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The Race for Stupidest Regulatory Practice Gets Off to a Fast Start

During my Christmas hiatus, I missed reports that Pennsylvania’s much ballyhooed wine kiosks had to be shut down during the busy holiday drinking season.

Pennsylvania’s Liquor Control Board abruptly shut down the state’s wine kiosks last Tuesday, citing persistent mechanical problems — chief among those problems is the inability to dispense the bottles.

This prompted Eric Heyl of the Pittsburgh Tribune-Review to point out the obvious:

The machines debuted just last June, but were experiencing persistent malfunctions, such as failing to dispense wine. When you think about it, that’s a particularly egregious offense for a wine-dispensing kiosk to commit.

Despite the glowing enthusiasm of Liquor Control Board for the kiosks, Jack Wagner, the state auditor, has decided to take an objective look at the kiosks.

Wagner said his audit would focus on whether the kiosks, which are located in 30 supermarkets across the Keystone state, are delivering the customer convenience and additional revenue to the commonwealth that the (private vendor) LCB touted when it awarded a contract to Simple Brands LLC of Conshohocken, PA.

Don’t be surprised if the audit reveals that the kiosks don’t deliver “the customer convenience and additional revenue” the for-profit vendor promised, and don’t be surprised when the vendor lobbies for more money and more control as a solution to the obvious ridiculousness of the kiosk experiment.

One of the great under-reported stories of our time is the national trend turning governance into a for-profit enterprise. All over the country, state and local governments are patching gaps between revenue and spending by selling permanent assets — roads, bridges, parking meters — to for-profit companies that promise vast service improvements, lower costs and higher revenue. (Chicago’s experience with privatized parking meters is particularly instructive. See also Matt Taibbi.) Politicians on the right fall for the sales pitch because they believe that the private sector is automatically more efficient than government. Politicians on the left climb aboard the privatization train because it brings in big smacks of short-term revenue to prop-up programs the public isn’t willing to pay taxes to support.

Created in the process are economic interests in favor of obviously terrible policies. When California recently contemplated legalizing marijuana, some of the most generous contributions to the campaign against legalization came from narcotics officers and the operators of the privatized prisons they fill will hapless dope smokers. Freedom, in that case, was bad for business, so tens of thousands of Reefer Madness-class TV commercials ran to guarantee that there will continue to be plenty of people to confine for profit.

The obvious solution to Pennsylvania’s convenience/revenue problem is to allow private operators to sell wine. Yeah, well: any kind of change in alcohol regulation brings together a dog’s breakfast of strange bedfellows totally committed to maintaining the status quo. There are, first of all, the anti-alcohol activists who will back anything that makes it more difficult or expensive to drink. In Pennsylvania there are the employees of state liquor stores who want to stay on the government payroll. There’s a liquor distribution system that is perfectly comfortable dealing only with a state monopoly. And, now, there’s a private kiosk vendor with a huge stake in expanding the ridiculous program of robotic wine sales. All of those special interests have professional lobbyists who donate regularly to politicians who need money to run their campaigns and preserve their own jobs.

The audit of the machines will probably uncover the obvious: they suck. Unless wine consumers make their voices heard, don’t expect the result of what will surely be a disastrous audit to be anything but an expansion of the program.


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