The Objective Standard Blog

Tuesday, November 17, 2009

Bob McDonnell on Liquor Stores: Right Direction, Wrong Reason

According to a recent article in the Washington Post, newly elected governor of Virginia, Bob McDonnell submitted a proposal to privatize state-run liquor stores. While we should applaud McDonnell’s push toward privatization, we should condemn his reason for the push as wrong.

In Virginia the only place one can purchase hard liquor is at a store owned and managed by the Virginia Alcoholic Beverage Control Board (the ABC), which severely limits the number of stores and the variety of beverages they carry. Nearby DC, though saddled with its own regulations, has more liquor stores serving a greater variety of beverages at lower prices; thus many residents of VA cross into DC and purchase their adult beverages there. This, of course, results in diminished revenue for the VA government, and this is why McDonnell and company want to privatize the state-run liquor stores. The government can reap greater revenue, they argue, by selling the state-run stores through a public auction, eliminating the cost of managing the stores, while increasing competition with neighboring states and thus increasing tax revenue.

McDonnell is right that privatizing the liquor stores will result in greater profits for stores, more variety for consumers, and increased tax revenue for the state, but this is not the reason that liquor sales should be privatized. They should be privatized because of individual rights.

When the government forbids a store from selling liquor, the government thereby violates the store owner’s rights to liberty (freedom to act on one’s judgment) and property (freedom to use and dispose of one’s property as one sees fit). The proper role of government is not to manipulate markets or increase tax revenue, but to protect citizens’ rights to life, liberty, property, and the pursuit of happiness. The government has no moral right to regulate the sale of liquor.

Virginians should demand a free market in the liquor industry for the same reason they should demand a free market in all industries: because individuals and businesses have a moral right to produce and trade according to their own judgment, free from interference by the government.

Posted in: Business and Economics, Individual Rights and Law