INTERVIEW: Should ABC stores be privatized?

By Ryan Nobles - bio | email
Posted by Terry Alexander - email

RICHMOND, VA (WWBT) – Tonight, Governor Bob McDonnell will host his third town hall, where he will pitch his plan to privatize the state's ABC stores. He cease the move could generate more money for transportation. It has been met with a lukewarm reception from legislative leaders that must approve the plan.

Here to discuss the pros and cons of ABC privatization are two experts on the topic. Paul Goldman studied the issue during his time serving in Governor Doug Wilder's administration. He is opposed to the idea. And Norman Leahy is a lobbyist and blogger with the conservative think tank, the Virginia Institute for Public Policy. He also writes the blog Tershum Quids. He thinks ABC privatization is long overdue.

Ryan Nobles:  Norm, you have outlined many reasons for getting the state out of the liquor business. You make the argument not only from a philosophical perspective, but also from a financial perspective. Why do you think it makes sense?

Norman Leahy:  One of the biggest reasons I think it makes sense is because you have to ask, is selling booze one of the government's core functions? Does it rank up there with public safety, building highways, educating kids? No, it doesn't, but from a financial perspective, you have to think that the state could actually end up in the long run saving money if it gets rid of these stores. It won't have to be writing checks to liquor vendors, for one thing. It won't have to be paying benefits for the workers. It won't have to be paying overhead at the stores, so there are small amounts of money that add up over time that the state could be saving if it does decide to privatize.

Ryan Nobles:  Paul, you disagree. You actually believe that there's a chance that this is actually better for the free market that the state stay in the liquor business. Why is that?

Paul Goldman:  They have got $250-million a year. We don't know what they're going to make under the McDonnell proposal. We haven't heard that. Originally he said this is going to help fix transportation, but all he's going to get for these licenses is maybe two and a half months worth of one year's road maintenance and then it's gone. The truth of the matter is, what he's proposing is going to create an oligopoly in the wholesale business. He talks a lot about let's end the monopoly in the retail business, but he's going to create some politically connected people at the wholesale level and you don't hear him talking about that.

Ryan Nobles:  Do you agree with that, Norm? Is a there problem at the wholesale level? Could this make the free market smaller by putting a few very powerful distributors in control of the way liquor is sold?

Norman Leahy:  If you accept Paul's premise that it will create an oligopoly, then yes, sir, back to the free market. But we don't know what the governor's plan is so it's premature to comment on the creation of any market distorting at the wholesale level before we see the plan.

Ryan Nobles:  Isn't this set-up just a remaining vestige of a by-gone probation era and that it is not the government's job to sell booze? How would you argue that point?

Paul Goldman:  Everybody says if we had to do it all over again, the truth of the matter is, if we had to do it all over again, there's a lot of people that wouldn't give us the constitution that we have. The fact of the matter is, it's honest, it's safe, and the public knows it works. What they're going to propose will probably have less service, higher prices. They don't talk about that, and what about the increased social costs? This is supposed to be a socially conservative administration, but they don't talk about the increased social costs from drinking, nor do the normally socially conservative republicans. If a democrat had proposed this, they would all be complaining. This is just a lot of politics because there's a few people going to make a lot of money off this. This is going to be clear when the plan comes out.

Ryan Nobles:  Thank you both, Paul Goldman and Norman Leahy for your perspective and we'll hear what the governor has to say at the town hall tonight in Chester.

See the video at right for the full interview.

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