Republicans Should Favor Privatization of Liquor Sales

Republicans should support increased privatization and oppose the continuation of government-run entities. It should go without saying, but some Republicans in Virginia (and beyond) seem to have forgotten what it means to be a Republican.

Since his election last November, Governor Bob McDonnell has expressed an interest in privatizing  the commonwealth’s alcohol beverage control system. Now as his plans take shape and edge closer to abolishing the state’s hold on alcohol retail sales some Republicans are showing nervousness about McDonnell’s ideas.

Del. Tom Gear (R-Hampton) 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 also said he was concerned about replacing the $248 million ABC now deposits in the general fund annual in liquor profits, excise and sales taxes.

Sen. Emmett Hanger (R-Augusta) is concerned about the potential loss of tax revenue and increased consumption: “The money is already flowing into the general fund and being spent, every last penny. There is not a bonanza to have there.” “The experts I’ve talked to think privatization would be the absolutely wrong direction to go.”

Del. Bob Marshall (R-Prince William) is also concerned about increased consumption and revenue. “We have to make a decision not just about what’s going for today, but 10 years from now,” he said.

Republican politicians should NOT support policy simply to fall in line with the party or support a proposal simply because its author is a Republican — especially if the proposal only pays lip service to individual liberty, private property, or personal responsibility. However, many of the concerns expressed by McDonnell’s conservative opponents show an utter lack of concern for the principles their party is supposedly based on.

More than that — their concerns are entirely unfounded:

No new money

It’s understandable that lawmakers are concerned about losing a practically guaranteed annual revenue stream of $248 million, all of which is already allocated to pay for goods and services around the state. But according to an article published in the Washington Examiner this week those fears are unfounded when considering how much VA spends on the business of controlling liquor sales:

The Department of Alcoholic Beverage Control has a budget of $514 million. Through the third quarter of 2010, the Agency had spent more than $237 million on “supplies and materials.” Of that, $232 million was spent on alcoholic beverages…. meaning the commonwealth, in the interest of restocking the shelves at its ABC stores, was cutting checks to distilleries, wineries and importers across the country.

Higher rates of crime and abuse

Again it’s understandable that lawmakers and other interested parties are concerned that  “loosening” the state’s grip on alcohol sales will result in minor abuse, increased alcoholism, crime, and traffic accidents due to increased availability and affordability. If we look at other localities that have switched from control to private systems, we can see that these fears seem to be unfounded.

For example, Iowa privatized state stores in the 1980s without such an increase in social ills. The number of liquor stores nearly doubled, tax revenue from sales increased by $125 million, (according to the state’s division of alcoholic beverage control) yet, underage drinking and alcohol-related fatalities “remained steady.”

…even though Iowa’s number of liquor stores roughly doubled, its incidence of underage drinking and alcohol-related fatalities remained steady. “Privatization didn’t really have any effect” on such problems, said Keith Bailey of the Iowa chapter of MADD.

Similarly in Alberta, Canada, which privatized alcohol sales in 1993 has seen cheaper prices, increased numbers of retail operations, and higher amounts of government revenue.

Of the four western provinces along with Ontario and Quebec, Alberta is tied for the highest in terms of dollars raised from alcohol per capita, ahead of those with retail and distribution monopolies.

In addition to the fiscal benefits, privatization in Alberta did not result in a spike in crime, death, and abuse. In fact, despite increased availability in Alberta, consumption declined following privatization along with traffic accidents related to alcohol.

In the decade following privatization, Alberta’s impaired driving rate declined by a higher percentage than any other province — 73%. That compares to a 47% decline for Saskatchewan and an average 50% for Canada. In addition, citizens of Saskatchewan report higher rates of alcohol-related harm than nearly all other provinces, including Alberta.

All lawmakers, not simply Republicans, should seriously consider the merits of privatizing liquor sales. In particular, Republicans should temper their fear of change with a commitment to their espoused ideals. Infinite numbers of studies could be conducted, statistics could be collected from now until kingdom come: we will never know without a doubt what the results will be of privatizing liquor sales in Virginia. But by supporting the policies that best preserve free enterprise and personal liberty, Republicans can at least be certain that they are protecting their ideals and the rights of their citizens.