North Carolina’s Governor, Beverley Perdue, recently made headlines defending the state’s bloated, inefficient, and generally scandalous ABC system. North Carolina is one of only four states in the nation that retains such an obsolete, post-prohibition establishment. While Perdue cloaks her opposition as a defense of tax revenue and method of keeping liquor out of kids’ hands, her opposition is based on control. Perdue doesn’t want to give up the corrupt bureaucracy that currently controls liquor sales in North Carolina. This shouldn’t surprise anyone. When is the last time a Democrat advocated for free market solutions to anything?
Perdue claims, “I don’t want to be the governor who holds my little granddaughter’s hand as I walk down the aisles of Wal-Mart or Target or Rose’s to the toy center and have to pass shelves and shelves of liquor and say to her, ‘keep your hands off that liquor.’” What planet is Perdue living on? For starters, as the John Locke Foundation notes, Rose’s doesn’t currently sell beer or wine—which are both deregulated—and it’s highly unlikely they would start selling liquor. As for Target and Wal-Mart, in neither of these stores is the “toy center” accessed by walking through the beer and wine aisles. It’s unclear where Perdue gets the idea that if we deregulate liquor sales, consumers will have to wade through a jungle of liquor aisles to get to anything else in the store. If anything, it’s likely to be the opposite. At the Wal-Mart in Belmont, NC, beer and wine products are confined to a single aisle in the back corner of the store, a major detour for shoppers headed to the “toy center.” Even if they did pave the way to the “toy center” with Jim Bean and Bacardi, no one’s forcing Perdue to walk her granddaughter down liquor lane. She can choose to shop elsewhere.
Perdue also regurgitates the common line about how we need to “protect local governments.” In other words, we need to keep the ABC gravy train running. There are several flaws with this claim. First, liquor sales would still be taxed so that “revenue” would not be jeopardized. Local governments would lose the “profits” collected from ABC stores in their jurisdiction. However, this concern would be easily solved by either allowing local governments to tax liquor sales, or diverting a portion of the excise tax on liquor sales to local governments. Given that the Governor has acknowledged privatization would increase sales, the rate might not even need to be changed to achieve the same “revenues” as the current system.
That said, I would oppose both of these solutions to the “revenue” problem. What right does the North Carolina government have to the “profits” of a particular industry? What if the state suddenly decided that we needed to centralize control over technology sales in order to “protect local governments” from falling “revenues.” There won’t be any more Best Buy stores or Radio Shacks. The Apple store will have to close up shop as we introduce new, state-run, ETC (Electronics and Technology Control) stores. Good luck finding an iPod. Based on our experience with the ABC system, you’d probably be stuck with a Sony Walkman—the kind that plays tapes. Such a proposal would be laughed out of the Legislature—hopefully—but that’s exactly the model for North Carolina’s liquor sales. The ABC system provides inferior products at higher prices all in the name of “control” and “revenue.” Viewed in this light, it’s easy to understand why residents of border cities are often willing to make the trek to South Carolina to do their shopping.
Finally, the governor asserts that the rampant corruption in the ABC system is “unacceptable.” The solution? Rather than getting rid of the government monopoly that breeds corruption, we’re going to require some ethics training. In a truly free market, ethics training would be unnecessary. The conflict of interest dissipates. Liquor companies don’t need to convince individual retailers to carry their products. Private companies know that if they don’t carry a specific brand, they risk losing business to companies with a wider selection. Similarly, businesses that waste money generally run themselves out of the market. Competition is often a better arbiter of ethics than government bureaucracy.