Friday, August 06, 2010

The Not-So-Efficient Free Market System: Alcohol in VA

Our new Virginia governor won office last year based on a campaign of, among other promises, privatizing the system of ABC stores for selling liquor and using the proceeds for transportation.  The Post yesterday had an interesting article on the problems in implementing the promise, including a comparison with the systems in DC and MD.  Turns out VA gets more than 50 percent of the price of a bottle of Jack Daniels, while the other jurisdictions get less than 10 percent. Prices aren't that different, at least at the low and middle end.  So how does the gov get an equivalent yearly return from a private sales system?  Doesn't look as if it's possible.

Of course Virginians are used to Republican politicians making promises they can't fulfill.  (Not that Dems are immune from the syndrome.)

The side-by-side comparison shows IMHO the free market system is not necessarily the best.  Of course, alcohol has special characteristics: most of the products are time-tested.  I suspect if you looked at the Virginia ABC stores they don't do well at keeping up with the fads (like wine coolers, or special vodkas).  But as a child of someone who firmly believed in the merits of Prohibition, I'm not mourning this particular lack in Virginian society.

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