Jay Ostrich: Pa. LCB Extends Its Own Monopoly
Growing up on a Pennsylvania farm, we enjoyed playing games over the holidays and none more than Monopoly. The possibilities were endless, the rules clear and the objective simple — heck, it even had cool Keystone State references. But in the end, there could be only one winner with other players left on the outside, bankrupt and broken.
Such are the ends of all monopolies, private or public. Just ask Pennsylvania taxpayers and consumers of wine and spirits who have played the game since 1933.
Pennsylvania remains one of only two states in the entire nation (the other, Utah) where citizens and consumers are forced to play monopoly with a government that wields iron-fisted control over all wholesale and retail sales of wine and spirits. Whether you are a restaurateur or individual consumer, if you want to play you will pay and obey their rules.
Sadly, the state Liquor Control Board controls the dice, changes the rules as it goes and plays with your money — consumers and teetotalers alike — while picking wine winners and liquor losers for a small crop of producers of their choosing. Customers may never pass go, shop elsewhere or even hang a shingle to compete lest they face the dreaded Chance Card that always reads “Go Directly to Jail.”
Sound like a fun game? Pennsylvanians surely don’t think. Credible, consistent polling has shown overwhelming majorities of Democrats, Republicans and independents support ending the game in favor of privatization that will bring personal and economic freedoms while keeping more jobs and higher tax revenues flowing into the community chest.
But in a desperate move to prove their value, LCB officials have gone one step further to expand their monopoly. In a recent investigative report, the Pittsburgh Tribune-Review uncorked a secretive plot by board officials that siphoned millions in taxpayer money to research, copyright, brand, advertise and market more than 30 in-house wines and spirits to compete directly with private labels for shelf space and consumers. That’s right, taxpayers. You now own a line of government wine and spirits.
Unfortunately, shoppers can’t tell the difference with exotic brand names like TableLeaf, LA MERIKA, Hayes Valley, Las Parcelas and Vinestone filling the shelves — this without so much as a press release from an agency never shy about shining light upon predictable failures like its wine kiosk catastrophe. Pennsylvanians are left to only guess Government Wine wouldn’t yield much enthusiasm.
But forget for a moment the utterly unexplainable phenomenon of a government agency competing unfairly with private business while using millions more tax dollars to advertise and market these products in secrecy. Forget, too, the violation of public trust that has launched external and internal ethics investigations for numerous violations and disastrous decisions by executive staff that has cost taxpayers millions. In the end, it’s about whether the government has any right being in the alcohol sales business when private industry can do it with more convenience, greater selection and better prices.
True, many argue Pennsylvania’s public safety is at stake with the LCB providing a service to protect citizens from the social ills surrounding alcohol abuse. It’s a notion quickly dismissed by rigorous academic studies and empirical observation of other privatized states with lower rates of alcohol-related fatalities and maladies. The conclusion: Government-run liquor stores don’t prevent alcohol abuse.
Clearly, Pennsylvanians are crying sour grapes with this costly game and are responding by making up rules of their own — openly breaking the law. Even according to a taxpayer-funded study commissioned by the LCB, bootlegging through neighboring states is prevalent. In Philadelphia and eight bordering counties alone, the study revealed nearly half surveyed broke the law. This border bleed cost Pennsylvania nearly $100 million in sales and $40 million in state taxes.
At the end of nearly 80 years of control, the LCB ponderously produced a monopoly of manipulation, mediocrity, malfeasance and mismanagement. In its wake, we’re left with a small cadre of cronies counting their winnings, while the rest of Pennsylvanians, private businesses and consumers lay broken and bankrupted by bootlegging, border bleed and the loss of personal and economic freedoms.
LCB officials have had their turn, we’ve played their unfair game, and now Pennsylvanians are demanding their legislators declare this out-of-control agency must never pass go or collect another $200 again.
Jay Ostrich is director of public affairs of the Commonwealth Foundation, Pennsylvania’s free-market think tank based in Harrisburg.
