Analysis: YOPO – You Only Privatize Once



Analyst decries privatization manipulation of liquoir monopoly by government in US state of Penna.–“…It actually gets harder to reform the market after the first round of privatization, as the first round winners become part of the political coalition against change…”


Jon Geeting


Lew Bryson is making an important point here that deserves to be popularized, so here goes:

YOPO – You Only Privatize Once

Basically the Turzai liquor privatization bill turned into a bad joke. Rather than eliminating regulatory rents, it further entrenched the incumbent players in the booze market, and created even more opportunities for rent-seeking.

Some people want to argue that passing the Turzai bill would be a good first step, and then we can make further reforms later, but I think the evidence from post-Communist countries says they’re wrong.

It actually gets harder to reform the market after the first round of privatization, as the first round winners become part of the political coalition against change. It’s going to be much harder to win on smaller issues like tavern license reform when supermarket chains are on the other team next time.

That’s why Lew and I came up with the following 6-point plan. It is a program we think liberals and libertarians should be able to agree on. It is also the stuff that absolutely must get passed in the first round of privatization.

And we bout it every day, every day, every day…

1. Let supermarkets sell beer, wine and liquor, purchased from private wholesalers. This competition will likely kill the State Stores anyway.

2. Charge a flat fee to any business that wants to sell booze – no cap on licenses. This will actually make more money for the State, and make it easier for non-nuisance bars to thrive.

3. Tax volume, not value. The Johnstown Flood Emergency Tax makes cheap booze even cheaper, while making better booze even more expensive. Go to a gallonage tax, like almost every other state.

4. Allow Pennsylvanians to buy wine, spirits, or beer in other states, or through the mail/Internet from anywhere, without penalty. — End the police-enforced monopoly.

5. Allow any authorized retailer to sell beer in any volume they desire, without fake restrictions. — End the case law. Now. The Legislature has fiddled around for years over this simple change. Shut up and do it.

6. Open up the wholesale market to more competition. — More wholesalers means more competition, which means better prices and service.



…Then majority leader Turzai’s hamhanded politicking ruined any chance that it would go anywhere. So once again, the clear will of the majority of the Commonwealth’s citizens was thwarted by a gutless government.

Well, maybe not so bad. After all, the voters of Washington went for a privatization scheme that raised their already high liquor taxes, which should be a caution to all Pennsylvanians who want privatization. That caution, of course, is to be very, very careful about the privatization you get. Because all we’ve been offered recently is a bill — HB11 — that obviously was written with large corporate interests very much in mind, and an amendment to it that was clearly designed to be impossible to pass, in a nod to the power of organized labor. These were not the privatization we wanted, and I’m glad they didn’t pass….

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