Another Example of Your LCBO Hard at Work, Screwing You . . . If you’re feeling a pained sensation in your rear end, like a sandpaper wrapped glove entering your rectum, don’t worry fellow wine drinkers, that’s just the hand of the LCBO doing what they do best — sticking it to you. The LCBO has decided to take advantage of yet another potential money saving opportunity and has turned it into a money grab at your wallet. A recent article in the Toronto Star (“HST will lower tax on booze, but the price is going up ” – May 13, 2010) uncovered that the LCBO, instead of passing the HST savings on to you, which would have lowered the tax on booze from 12% to 8%, has decided to raise the price all in the name of “social responsibility”. Oh happy day, thank you LCBO for keeping me on the straight and narrow while lighting my pockets and lining yours in the process. Oh thank you — thank you.
Michael Pinkus, Ontario Wine Review, 2010-05-27
May 27, 2010
QotD: This isn’t what we mean by “the invisible hand”
May 13, 2010
QotD: Because your government cares about your health
If there ever was a reason to get the Ontario government out of the liquor business, this is it. While taxes on booze will drop on July 1, thanks to the introduction of the province’s new Harmonized Sales Tax, the price of your favourite poison will actually increase because — wait for it — the government doesn’t want to turn you into an alcoholic.
[. . .]
Actually, the whole modus operandi of the LCBO is counter-intuitive. At the same time that it preaches social responsibility, the LCBO inundates Ontario households with glossy brochures that take lifestyle advertising to new heights. The latest one cheekily invites customers to take “French lessons”, and features winsome couples in various states of embrace (hey, aren’t the French always making out?). A concurrent radio campaign features a sexy French-accented female voice extolling the virtues of Bordeaux. You get thirsty just listening to her.
Such campaigns are designed to make Ontarians drink more, not less, of course, funneling more cash into LCBO coffers and keeping its employees on the public payroll at juicy union wages. All fuelled by taxes and a staggering mark-up of 71.5% on that latest imported bottle which pairs so well with flank steak and frites.
This kind of hypocrisy is but one reason why the government shouldn’t be in the liquor business. The others include higher prices, less consumer choice, and the general inefficiency inherent in any monopoly business, whether public or private.
Tasha Kheiriddin, “Lower taxes, higher prices, courtesy of your local LCBO”, National Post, 2010-05-13
April 2, 2010
QotD: The KGBO, er, I mean LCBO
Because we live under a monopoly regime that has no intention of loosening restrictive laws, we will never see “wine bar/stores” like this. Americans are jaded to these luxuries of free market access to wine and loads of selection. You read magazines where they tell you to talk with your retailer about finding the best wines from out of theway places and dedicated small producers, and the knowledgeable Ontarian’s reaction is “Yeah, right not in my lifetime will I see that.” While in the U.S. the ‘little guy’ whose passion for wine you can feel the moment you walk in the door and engage in a “which wine should I get” conversation. A recent discussion with an ex-pat American wine collector and drinker (just recently moved north of the 49th parallel) elicited disgust about the LCBO and its selection. “I’m from Chicago,” he tells me, “and I can’t find a decent bottle of wine up here and the selection is . . .” he trails off and shakes his head. Ontarians are used to it. We’ve grown up with Big Brother’s iron fist clamped firmly around our throat and his sweaty palm covering our eyes to what the world outside our borders is doing with booze (wine in particular).
I usually urge you to take a trip to wine country, but this year I want you to take a trip abroad, not to a wine country or region, but to a U.S. wine retailer or specialty shop, a grocery store will do in a pinch (yes I did say a grocery store). Check out, not only the selection but the price, what’s on sale and for how much, wines for under $4, 2 for 1, 3 for 1 or sometimes more for one low price. Discounts for multiple purchases, sale prices that actually seem like you are saving money and not just a dollar or two off. Pay attention to what you see, then ask yourself, “why don’t we have that here in Ontario?” You know the answer, it stares at you with big white letters on a big green background and they go by a four-letter acronym (do I really have to spell it out?) How about this, their first letters are L.C., although they should be K.G. If you are any kind of oenophile, be it novice or pro, you’ll realize that a trip across the border is enthralling and liberating — but then it’s back to the oppressive world of Ontario with Big Brother’s hands shielding you and stopping you and then you tell me honestly, which system would you like to live under?
Michael Pinkus, “Is it a Shop or is it a Bar? Whichever it is, I want one here”, Ontario Wine Review, 2010-04-01
March 13, 2010
Privatization? Let’s not be ideological!
Robert Fulford on the problems with unions in the public service:
Unions hate the very word “privatization.” And no wonder. Their present system is close to perfect: Their workers can’t be fired but can strike, as they do from time to time, demonstrating their power. They win most of their struggles with politicians, who throw billions at them just to keep them quiet. (After all, it’s not as if the politicians were spending their own money.)
This arrangement became commonplace in Canada about half a century ago, turning public-sector employees into princes of the working class who make more money than other people doing the same jobs, and receive more generous benefits.
Union members passionately believe this is no more than their due. The unions and their friends believe public ownership is fundamentally good, private ownership at best dubious. In 1994, when it seemed possible that Ontario would privatize liquor sales, the Ontario Liquor Boards Employees’ Union commissioned a study by a York University economist, Nuri Jazairi. He found, no surprise, that this was a bad idea and that the provincial government should continue to control every ounce of liquor sold within provincial boundaries, presumably for eternity.
But his report was most revealing when he turned to the motives of those who favour privatization. He suggested the idea sprang from “purely political and ideological reasons,” among which he listed “the control of public expenditures” and “limiting the role of government in managing the economy.”
It’s no surprise that the folks who benefit disproportionally from the current arrangement are the most vocally opposed to any changes which would reduce their advantages. If the government did get enough political will to go ahead and privatize, there’s no way (unless the government tied their hands in advance) that private enterprise would give — or could afford to give — their employees the same pay and benefits they currently enjoy under public ownership.
Update: Speaking of situations which could only arise under public ownership, here’s a perfect example:
More than 1,250 Ontario Ministry of Revenue employees will soon be receiving severance packages of up to $45,000 each — but they won’t be out of work. Most of them aren’t even switching desks. They’re simply being transferred from the provincial payroll to the federal payroll when the province moves to a federal harmonized sales tax this summer.
November 13, 2009
Virginia to privatize their state-run liquor stores?
Katherine Mangu-Ward on the prospect of Virginia selling off their state-owned liquor stores:
Virginia is one of 18 states where the government is the monopoly rumrunner. Supermarkets, gourmet shops, and corner stores are all forbidden to sell liquor. But Bob McDonnell, the newly-elected Republican governor, has promised to end the monopoly on liquor sales in the Old Dominion.
This bold gesture isn’t because McDonnell is an especially thoroughgoing libertarian; there are plenty of other areas where he’d like to see more state involvement in the private lives of citizens, not less. This isn’t a 12-step program to help the commonwealth go cold turkey on alcohol money either. McDonnell has no intention of letting Virginia’s bottle-based income fall below its current levels of more than $100 million a year. In fact, part of the reason McDonnell is considering privatization at all is that he is looking for cash to spend on transportation infrastructure. He predicts that selling off the state’s 334 liquor stores to private players and gathering licensing fees from more private sellers will bring in $500 million in the short run, while leaving long-run income intact. (The Washington Post remains unconvinced, noting that McDonnell’s figures may be too optimistic.)
But no matter what the political and budgetary machinations, Virginians are unlikely to wind up paying more for their rotgut, and they are very likely to wind up with a better selection and a relatively skeeze-free shopping experience. Commonwealth officials can focus on governing a large landmass without having to fuss with the details of running a liquor empire. And the move may even represent a net gain for the state budget in the future when the state sheds responsibility for ABC employee benefits and pensions, and starts bringing in real estate and other tax revenue from the privatized stores.
I’ve written about Ontario’s LCBO and the (dim) hopes of privatization at the old blog. In 2004, there was a brief flurry of discussion on privatizing the LCBO:
For those of you who don’t live in Ontario, the LCBO is the government-run monopoly provider of almost all alcoholic beverages except beer and wine, which are sold through the Brewers Retail, now operating under the name “The Beer Store” and through individual winery-owned wine stores, respectively. Both the LCBO and the Brewers Retail were set up after the repeal of prohibition in Ontario to control the sale and distribution of alcohol in the province. The LCBO is government-owned, while the Brewers Retail is owned by the major breweries (Labatt, Molson, & Sleeman).
A few elections ago, the Ontario government under Premier Mike Harris started talking about getting the government out of the liquor business. The LCBO, which up until that point had operated like a sluggish version of the Post Office, suddenly had plenty of incentive to try appealing to their customers. Until the threat of privatization, the LCBO was notorious for poor service, lousy retail practices, and surly staff. Until the 1980’s, many LCBO outlets were run exactly like a warehouse: you didn’t actually get to see what was for sale, you only had a grubby list of current stock from which to write down your selections on pick tickets, which were then (eventually) filled by the staff.
If the intent was to make buying a bottle of wine feel grubby, seamy, and uncomfortable, they were masters of the craft. No shopper freshly arrived from behind the Iron Curtain would fail to recognize the atmosphere in an old LCBO outlet.
During the 1980’s, most LCBO stores finally became self-service, which required some attempt by the staff to stock shelves, mop the floors, and generally behave a bit more like a normal retail operation. It took quite some time for the atmosphere to become any more congenial or welcoming, as the staff were all unionized and most had worked there for years under the old regime — you might almost say that they had to die off and be replaced by younger employees who didn’t remember the “good old days”.
To return to the early 1990’s, the LCBO had gone through massive changes (from their own point of view), but were still far behind the times. The threat of being sold to the private sector seems to have operated as a massive injection of adrenalin to the corporate heart: the LCBO suddenly became serious about serving the customer, expanding their services, making themselves more customer-friendly and providing their staff with proper training.
In the end, the Tory government decided that they preferred the direct stream of profits from the LCBO monopoly and backed away from their privatization plans. To my amazement (and probably that of most impartial observers), the LCBO did not immediately fall back into their bad old habits: they continued the modernization that had already taken them so far from their roots.
Today, the LCBO is almost unrecognizable as the Stalinist bureaucracy of the 1960s and 70s. Their staff are generally friendly, helpful, and (mirabile dictu) know far more about their products than ever before.
All that being said, I still am happy to hear that the current government is talking about privatization again. The LCBO is better than it used to be, and continues to improve, but they are still a monopoly provider with little real competition. I don’t pretend that a badly run sale might well end up (in the short-to-medium term) reducing the variety of alcoholic products for sale in Ontario, but having competing retailing channels would (in the long term) produce a healthier market with the competitors striving to attract more customers by better service, wider selection or even (dare we say it) lower prices.
Of course, 2005 came and went, with no movement in the direction of privatization, and it won’t happen under the current provincial government. The revenue stream is still too good for the province to give up.
