What are these Republicans drinking? In 2011, Governor Bob McDonnell of Virginia tried to privatize his state’s Soviet-style liquor stores and was handed a stinging legislative defeat. In 2013, another Republican governor, Tom Corbett of Pennsylvania, persuaded the Pennsylvania house of representatives to pass a liquor-privatization bill, which remains stalled in the senate. The efforts of those GOP governors have been stymied in part by Democrats unwilling to give up state-run enterprises and the money that the union-dominated work forces associated with them shunt into their campaign coffers. But those free-market Republicans face another obstacle: anti-free-market Republicans.
In 1983, economist Bruce Yandle published his famous “Bootleggers and Baptists” essay, in which he argued that parties with opposite interests often find themselves supporting identical regulations. In the case of alcohol prohibition, teetotaling Baptists supported the law because they hoped that fewer people would raise their spirits by downing spirits, while bootleggers supported the law because they wanted to drive drinkers into the black market, which outlaws would by definition monopolize. Without intending to, the Baptists and bootleggers formed a unified political coalition. Sometimes, such competing interests are members of the same organization, as with the case of the Taliban, which is a narcotics syndicate that crusades against drug use, or the U.S. government, which both penalizes and subsidizes the consumption of tobacco. Likewise, the Commonwealth of Pennsylvania is both the regulator of alcoholic beverages and the sole retailer of wine and spirits. Call it “Bootleggers and Quakers.”
Except Pennsylvania is not really the Quaker State any more. The Quakers’ social conservatism regarding issues such as gambling and drinking has long since disappeared from Pennsylvania politics. (It has mostly disappeared from the Quaker ethic, too, and America’s most famous pacifists are of late much more interested in sponsoring Hamas munitions flotillas than temperance pledges.) The government of Pennsylvania is up to its ears in various sindustries: When Pennsylvania’s government-cartel casinos stock their bars, they go to the state’s government-monopoly alcohol wholesalers, which also supply the state’s government-monopoly spirits retailers and its government-monopoly wine retailers. And that means there’s a powerful nexus of economic and political interests at work in the Keystone State: crony capitalists and public-sector unions. Divorcing the two is no small task. Governor Corbett, like Governor McDonnell, has a Republican majority in the state house to rely upon, and, unlike the Virginian, he has a Republican majority in the senate, too. But liquor reform is far from a done deal.
Pennsylvania is kind of goofy when it comes to booze, with the most restrictive laws outside of Utah. A bar can sell you a six-pack of beer to go, but no more. A state-licensed beer distributor can sell you a case of beer, but no less. Grocery stores are forbidden to sell beer unless they have restaurant licenses, seating for at least 30 people, and a separate cash register for ringing up the booze. Spirits and wine are sold only in the state-run monopoly stores, where clerks with decidedly Stalinist demeanors will grumble while collecting in excess of $40,000 a year for scanning whichever bottle you choose out of the scant selection on hand. Those clerks are represented by hall-of-fame working-class hero Wendell W. Young IV, who inherited the presidency of the United Food and Commercial Workers Local 1776 — and the 260 grand a year that goes with it — from his father, Wendell W. Young III.
You can see how the math works: Wendell W. Young IV makes about ten times what the average member of his union is paid, and if those members had to compete in a real labor market rather than in a state-run monopoly, their compensation probably would go down, and his paycheck and political influence would be more difficult to support. The unions spread money around to both parties, lavishing special attention on key leaders and committee chairmen. The 150 or so grocery stores that have restaurant licenses do not want to compete with the thousands of grocery stores that don’t. And most of all, those government-protected beer distributors do not want new competitors in the marketplace and will fight like rabid wolverines to maintain their political privileges. Some of them are better prepared for battle than others: Pat Deon Beverages in suburban Bucks County is owned by Republican bigwig Pasquale Deon, who is a member of the board of both the turnpike commission and SEPTA, the Philadelphia area’s mass-transit authority — high places in the patronage-driven ecosystem of Pennsylvania politics.
Privatization proponents have offered some serious sweeteners for the distributors, such as a year-long period during which they would have exclusive access to new liquor licenses at a deep discount, but it is not clear that they will be enough. Republicans may have a nominal majority in the state legislature, but conservatives complain that the functioning majority belongs to the “union party,” the bipartisan collection of legislators beholden to the state’s public-sector labor syndicates. The failure of earlier piecemeal reform efforts nonetheless has reformers betting big on true full privatization. “It’s the Soviet Union trying to move to a market economy,” says Matthew Brouillette of the Commonwealth Foundation, a free-market think tank dedicated to Pennsylvania issues. “The transition costs are high. But we’ve tried perestroika strategies, and they’ve given us boondoggle after boondoggle.”