If Liquor Privatization Is Not Handled Right, It Might Benefit Consumers


The Washington Post reports that Virginia Gov. Bob McDonnell's plan to privatize liquor retailing in the Old Dominion is encountering resistance from some of his fellow Republicans:

Del. Tom Gear (R-Hampton), who chairs the Alcohol Beverage Control subcommittee of the House General Laws committee—the group likely to be the first to consider the plan if the governor calls a special session this fall—said Tuesday that he has "reservations."…

Gear…said he was concerned by suggestions that Costco and Wal-Mart would be able to sell liquor in a new system. He said he's worried the big companies could make it tough for small retail businesses to successfully compete in the market.

"My idea was to create jobs from small operations, mom-and-pop stores," he said. "Costco can put in liquor and never have to hire a single person."

Gear evidently sees liquor privatization as a stimulus program that should be judged by the number of jobs it creates. According to this view, big discounters like Costco and Wal-Mart cannot be allowed to compete with "mom-and-pop stores" because they are too efficient. By the same logic, Virginia should force liquor retailers to operate like a Chinese department store, assigning one employee to give the customer a card representing a bottle of bourbon, another to take the customer's money and stamp the card, a third to accept the stamped card, and a fourth to fetch the bottle. That would create four times as many jobs as a self-serve system where the customer takes his purchase to the cashier. Where have we heard this kind of reasoning before?

If Gear cared about consumers, he would welcome competition, which drives down prices, widens selection, and improves service. Instead he wants to replace a state monopoly with a state-enforced cartel. Which is the party of free markets again?

Previous coverage of McDonnell's privatization plan here. Perhaps Virginians should count themselves lucky that they can at least buy beer and wine (but not distilled spirits) in grocery stores.