Privatizing the Liquor Market

Published November 4, 2011 3:05pm ET



Economic theory and two century’s worth of observation tell us that the government cannot run a business nearly as effectively as a private owner, yet this inefficiency is used as a selling point by politicians defending the continued existence of state-run liquor stores.

Eighteen states still maintain some form of government monopoly over the sale of alcohol, for the ostensible reason that having government in charge makes it easier to deter drinking than if it were left in the hands of the big bad private market. However, there are signs that this club may lose a few members: Residents of Washington State will vote next Tuesday whether to privatize its wholesale and retail liquor market, the Pennsylvania legislature is currently debating its own liquor privatization initiative, and Virginia’s Governor Bob McDonnell may rekindle the debate in Virginia in 2012.

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