Government does not belong in booze business
- Eric Winters
- Portland Tribune - Opinion
A disastrous experiment in social engineering called Prohibition ended in 1933. In its wake, Oregon politicians replaced gangsters and bootleggers with a government-run liquor monopoly.
Seventy years later, mob-run liquor worries seem quaint, but the mutated legacy of Prohibition endures.
The state liquor monopoly exists primarily because of the lobbying power of certain industries rather than an ability to provide any useful service.
Two-thirds of the states allow competition in liquor sales, and there's no reason to expect Oregonians would not also embrace the benefits of markets (selection, pricing, convenience). Because of the government liquor monopoly, Oregon has the third-highest state-added markup on liquor.
Oregon mandates that spirits be sold in less-than-convenient stores, which are forbidden to advertise. Liquor purchased by the OLCC is marked up 108 percent before it is (inefficiently) shipped to all corners of the state from a single state warehouse.
The price markup has nothing to do with alcohol content but everything to do with beverage quality. Better beverages, which cost more at wholesale, are punished for that quality even though they contain no more alcohol than a bottle of rotgut.
Beer in Oregon, on the other hand, is advertised and available everywhere. Interestingly, Oregon's beer tax is the lowest in the nation. It is not surprising that The Beer Cartel spends buckets of money every legislative session to make sure the OLCC keeps spirits as expensive and hard to find as possible.
Defenders of the OLCC cite the benefit that it grabs $100 million a year for the state from liquor sales. That’s a false argument. The revenue could easily be replaced through a simple flat tax on all beverages based upon alcohol content. There's no reason to discriminate among beers, ciders, meads, wines and spirits if each alcohol serving results in similar degrees of intoxication.
If we just tax pure alcohol by the serving (about 6 cents), we would generate millions of dollars in additional sales (and taxes) from Washington tourists, who pay the second-highest prices in the country.
OLCC privatization makes more sense now than ever.