“State stores,” they’re called. The shelves are stocked with the adult beverages the LCB decides consumers will imbibe. The prices are set at what the LCB decides those consumers will pay. And, controlled by the Governor, the LCB will do what the Governor wants.
Take the Commonwealth of Virginia, for example.
A Reason Magazine article reports that in the last fiscal year, state stores earned $140M, not counting the $200M in revenue from liquor taxes. $340M isn't chump change when it comes to any state’s budget. However, with this particular Commonwealth having a budget shortfall, Governor Terry McAuliffe did what any good Democrat would do: Raise taxes. So, he ordered the LCB to increase its profits to $145M for the upcoming fiscal year.
So, who will be coming up with that extra $5M? The consumers, of course. Just look at how the price of liquor has skyrocketted during the past 10 years! That's not market forces. No, it's taxes!
The operative assumption is that increasing prices for adult beverages will turn into higher revenues to the Commonwealth which, in turn, will provide politicians and the union bosses the $$$s they want to provide the adult beverages they decide their constituents want. Why union bosses? The state stores are unionized.
But, that’s to ignore market realities. Seen the price of a bottle of fine single malt lately? It’s “out of this world”! The simple market reality is that when prices are increased too much, consumers substitute cheaper products which, in turn, decreases both income and profits.
In the Commonwealth of Pennsylvania, the former Governor did his best to end the government's control over the liquor business. But, anti-privatization interests—including the union bosses—successfully opposed the Governor's efforts. They argued, as they do in every state where the state stores hire unionized labor, that big-box retailers—like Costco—would dominate the adult beverage industry, that the consumption of adult beverages would rise, that underage drinking would skyrocket, and there’d be many more DUI-related casualties and deaths. Omigosh...the horrors!
Of course, that scenario is based more on hypotheticals than it is upon fact. If that scenario was true, then every state would have an LCB. Or, so it would seem.
LCB’s have nothing to do with “public safety” and everything to do with $$$s flowing into government. After all, those $$$s provide “public servants” the “Mother’s milk” that’s needed if those pols are to make government responsive to the people.
Let the discussion begin…
To read the Reason Magazine article, click on the following link:
"End State Monopolies on Liquor Sales."