The people have spoken! According to a new poll from Quinnipiac University, Pennsylvanians overwhelmingly want to privatize state liquor stores. That's good news for incoming Governor Tom Corbett, who has pledged to sell off the stores to help close a budget gap that could be as high as $4 billion.
When we saw this poll, we couldn't help but think of a blog post written a few weeks ago by Dave Davies of Newsworks. He pointed out that selling off the licenses might raise some cash for state government, but it won't mean much of a difference for consumers:
The idea is to auction off 621 retail liquor licenses and 100 wholesale licenses. To get $2 billion from that, licenses will have to go for an average of more than $2.7 million each.
Nobody pays $2.7 million for a license unless it gives them a rare and exclusive privilege to sell wine and liquor. So instead of buying wine and beer in grocery stores or a bounty of shops that compete with each other, you'd still have to hunt down one of the former State Stores licensees, who are now granted a state-chartered monopoly.
This is a really important point and one that seems to be missing from the current debate. Pennsylvania residents might be eager to sell off the state stores, but they're kidding themselves if they think it's going to mean an increase in competition. Dave suggests that a better way to handle this issue is to grant liquor licenses (with certain standards) to retailers and charge a fee. This wouldn't generate a big upfront payment to help the state budget, but it will truly alter the current liquor laws.
Depending on how the rules are structured, Dave's idea could mean an explosion in the number of liquor stores in the state. And this raises some interesting questions.
For example, New Jersey has much more liberal laws about the sale of alcohol, and it has nearly 1,800 liquor stores (Pennsylvania, a much larger state, has around 600.). If Pennsylvania followed suit, there would be more choices for consumers, but also potentially more negative side effects. Take drunk driving. Pennsylvania has a population of about 12.2 million people. Last year, there were 141 alcohol-related fatalities. New Jersey, with a population of 8.4 million, had 149 drunk driving deaths during the same period. Now, it's impossible to draw a straight line between the number of liquor stores and the number of deaths, but the wide availability of booze could well be a factor. [See update on numbers]
Look, we're not arguing in favor of Pennsylvania's completely ludicrous liquor laws. Reform is obviously necessary and Governor-elect Corbett seems eager to take up the challenge. But there are often unintended consequences to these decisions. Pennsylvanians should keep that in mind while cheering on the move to privatize the state stores.
Update (6:42 PM): Ok, as you can see in the comments, we have a disagreement on the exact number of drunk driving deaths in Pennsylvania. The number may be 406 and our original numbers are just incidents investigated by the state police. We'll confirm this with state officials tomorrow and update the post. Obviously, this would change the dynamic in terms of drunk driving fatalities, but we still think it's worth considering the possibility that dramatically increasing the number of liquor stores would have unintended consequences.