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| From the LCB site. |
Here's the story though, see you don't govern by polls. You obviously don't take positions that the public is fundamentally opposed to and think you'll win elections. Tom Corbett certainly isn't. His cuts to education over the last two years, his privatizing the lottery, even his decisions on Marcellus Shale are hardly popular. He's not trying to sell liquor stores because he wants better liquor policy, or because the public wants it, or even because it's leaking money (it's not), he's trying to sell the stores because he's an ideological zealot who thinks the state should not really do anything at all. Ideologically, there's no reason at all for Democrats to support this- we don't think the state should do nothing, so we generally aren't pro-privatization. Furthermore this is not a resource drain on the state, so there's no reason to view this as a service that needs to go imminently.
Most of this opposition is based on false pretenses anyway. Most people think that the state stores are draining red ink into our budget, with high paid state workers running up our bills for crappy service. Neither is true. Now are you going to abandon your basic principles and alliances based on polling that isn't grounded in reality, or do you set policy based on belief?
On the surface, I simply reject the idea that asset sales are a net-neutral thing that need to be given the benefit of the doubt. Tom Corbett is saying he's going to use the money from this sale for a $1 billion block grant, over four years, for education. Over 20 years, the stores right now would make 150% of that, and bring that money in annually, just left alone, as is. I'd rather the steady revenue stream than the one time and done stream. Give me the $72 million a year they are turning in profit now.
Next off, there is this idea that this is better for the consumer. How so? I don't view liquor and beer as the same product, nor do most drinkers. I go to the liquor store to buy a bottle of alcohol or wine, and I go to the beer distributor to buy a case. I know the difference, and don't really want both together, since I don't really drink both together. Further, being a customer in both Pennsylvania and New Jersey, I see no improvement in New Jersey for selection, other than both being together, compared to the Pennsylvania stores. If anything I see the opposite. If you'd like to see your supermarket sell both, fine, call for that to pass, but there's no need to sell the stores to get better selection. I don't see how that helps anything.
Most of the complaints about the state liquor stores seem to me to be about the way the stores are run themselves. If you want something like Jersey where stores sell liquor and wine, fine, liberalize liquor laws. If you think there are too many rural liquor stores that lose money on their own, fine, close some down and run the higher profit stores. It would drive the profit margin for the state even higher.
There's this idea that the workers are acting as some sort of "evil special interest" here too. The workers in these stores are paying their bills on their salaries. This is what feeds them. Again here, Democrats believe in unionized, better paying jobs. If keeping those stores is not draining red ink into our state budget, there is no reason to kill these jobs, or send them into a lower paying private sector. The idea is that the private sector should pay more, not the public sector less. We're not into deflation economics on the left.
Finally, the most ridiculous thing glossed over by pro-privatization forces is this idea that the $72 million a year is pointless to be worrying about. They say why not go ahead, privatize the stores and lose that money, and make that up with an increased beer tax or something (sure helped Onorato, didn't it?). So let's end the good paying jobs, in profitable stores, and make up the profits from them by taxing consumers, working class people. That's as red-meat, Mitt Romney style of a way to govern as I've seen.
I don't see any reason for Democrats to support selling off an asset, privatizing stores, privatizing jobs, and giving up the revenue source for the government here. It's not as though Governor Corbett is really convincing anyone to follow him here. He couldn't pass this last legislative session with bigger majorities.
22 comments:
Besides that the public has wanted to be rid of the PLCB for decades, that the governor said two years ago he wanted PA out of the retail end of the liquor business and while it doesn't need to go imminently how long should the will of the people be ignored? Is 20 years long enough? How about 30 or 40 or maybe 50?
Do you have a hard time going to the supermarket with all those foods that don't go together? After all you don't eat cereal and shrimp at the same time.
The profit that the PLCB makes now will be exceeded by the increase in sales due to more convenience of 1200 stores vs the 600 we have now, the decrease in in the $140M in lost border bleed taxes, the business taxes the PLCB doesn't pay, the income taxes of the new owners (which the PLCB doesn't pay), the future retirement and shortfalls the public won't have to pay and the cost of the $110M interest free loan the PLCB gets every year.
It isn't the workers the public doesn't like it is the system, a system that has been rejected by the majority of other states, a system that people see not working as well as Binny's, Moore Brothers, Total Wines, Spec's HighTimeWine or any of a number of stores through out the country. The public wants change and if some good comes out of it like $1B for schools all the more reason to do what the public wants.
Albert,
Lots of unwarranted assumptions there. As I stated in the article, I don't think the will of the people is clear. They assume a lot of things are true that aren't, because of the untrue rhetoric of the governor and others, that misleads them into those beliefs. Polling doesn't move the ball much with people who oppose sale, because the public isn't being informed.
Actually, I typically buy my food at different supermarkets, so that's a great example to prove how the supposed "convenience" is not real. I don't buy seafood in the same place as lettuce. It's not that it's harder to have different products in the same place, it's that it's not necessary, and hardly more convenient, unless you actually think one place has the best product for everything. It doesn't, of course.
You are banking that 600 more stores will be profitable, but there really isn't a demand for that. Like any other business, the private stores will find every loophole and end up paying less or the same as we're used to getting. There's no record of windfalls that were sustained in places like Washington, or even by our neighbors to the east.
I've seen those chains you mentioned- I'm not anymore impressed by the private stores than I am by the state ones. I've shopped in Jersey before, and the private stores are no better.
You're taking a lot of basic assumptions about what will happen in privatization. The real life cases in other states seems to suggest the utopia you see on alcohol policy will be non-existent.
You are right a poll doesn't mean much but how about 50 years of polls all with the same result? I ask you what is more important, what the citizens want or the status quo?
One only has to look at other states to see that thousands of stores are profitable. Will all be? Of course not but with still a constricted amount of stores available someone will step up and try their hand for every failure, it is not like the market is saturated or will be. Actually I would be pretty surprised myself if any noticeable percentage failed. Now let us couple that with the increase from 600 to 5,000 places that could or would sell wine. A number of these stores already exist as business selling beer or soda or what have you. If they find that their business model doesn't support selling the product they will either stop or sell something else or get out of the market. Pretty much how the economy works.
If you double the amount of stores and they pay the same then the amount collected is increased. That isn't counting the license fees et al either. If they pay less (and they ALL would have to pay less) then what you are saying in a round-about way is the the department of revenue can't do their job which really isn't a privatization problem it is an enforcement one.
For Washington they have increased the number of stores by 5 times and have a number of superstores which have increased selection Even with the draconian taxes and increase in border bleed sales are up and they are ahead on tax collection and on track to have the 17% additional tax lowered to 5% in 2014 as the law states. Plus there are some other reductions that take place too. . Since PA is not going to do what WA did with raising the fees and taxes you can't really use them as a 1 to 1 example. Apparently somebody was paying attention and learned what not to do.
You say you have been to Binny's in Chicago, Moore Brothers in NJ, Total Wines (pick one there are 70+) Spec's in Houston or Hi-Time in Costa Mesa and 30,000+ sq ft of retail space (largest in PA is 11,000) with thousands of more items in stock doesn't impress you then you aren't very adventurous in your choices. Since PA doesn't have any boutique stores where knowledge and service are the main selling points you can't use them as an example against the larger stores.
Lastly the money isn't that important. $100M is such a small part of the $25B budget but it gets the state out of a business it shouldn't be in. Citizens do not need some over-priced clerk in Harrisburg telling them what they can or can not buy.
Albert,
Some over-priced clerk? Because they make a wage that can feed a family, they are not over-priced. I see your thinking now. No, the private market is under-priced, actually.
I actually did go to Binny's once, I lived in the midwest for a while. It's neat, but not particularly useful if you ask me. I find the workers in the PA stores helpful when I go in, maybe the boutiques are too, but I'm not much interested in boutique stores, so I don't know. I've been in lots of private liquor stores in New Jersey though, and really haven't found most to be an improvement. I'd imagine most people see little difference too.
You're right, $100 million is not a large percentage of the budget. My principle is though, you replace revenue one for one. No one's really proposed that, and the ideas that have floated, like a beer tax, push that cost onto the consumers. If the stores made $1 though, I'd say the same thing- why give into the "smaller government" fetish if this isn't a loser right now?
I am saying the department of revenue isn't that great, yes. At least with the state stores, the job's easy.
I don't see the demand there for more stores. I see no evidence that this is something the market is asking for right now. Maybe I'm missing something, but adding a bunch of retailers won't do much.
I just don't see any reason to do this.
"you replace revenue one for one. No one's really proposed that" Preposterous, the revenue stream is increased due to licensing fees, increased employment, greater tax collection, less border bleed etc etc. How many streams do you want?
Since box stores can't buy all the licenses (see the 5% limitation) there will be more people working, delivering, warehousing, renting and paying taxes.
Just because you can't grasp the demand that has consistently been there for decades does not negate it. Next time you go to New Jersey or Delaware look at all the PA plates, that alone shows there is a demand for something not provided by the PLCB.
Whether the clerk is over-priced or not he is still limiting the market freedoms that most citizens enjoy.
Albert,
Please, oh please, explain how that clerk is limiting anything by selling you alcohol. I'll be waiting on this one.
I worked in Jersey for most of 2012, far into Jersey in fact in Woodbridge. Their liquor stores had no out of state plates, ever. The only place you see out of state plates are border towns, like in Phillipsburg, and I've been one of them. I don't go there because they're better. I go there because they're closer to where I'm at, at that moment in time. There's no real evidence that people want a bunch of new stores in the southeast, though there is evidence that the rural area stores are losers. We may in fact see contraction of the market in a privatized world.
Box stores cannot buy all of the licenses, which is great, but like most laws, that can change, and probably will. Your assumption that all of these new jobs will be created is based on what more than theory exactly? Did that happen in other privatization schemes?
No one has proposed a specific plan to replace that revenue, just these utopian ideals of how well things will go in this new system. I don't see that success as absolutely likely, nor do I think it's worth selling off the stores for if it did.
Explain how Harrisburg is limiting selection? No, read up on it yourself to see how Harrisburg limits selection. Learn how the PLCB does procurement, do a little research. You can start here: http://plcbusersgroup.org/2011/08/selection-report-2011-08-06.html
Demand is driven by price, selection and convenience. If people near the border of NJ, MD,DE stop there instead of in PA it is going to be for one of those three reasons either separately or in combination. That shows that the demand for convenience, price or selection is greater at Joe Canal's then it is wherever those PA resident's live. If PA stores offered the same amount of CPS then you would see less people stopping at the border and more at there own PA locations.
I really don't have the inclination to teach you Econ 101 but perhaps that will jog your memory.
Obviously, a new business will need workers and an existing business will need some but not as many. Whatever it takes to be the most efficient, something the government and especially the PLCB isn't that good at.
Since alcohol won't be stored at only one of 3 warehouses in PA there will be a need for more warehouseman and delivery drivers to move product to the additional stores. Specialty stores will need people with a greater product knowledge and due to the limited amount of those in the current PA system, will need to pay more for those that have that knowledge just like any other business.
This doesn't even include the additional locations for wine sales and the people it will take to provide product to those locations.
In the end total dollar sales only have to go up about 17% to make up the PLCB contribution not counting the license fees, business taxes, retirement savings, or income taxes. Even in Washington after raising prices 22% on top of the already most heavily taxed liquor in the US, with a doubling or more of border bleed revenues and sales are up. If you can't see a pent up demand in PA you have blinders on and have swallowed the UFCW story hook, line and sinker.
The plan is specific, sell 1200 liquor licenses and ~5,000 beer/wine licenses, provide more convenience to the customer (Even the PLCB itself says that increasing hours and stores open on Sunday will bring in $75M - how much will double the stores with longer hours bring in?)
You don't believe the Governor - fine, you don't believe the PLCB - that's OK too, and you don't believe in pent-up demand for increased selection, convenience and price. But you do believe you are right even though you have provided no justification for your belief. Just because doesn't cut it.
Albert, your argument is nonsensical. Harrisburg sells what is desired by the public in their liquor stores. You may want some liquor from Moldova, but that's no reason for them to carry it, and virtually no one in the public is making the argument that they don't get enough choices.
The point is that there are not more people at NJ stores from PA than there are NJ people at PA stores, and your argument that people flee over the border for the private stores is grounded in ignorance at best. Show some stats or shut up here, it's a bad argument. I see just as many NJ plates at PA stores as vice-versa.
There's no reason to think more new jobs will be created than jobs lost in closing the state stores. Most will be lateral moves. The warehouse argument is also silly. Wegman's won't create a new wine warehouse. This is pure grasping on your part. It's not moving anyone.
Again, if there is some pent up demand, where is it? There is no one not buying liquor now because it's in state stores, that is an incredibly stupid argument.
You're bringing nothing here, and frankly sound like you work for Corbett or something. You cite pent up demand that you cannot quantify, you cite jobs numbers that you cannot quantify, and you cite some sort of cap on your choices that the market would do too. You just really want to get the state out of the business though, right? It's not "government's place," correct?
Well, it is obvious you didn't read the link nor have you been following any thing outside your own made up world about selection, service, price or convenience. You certainly need to read more to expand your knowledge base.
Harrisburg does not sell what is desired by the public, they sell what they select for the public. If something doesn't meet the sales expected FOR THE ENTIRE STATE it is de-listed. Never mind that maybe there is a store that does sell an amount to a customer or bar the state says that it won't be available. In a private store the owner would bend over backwards to keep that regular customer. In PA it is "pick something else"
Not having enough choices is one of the main complaints about the PLCB with convenience being the main one. If they don't have something you want you can't go get it - that isn't legal. You can't have it shipped in - that isn't legal. You can't order it from the PLCB - they don't have it.
How many of the Wine Spectator's top 10 wines were available in PA? 3. How many could you find at Moore Brothers in New Jersey? 6 Of course since they are all sold out now you can't find any at any place but the 2nd largest wine buyer in the US couldn't do better then one store in New Jersey? Tell me again how there isn't a demand for those wines.
Maybe you want scotch. Old Pulteney 17 was selected as the best single malt in the world in 2011. Can you buy it in PA? Nope. Tell me there wasn't a demand for that by people who drink scotch. I can buy it in MD or NJ though. Not a scotch fan then how about the top rated Irish whiskey Tyrconnell 10 Year Old Sherry Cask. Better get ready to drive because you can't buy it in PA but you can in NJ. And the list goes on and on. You have no idea what you are talking about.
You are right, Wegmans won't create a new warehouse there are only 15 in the state after all, but Diageo probably will and the wholesalers that won't be using the 3 closed PLCB warehouses will need to to something.
I'm guessing you didn't do well in Econ 101 because you don't understand what pent up demand is. Not my problem.
Yes the market will cap choices but under a private system I would have more chances of finding what I wanted. If PA doesn't have it you are SOL but if Joe's Liquor Emporium doesn't have it or can't order it I can go somewhere else. You don't have the choice in PA now.
Yes, I do want the state out of the retail liquor business and to that end I have read and researched my position. You need to do the same if you want your arguments to have any validity above: I don't see it, I'm not feeling that.
I asked you this in my 2nd post and you didn't answer it so I'll give you another shot. "What is more important, what the citizens want or the status quo?"
Albert,
1. Your question is not reality based and gets no answer. The most important thing is getting the policy right, and that means keeping the stores. Most of the public supporters of sale likely incorrectly believe the stores lose money. That is really only true in rural areas, and not overall, so you are asking a straw man question that has no correct answer.
2. Your link states something that virtually anyone knows, that the PLCB buys the alcohol it sells. What's the point of looking at it, I can walk into a liquor store and see that. They do buy based on statewide sales, which makes sense for a statewide agency. It even makes sense for greater philly and greater pittsburgh, where most of the people live, and buy. What's your point? They don't buy your exotic taste in your county, so now we should sell the stores? Sorry, that doesn't move me at all. That you can't currently buy something legally that they don't sell is a nice argument for changing regulatory law, but it is not a good argument for sale.
3. I know nothing about alcohol.... that's laughable. I really don't know about this list you speak of, but I've never went into a liquor store in this state and been disappointed in the selection.
4. No, there really won't be a warehouse boom, but nice try. There's no reason for a business to open more warehouse space than needed. Sure, there will be a few new ones, but the job gains will be offset by losses from the state stores. It's a net nothing.
5. You're economically illiterate. Pent up demand? Really? So there's people not buying right now that will buy when the state is out? Ha. There's going to be so much new sales from newly available liquors to double the number of stores? Please, this is laughable, it's like you're a lobbyist for the vendors who want this change.
6. I don't want the state out of anything that is profitable. That doesn't take research, it's called principle.
Your argument is laughable, lacks any valid arguments, and isn't backed up by any numbers. You would sell off the state stores for a one time transfusion of money, because you simply believe in the magic private market fairy. Mine is to keep the status quo in principle, make some adjustments to regulatory policy, and to continue collecting $72 million or more per year and keeping good paying jobs in this state.
One can't argue with a socialist about the free market.
You did answer the question eventually and it is what I would expect. Change is hard, change is scary sometimes and you would rather avoid it.
My link shows that the selection in the state that is the 2nd largest liquor buyer in the country is poorer then single stores in non-socialized parts of the country. There are good reasons to be skeptical about markets’ abilities to deliver *socially desirable* outcomes, but not about their capacity to organize delivery of consumer goods. They are extremely good at that as the link shows.
I didn't say you know nothing about alcohol although your knowledge seems a bit mundane but I did say that you don't know what you are talking about when it comes to selection.
The warehouse was an example of new job creation not as a replacement for all 3000 clerks but you knew that.
Yes pent up demand. There are people who are not buying because the state does not provide what they want, something at a price they want to pay or the opportunity cost is greater then they want to pay.
Why you can't believe that the market will support 1200 stores when other states easily do that is beyond me. People do not open businesses to fail so your position makes no economic sense.
Some examples:
PA has 605 stores or one store for every 20,000 residents.
NYC has !1300 stores
Chicago has ~630 stores
Oklahoma has ~660 stores
California has ~4,000 stores
Idaho (a control state) only has 164 stores but that is still double the amount per resident at one store for every 9700 residents.
Washington went from 313 stores (the same ratio of residents to stores as PA) to ~1500
Clearly there is a demand for more stores/convenience that PA is not fulfilling. Or are you one of those who think that only PA and Utah are doing things right and the rest of the country is wrong?
Otherwise you are just not informed and poorly read.
Now let's see some of you numbers to counter the limited selection, inconvenient number of stores and why you say there is no pent up demand. I'm only asking for what you wanted of me.
Since you don't like to read anything not put out by the private alcohol industry, let me help you understand why this is bad economics and a loser for the state, first:
http://voices.washingtonpost.com/virginiapolitics/2010/09/as_we_reported_this_weekend.html
Now, that Iowa, West Virginia, and Maine lost money, you will dismiss as "different states," I know, and you'll say "but sales went up!" They did, in many states. There was also questions left in most states as to whether or not new customers came in, or, more likely, the same customers just consumed more.
To review here- the states all saw drops in revenue, and no new consumers were added that we can verify.
Freakonomics went further, citing two studies. One was the Commonwealth Foundation saying that alcohol consumption actually dropped by as much as 5.9% in Iowa and West Virginia after privatization. On the other hand, MIT Professor Steven Herzenberg says alcohol consumption went up- but it was almost all with existing consumers consuming more. He also correctly notes that 10% of the population does most of the consumption. He does note that in his study he saw a 48% increase in sales from newly privatized alcohol, but that increase was limited almost entirely to the same consumers.
http://www.freakonomics.com/2011/06/20/does-privatizing-retail-alcohol-sales-increase-or-decrease-consumption/
In other words, there is no pent up demand. There is no group of people currently not buying that will suddenly start buying. There will be an increase in consumption, yes, but that is just current consumers going wild and drinking more.
Yes, we have *less* stores, per person, than other states. What we know is that adding more stores might be more *convenient* for you, but there are not new people who will fill them. Maybe you think it is better to have more stores for today's consumers, fine. That seems pointless to me. In addition, places with much lower ratios that you cited, such as NYC or Chicago, have much younger, higher consuming neighborhoods than most of PA. You wouldn't put a bunch of new wine and spirit stores in Greene County, for instance.
The numbers bare out- we may or may not have increased consumption based on the studies, from the same market we have now, and we will lose money, and we'll have a lot more issues with these people who do most of the consuming. Not exactly the ad your side wants to put up for selling the stores.
As for delivery of goods- you're essentially saying the free market stores can dig in a little further and add selection regionally within the state. I don't doubt that, but state stores could do that too. You're essentially arguing with the management of the state stores. No one ever contested that. I find the selection to be fine though. There are a few people who want more options I'm sure because they have some exotic tastes, but I don't think a portion of 10% of the population constitutes a major public policy issue.
By the way, while I'm sure your politics are off in right field based on some of your statements, when you start calling people a "Socialist," you lose credibility in light of the last few years. It's hardly socialist to think the state should continue to do things that are making it a profit. The state is hardly socialist now. Besides that, an actual socialist would not just want state controlled stores, but state made liquor, rationed out to all according to "equal" distribution. Yeah, not exactly the proposal.
Please do tell though, do you work for the liquor industry, one of the vendors who stands to gain on this sale, the PLCB of Corbett's, or Corbett. I've seen you pop up on some other boards and you weren't a regular on most of them until this issue started.
What Iowa did 28 years ago and West Virgina did 23 years ago are things to consider but since PA is not doing the exact same thing in the exact same way are not examples to follow but to learn from. I did notice you don't say anything about Washington which is ahead of tax collection after privatization.
This you will have to explain to me. You list a report that says consumption went up 48% and then say there is no pent up demand. Just what, exactly, do you think pent up demand is? Going wild as you call it or being able to get the product you want at the price you want where the opportunity cost is within what you want to pay?
"Maybe you think it is better to have more stores for today's consumers, fine. That seems pointless to me." However, your opinion does not match the wants of the public in a less regulated environment. The numbers of stores in other locations bare this out whether you like the result or not.
Yes I would put new stores in Greene County. It may only be able to support 2 or 3 smaller stores with limited amount of skus in stock they will either be able to order things as the PLCB stores do now or the consumer will be able to pick a different store with different result, something they can't do now. For wine it will be even better since the product will be more accessible and again if something different is required the consumer can shop around. Convenience can beat price otherwise there wouldn't be so many Sheetz, Wawa, 7-11 etc etc.
"In addition, places with much lower ratios that you cited, such as NYC or Chicago, have much younger, higher consuming neighborhoods than most of PA."
So you can't see having more and better stores in Philly or Pittsburgh because they don't have a young enough scene for you?
Nice to know that Oklahoma is more hip then PA though.
I'm glad that you are fine with other people deciding what products you may or may not buy when they are readily available elsewhere but I would say that is a minority view by far in the United States.
The PLCB is socialist. They control what you get, when you can get it, they ration the product and they do have their own brands made to compete against the private sector. In fact they spend 10% of the ad budget on their brands and place them in prime locations to the detriment of other brands. That whole scheme is being investigated at the moment. Besides, I said you were a socialist, not the state itself although I do feel that way about the PLCB.
I'm an independent and have voted for both parties based on what candidate I feel can do the better job. I own my own business and have nothing to do with the liquor industry. And you?
Albert, you are an independent and I am the Pope. I know you're a Corbett enthusiast, save the lies. As for me being a socialist, I think I already took your socialist argument apart. When you learn what socialism is, come tell me about it.
I'm fine with the market deciding what's on sale. If something doesn't sell statewide, I can totally understand why a state dealer might not want to sell it. Should they study what sells by market better? Yeah, they should.
I think by saying "in most of PA" I left enough room to keep Philly and Pittsburgh apart from the rest. Could they have more stores? Yeah. Probably even better stores. Both are considerably smaller though than NYC or Chicago.
You continue to believe there are all these new customers in Greene County, if only they had more options than the state offers. That's just not so.
You are an economic illiterate. "Pent up demand" is broadly defined as people re-entering a market after staying out for a reason, such as a recession. There is no one staying out of the market now. At best, you can claim that current consumers will buy more. That is not what we define as "pent up demand" though in the actual economy. The bottom line is that the same 10% of consumers will be doing the better 80% of purchasing, so this idea that we need all these new stores and such is stupid. Do we need more in Philadelphia? Yeah, most likely. Do we need more in Snyder County? I doubt what we have is making money there.
I don't need to mention Washington, you will. All that does is prove my point, these revenue hopes from Corbett are sketchy at best. There's no way to know. The best bet is that these private stores will hire lots of accountants and save themselves as much money as possible. The only close to sure bet we have is sales tax, since we can make some predictions on sales.
What do I do- I'm self employed, doing PR and campaigns. I don't do much in PA campaigns anymore, but used to. I won't push you on what kind of business you own, I don't overly care.
I don't know why voting for someone doesn't make you an independent but just to make your day I did vote for Corbett and Ridge and Casey and Shapp. The others I voted for lost.
Heres something for you to read while you think about that. It is from a more liberal site so you should feel at ease. http://www.keystonepolitics.com/2013/02/everybody-wants-to-end-the-state-booze-monopoly-except-people-who-dont-use-the-stores/#comments
You even explain pent up demand is and still can't understand what you wrote. "People staying out of the market for a reason." The reasons can be but are not limited to: lack of product, lack of convenience, high opportunity cost. Or in the case of the classic recession example, lack of funds which is really high opportunity costs.
I read Keystone every day, thanks. Jon and I break apart in general on these issues though. He's much more pro-selling most public goods than I am. He's for selling nursing homes too, because he wants different services than I do.
You are a moron. Who is "staying out" of the market that is getting in? No one. Buying more because you like the products more is not "pent up demand." You clearly don't get basic economics, you should be careful getting into these debates.
I could excuse you the other votes, but Corbett's awful. He's one of the worst five governors in the country. You seem to only like conservative Dems too.
The argument for this "system" made little sense long before Tom Corbett showed up.
Everything in your argument depends on one thing--the stores are "profitable" because everything the state does restricts supply and prevents competition. Short of Pennsylvanians driving out of state or giving up liquor, nearly all sales are going to this one outlet. They aren't losing money because under these conditions, it is nearly impossible.
Its the conditions that people don't like!
Given any change in the alcohol sales laws, the State Stores are either going to have to 1) change their workplace rules to offer product at competitive hours or 2) lose outlets to competition. If #2 happens, there is about a 95% chance that the stores will lobby to prevent #1 from happening. Or the state will have to bail out failing stores. That will sure be an attractive time to sell out for the State.
I don't believe the sale will get a billion dollars because I think, at heart, the PCLB stores are a crap franchise poorly equipped to compete on what people actually want. They don't have very good systems to figure out what the public wants, as evidenced by their years-long resistance to selling on Sundays.
Everything else in the argument barely cracks the who cares line. I don't really care where you buy food and drink, and in what quantities. I don't care when you want to shop. I would rather shop at stores that treat their employees well and where employees act like they enjoy their jobs--and there are stores like that in other states too. Maybe this is step one in the Corbett Plan to Take Over The Universe, but I'm quite all right with this step.
None of that requires state-sponsored rentier behavior in the name of "control."
GDub,
The public does not care who they buy from. They want affordable stores, they want to be able to pick from a basic selection that has most everything they want, and they want to be able to get to the stores. 95% of the public does not even consider this "should the government" have a cartel stuff. 90% of the public doesn't overly care about having boutique stores, or that they have an exotic selection of things they can't get now. Now, Albert does make a fair point that 7 of the top 10 sellers aren't available in PA. That's a problem. It shows poor management by the PLCB. That should be fixed. That's no reason to sell though. That's a reason to fire the appointed administrators. I have no problem personally with the state owning this because it makes money, this is true, and because I reject the "small government" approach wholesale. I'm not saying i'm for inefficiency, but if this is making money on the whole, and is poorly managed, why not just fire the management and bring in better ones? That would seem to be a moneymaker.
Re-entering a market after is the same as staying out of the market during, and you call me a moron sheesh. The during is now because the goods are not available from the state or at the price people want to pay.
Let's try it this way. Tyrconnell 10 Year Old Sherry Cask was voted as the best 12 yo and under Irish whiskey. It isn't available in PA. Are there people who want it because they like Irish whiskey? Are there people who would buy it because it was considered the best and they want to try it? Are there people who would buy it as a gift because their friend likes Irish whiskey? Are there any Irish bars in the entire state that would like to have it available to their customers? All that is pent up demand. The market is lagging the consumer. The consumer is waiting until (classically) they have the financial means to meet the seller's price. Since there is no seller in PA the it is the same as the seller having too high a price, the product is not available to the consumer. This creates a backlog of demand for the product that is satisfied when the product is made available. Now multiply that by thousands to products that could be available. That is a prime example of pent up demand.
Another example of why readily available consumer goods will increase sales with added convenience at least until saturation or consumer equilibrium is reached.
Since demand itself is partially price driven with lower prices you will have more sales as long as the opportunity cost of the next best choice is greater then yours.
Example: Is it better for me to drive 15 miles to store x and buy item y at the lowest price or should I go a mile down the road and pay more. If the value of time and gas and usage is greater then the price difference the smart consumer goes a mile down the road. Sales go up because the opportunity cost is less for the next best choice, the closer store. That is what more stores will bring, a change in the opportunity cost of the stocked items. In the long run the consumer will buy more (at least until his particular equilibrium point for that good is reached) because the total cost is less locally then at the further store.
the PLCB isn't a management problem, its a systematic problem. the "system" is designed around the supplier, not the consumer--so it reaches its natural limit due to the business model, not due to insufficient customer demand. Such a system cannot survive in open competition.
You underline my point. The State Stores have NEVER had good systems for incorporating customer feedback on hours, location, and price, regardless of who was in charge. They make money because the state creates a market for them at the expense of customers who care and customers who don't alike.
At the end of the day, these "on behalf of the public" arguments all fear the same thing--people voting with their feet.
The State Stores made, after reducing for over $400 million in taxes (collected anyway) 80 million in "profit" on 1.5 BILLION in sales. That is a tiny sum to prevent a normal wine and liquor market.
GDub,
The problem with your argument is that we've heard it before. In more cases than not, your "voting with your feet" resulted in less revenue. By no means can anyone be sure, but it's at least as likely that I'm right and it's a loser, so it's hardly a fear of what you say working, more so of what you say failing.
Albert,
I can't help you here. If you don't understand that someone in the market buying more is NOT pent up demand, you're just economically slow. I'm sorry. Yes, the 10% of the population that buys liquor might buy more. That is not pent up demand. It's consumers buying more because they believe the product has improved. Maybe that will happen, I can't sit here and say it won't. I can tell you that if you're going to throw around actual economic terms, know what the hell you are talking about when using them.
I'm sorry that you can't read so I guess we are even.
Someone in the market wanting buying something that wasn't available due to price (or in the example non-availability which is infinite price) - is pent up demand.
Dust off your old Econ books and look at them again.
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