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Gin, juice and state monopolies

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I wouldn't have thought that Virginia Gov. Bob McDonnell, a Christian conservative with a hard moralist streak, would be the guy to substantially loosen the state's liquor laws and increase the availability of booze. But so it goes. And in case it's unclear, I'm fully in support of this policy: State monopolies on liquor sales combine bad economic policy with bad social policy.

Photo credit: Tracy A. Woodward/The Washington Post.

By Ezra Klein  |  August 18, 2010; 11:02 AM ET
 
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Comments

Amen! Not to mention that the VA ABC stores are dingy and gross.

Posted by: theo2709 | August 18, 2010 11:58 AM | Report abuse

Ezra,

We have such a monopoly in Ontario, and it seems to work out: access to booze is equalized around the province, bulk orders keep costs down, revenues support social programs, and alcohol in bulk is kept out of the hands of minors.

Seems to me to be a good policy. I'm open to having my mind changed, though: why do you think state monopolies are bad policy?

Note to Ontario readers: yes, I know about the Beer Store and Wine Rack, in addition to the LCBO...

Posted by: andrewmiller2007 | August 18, 2010 12:03 PM | Report abuse

Unfortunately, Governor McKenDoll doesn't have a plan on how to plug the $100 million plus annual hole in the state budget that he would create by selling off the stores. Since we are still recovering from the 'no car tax' debacle of the last Republithug governor before this one, I'm not really anxious to jump down the rabbit hole again. Besides, he's not doing this for reasons of principle, he's just looking for a quick fix for road problems so he can take credit for the fix and leave the pain for later.

Posted by: guesswhosue | August 18, 2010 12:31 PM | Report abuse

*******We have such a monopoly in Ontario, and it seems to work out: access to booze is equalized around the province, bulk orders keep costs down, revenues support social programs, and alcohol in bulk is kept out of the hands of minors******

They have such a policy in New Hampshire, too.

I can see New Hampshire's angle: the state's liquor stores undercut the prices of nearby Massachusetts, and the New Hampshire government captures a lot of profit that would otherwise end up in the bank accounts of Massachusetts liquor store ("package stores" as they're called here) owners, or in the coffers of the state's revenue department.

But in general it's hard to see the case for a government monopoly over, you know, simply taxing the stuff.

Posted by: Jasper999 | August 18, 2010 12:43 PM | Report abuse

Ezra,

Long time reader. First time commenter. I'm curious: what are your (unstated) reasons for opposing state liquor stores? How do they combine "bad economic policy with bad social policy"? Tease that out a bit.

Posted by: LarryTate1 | August 18, 2010 12:54 PM | Report abuse

Agreed, Larry. Please explain, Ezra.

Posted by: gmart68b | August 18, 2010 2:32 PM | Report abuse

Pearlstein's analysis is quite good, but politically would new, powerful industry pressures as well as more general anti-tax pressures threaten his assumption that higher taxes on liquor will make up for the loss of profits that have been going to the state? Are his tax assumptions realistic and sustainable?

Posted by: pjro | August 18, 2010 2:36 PM | Report abuse

--"I wouldn't have thought that Virginia Gov. Bob McDonnell, a Christian conservative with a hard moralist streak, would be the guy to substantially loosen the state's liquor laws and increase the availability of booze."--

Might be a good opportunity, Klein, to explore your self-righteous bigotries. Could very well be your take on "Christian" and "conservative" are as wrong as your infatuation with larding the country up with government "policy".

Posted by: msoja | August 18, 2010 2:51 PM | Report abuse

I don't care so much about state liquor stores. I mean, it is annoying when they're closed. Still, what really annoys me is unlike my native WA, in New Jersey there's no beer or wine sold in grocery stores/mini marts. Now *that* is a problem.

Posted by: MosBen | August 18, 2010 2:54 PM | Report abuse

Look on the bright side. It could be worse.

"City authorities in Moscow have announced a ban on the sale of spirits between 10pm and 10am, in the most recent of a series of measures designed to break the country's drinking habit."

and

"Russia has since increased excise on beer, raised the minimum price of a bottle of vodka to 89 roubles (£1.87) and announced plans to cut sales at kiosks. Legal changes to make it a criminal rather than an administrative offence to sell alcohol to minors are also in the pipeline and last month police began enforcing a zero drink-drive limit.

Shops and other outlets in Moscow had been banned from selling alcohol over 15% in strength between 11pm and 8am but a legal loophole allowed them to acquire permission for 24-hour sales from district authorities. Establishments serving food are not affected."
http://www.guardian.co.uk/world/2010/aug/18/moscow-ban-vodka

Posted by: tuber | August 18, 2010 3:04 PM | Report abuse

Having grown up in Virginia, I'll say this much: as underaged drinkers we didn't screw around with the ABC stores -- we'd go into DC or some other place if we wanted hard liquor.

In hindsight I don't see this as such a bad thing.

In terms of the economic benefits for the state treasury and the added costs for consumers -- essentially negligible -- I'm a huge fan of the ABC stores. My view on this is the same with state lotteries. If you're going to give people an outlet for activities with a potential for real social costs, at least off-set those costs by taxing the heck out of the activity or capturing the lion's share of the profits.

If marijuana is ever legalized, ABC stores are probably the way to handle sales.

As a side note, the limits on hard liquor sales also probably produce some benefits in terms of ads and other forms of marketing (e.g. no bill boards).

The budget consequences of McDonnell's plan are going to be absolutely nasty. Net all changes it's likely to create a $1 billion to $1.5 billion hole in the state budget over the next 10 years. His friends in the retail and liquor industry though will undoubtedly be happy campers with capturing more profits -- no doubt they'll see that McDonnell gets his cut of the action too.

Posted by: JPRS | August 18, 2010 3:13 PM | Report abuse

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