Tonight in Harrisonburg, Governor Bob McDonnell will be holding the sixth in his series of eight town hall meetings on the topic of reforming Virginia’s government. As always, the centerpiece of the governor’s presentation will be his proposals to privatize the state’s monopoly on the wholesale and retail sale of distilled spirits, which dates to 1934 and the end of alcohol Prohibition.
Earlier this month, the Virginia Institute for Public Policy, a state-level think tank based in Gainesville, published a study called Impaired Judgment: The Failure of Control States to Reduce Alcohol-Related Problems, written by George Mason University economist Donald Boudreaux and Julia Williams, a consultant with the Regulatory Economics Group, LLC.
‘No statistically significant difference’
A few days after the study was released, the Charlottesville Libertarian Examiner caught up with Institute president John Taylor in Richmond, who summarized its findings.
“We looked at the public health and safety aspects of privatizing the state-owned liquor stores,” Taylor explained, comparing “the control stores that have monopolies over the sale of distilled spirits vs. the license states where the state government will sell licenses to private vendors to sell distilled spirits.”
These findings closely match those found by Duquesne University economist Antony Davies in research he did for a Pennsylvania think tank.
The three areas examined in the study, he said, “were alcohol-related deaths, binge drinking, and drunk-driving fatalities. In those three areas, what we found was there’s no statistically significant difference between the control states and the license states. There just isn’t.”
If one argues that “we have to control distilled spirit sales and give the government a monopoly,” Taylor said, “then public health and public safety [are] not really the excuse,” repeating for emphasis: “In those three areas, there is really not a need or an excuse for the government to be involved.”
With regard to the revenue that could be gained (or lost) through privatization, Taylor said that he understands the governor has claimed privatization will result in a windfall of $500 million that will be applied to transportation program.
‘Moral hazard’
However, he added, “To me, the revenue argument is not a good argument to begin with, because I don’t believe selling liquor is a core function of government. If you can say, ‘well, yeah, but the state makes a lot of money off of it,’ [then] the state might make a lot of money off a lot of things that should be private industries.”
Turning sardonic, Taylor added with a smile:
“I mean, if we allow them to have a monopoly to sell liquor, before you know it, they’ll take over car companies, insurance companies, banks – oh, sorry, they already do that.”
Having government involved in one consumer business, like liquor, Taylor argued, is the start of “a slippery slope and it’s a moral hazard. I just don’t want our government involved in this. I want a small government that I can easily monitor to make sure I know what they’re doing so that I can bash them when they overstep their bounds.”
Asked what he has heard from members of the General Assembly, who will have to vote to approve any privatization program, Taylor noted that “there are some that have expressed views that they don’t want to give up the ABC stores simply because they think it would be a loss of revenue.”
‘Not a core function’
At the same time, however, he pointed out that “the more conservative members of the General Assembly would agree that this is really not a core function of government and the government should get out of it.”
Following tonight’s town hall in Harrisonburg, Governor McDonnell will meet with voters and taxpayers in Danville on August 30 and in Bristol on August 31. Press reports indicate that he will officially release his ABC privatization proposals on September 8, for the consideration of the Government Reform Commission.
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