Liquor Privatization Would Save Money and Improve Service, but It Also Would Eliminate Unnecessary Government Jobs. What to Do?


Dominic Pileggi, majority leader of the Pennsylvania Senate, says privatizing the state's liquor stores has "moved up to the top of the agenda" now that Pennsylvania will have a Republican governor as well as a GOP-controlled legislature. The New York Times notes that incoming Gov. Tom Corbett (currently attorney general) "must consider both a budget gap that could run as high as $5 billion and his campaign pledge not to raise taxes." Getting the state out of the booze business, the Times says, "would potentially bring $2 billion for state coffers, but also layoffs of several thousand state workers."

Allow me to question that but. The Times warns that Pennsylvania's privatization plans are "endangering the jobs of thousands of state workers." But if you believe states should not participate in, let alone monopolize, profit-making businesses, the fact that privatization reduces the public payroll while saving on operating expenses and improving customer service hardly counts as a disadvantage. Private businesses that sell wine and liquor do employ people, by the way. But even if they were operated by robots, how seriously can we take the argument that unnecessary government jobs should not be eliminated because then there will be fewer unnecessary government jobs? And if Corbett decided to preserve the state stores and cover the deficit by raising taxes, wouldn't that decision also have an impact on employment? Or is it only government-directed money that creates jobs?

As I noted in August, privatization advocates also have been known to argue, with a logic familiar to fans and foes of President Obama's stimulus package, that the business of distributing alcoholic beverages should be designed to maximize jobs—i.e., to be as inefficient as possible. More on Pennsylvania's liquor distribution system here. Reason coverage of liquor privatization in Virginia here.