throughout the commonwealth. That comes out to $2M per license. I'd wager that there are large swaths of PA where the profits from liquor sales would have trouble getting a shop owner to breaking even after financing a $2M license and all the standard business overhead.

that is what they talked about, Chris. And you are 100% correct. That is why the total revenue number they were tossing around was a bunch of hooey.

Is there a reason that all the licenses need to be the same price? Maybe ones in Philadelphia could be $4M and ones in say... Reading could be $500K. In any case, I think having such a small number of licenses is ludicrous.

Mike - why do you think that PA could not have alcohol sold in supermarkets, gas stations etc? I'm genuinely curious - I find all of these restrictions on buying alcohol to be bafflings.

[lancastermike]

They also need more stores that aren't just convenient to large populations. If a supermarket chain can make money in the country so can a state store.

Not exactly sure I understand this. I'm not suggesting that a privatly owned liquor store can't make a profit in Ridgway or Dushore, but to think the selection or service would be better than exists now I do doubt

I'd still question whether there's be a store there at all. Doing the math based on my understanding of what's been proposed, they expect to pull in $1.5 Billion from selling 750 licenses to operate liquor stores throughout the commonwealth. That comes out to $2M per license. I'd wager that there are large swaths of PA where the profits from liquor sales would have trouble getting a shop owner to breaking even after financing a $2M license and all the standard business overhead.

that is what they talked about, Chris. And you are 100% correct. That is why the total revenue number they were tossing around was a bunch of hooey.

Is there a reason that all the licenses need to be the same price? Maybe ones in Philadelphia could be $4M and ones in say... Reading could be $500K. In any case, I think having such a small number of licenses is ludicrous.

Mike - why do you think that PA could not have alcohol sold in supermarkets, gas stations etc? I'm genuinely curious - I find all of these restrictions on buying alcohol to be bafflings.

I do not think the people of the state would want to see that and I don't think the legislature does either. To a large extent the state is a conservative place.

[Boilerfood]

Maybe it is a product of my youth, but I am always perplexed at the varied liquor laws across the nation. For example, Louisiana has parts of the state without open container laws. I grew up in Ohio where groceries cant sell anything over 65 proof or something equally silly and arbitrary. I attend school in Indiana where there is no liquor sales on Sundays, forcing grocery stores to set giant palates of whatever is free in the way of the aisles because you arent allowed to even walk down them. But, as mentioned before, in California the corner quickie mart as liquor selections that rival most of what we have in the midwest.

EDIT: Forgot a word.

Edited March 11, 2011 by Boilerfood (log)

[Chris Amirault]

Maybe it is a product of my youth, but I am always perplexed at the varied liquor laws across the nation.

It's not a product of your youth. As this topic makes clear, it's a product of happenstance, avarice, convenience, capital, organized crime, legislation, massive distribution conglomerates, and the Most Interesting Man in the World. Well, not that last one.

[gfweb]

The fundamental question is whether the state belongs in the booze business any more than they belong in the gasoline business. You can make arguments pro and con regarding practicality, but at the core of it is the question as to whether PA govt's mission is to be a retailer. Who would think that is a good idea? Probably even unconstitutional on some level.

[Edward J]

Hefty licenes....

But why go for a single amputation when you can go for along, slow, bleed?

Here in B.C. we do have private sellers as well as Gov't ones. Don't know what the licese fees are, but all booze--including beer and wine must be bought through the provincial Gov't, they set the prices.

Booze is a very steady cash cow. Serious consideration should be given before giving it up.

[Jeff L]

One only need to compare choice, convenience and price in neighboring Delaware to see how much better it can be.

Well said and the very same scenario, actually even better, holds true in NJ.

Edited March 12, 2011 by Jeff L (log)

[Jeff L]

There are plenty of things to complain about with regard to the PLCB. BUT we've seen right here on eG's old PA booze thread that when the right guy is running it, it can do great work and provide great values. Not every chairman of the Board is a Jonathan Newman, however. The way things are set up, all of Pennsylvania's boozy eggs are in one basket, and when a chairman doesn't do a great job of making the system work, it starts to annoy everybody everywhere.

If we go ahead and privatize, I hope it gets done right. I worry a bit about the far reaches of the state, as an unfettered market with an artificial cap on the number of retail outlets, as seems to be the current idea in the legislature, creates a huge economic incentive to cluster all of the outlets in the densely populated areas of the state, leaving the rural folks with long trips to potentially indifferently run stores that might be worse than what we've got today.

Good point Chris. The matter of license cost needs to be based on store traffic or gross sales. It wouldn't be fair to those more rural areas to pay the same as one would in philly or pittsburgh.

I was really pleased with Newman but we all know what happened to him, more political bullshit. He was a rare bird indeed, he didn't do it for the money but for the passion of getting it right for Pennsylvanians.

Truth be told, I've been really wanting this sytem to be privatized since I moved to the state over 20 years ago, but seeing the latest email blast from the "Chairman's Selection" featuring wines over $200 really rubbed me the wrong way. I don't know about where you live but the selections in the Newtown store have really sucked since newman left. The difference is the slack is being picked up by the other bozos on the LCB. I can't believe that Newman's key buyers are still working for the state of PA and didn't go with Newman's new company.

I too hope it gets done right as I'm getting real tired of going to new Jersey for my purchases