There’s No Way Around Conflicts of Interest at the PA Liquor Control Board

If the Department of Environmental Protection was running a monopoly business selling natural gas alongside their regulatory oversight duties, I think most of my liberal friends would see a huge problem with that.

There would be a pretty obvious tension between the gas selling goal and the environmental protection goal, right? You wouldn’t want to see a single agency trying to do both of those jobs at the same time.

So it’s frustrating to me that this report about top officials at the Liquor Control Board accepting gifts and favors from the people they’re supposed to be regulating is unlikely to have much truck with the folks you could normally count on to raise a fuss about regulatory corruption, since they are preoccupied with defending rent-seeking by state store unions.

The key takeaway from this report, though, is that conflicts of interest are built into the institutional design of the LCB. You can’t fix this stuff by just firing the bad actors. You actually have to split off the booze selling functions from the booze regulating functions.

Once you admit that the booze selling function needs to be spun off, you’re faced with the question of what’s the best way to balance maximum consumer choice against the need to minimize the public health harms of alcohol abuse.

I think if you’re looking at that question objectively, rather than trying to protect the interests of the various incumbent service providers, you’ll see that it’s perfectly possible to control alcohol-related harms through high taxes on low-value products, while maximizing choice by removing most restrictions on who’s allowed to sell the different kinds and quantities of alcohol.

Comments

  1. GDub says:

    This is the one Pennsylvanian issue that never fails to provoke amusement with out-of-state friends.

    It isn’t as much of a conflict of interest as a pure rentier arrangement. The liquor control aspect has rather little to do with it, other than with the graft you point out in the article.

    As with any rentier arrangement, the press is full of wild claims from interested parties about “how good we have it under the current system.” These claims–from price, to levels of alcoholism, to levels of consumer choice and satisfaction–could be easily checked in a survey designed by an undergraduate, but somehow newspapers never get around to it.

    Some years ago the State Store tried an “experiment” in Allentown in which they opened on Sundays, which the union claimed “nobody” wanted. The line stretched around the block each weekend, and at the end of the experiment the union self-satisfied stated that their point had been proven, so it took a few more years to bring PA to the level of North Carolina.

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