Let’s go into the way-way-way-back machine, shall

we?

The editorial-page lede of The

Seattle Times for Nov. 8, 2011: “The victory of Initiative 1183 is good news for the consumers and taxpayers of Washington.”

That was in the aftermath of voter approval of I-1183, the measure, largely bankrolled by Costco, that privatized hard-liquor sales in the state of Washington, after numerous Times editorials urging its passage.

Now let’s go hurtling back to the present — The Seattle Times, June 5, 2012: “Washington state’s new liquor-privatization law is challenging the basic idea that competition leads to lower prices. Less than a week after a historic change to liquor sales in Washington, many customers are complaining about bigger [sic] than expected prices….”

Remarkably, this last bit is billed as a reported news story, not an opinion piece.

Does anyone who doesn’t have a vested interest in privatization schemes still believe the canard that turning a societal function —

SEATTLE

SOUNDINGS

By

Geov Parrish

any societal function — over from government to private business will be “good news for consumers” because “competition leads to lower prices”?

Well, some of us did last November, after Costco’s $23 million campaign, the most expensive in state history. From the same article: Lynnwood retiree Bill Jessberger, who voted for I-1183, says he now wishes he hadn’t.

“I was hoping to get cheaper prices, and they’re not cheaper. They’re more expensive,” Jessberger said Tuesday. “Unfortunately, the initiative didn’t do what I thought it would.”

Uh-huh.

All a scheme

Privatization schemes are not rocket science. They usually work like this: There is money in the public sector that the private sector would like to get its hands on. It does so by playing on the popular conception of inefficient government bureaucrats and that “more choice” and “more competition” will magically lower prices, improve customer service and so on.

On the rare occasions when the cost of purchasing legislators does not pencil out with the financial benefits involved, corporations now know that they can go directly to voters to get their scheme approved, as Costco discovered.

So privatization takes place. And we are shocked that prices go up and the consumer experience gets worse. It’s such a stunner that the Times story was only one of several local media stories this month on consumers’ surprise at the new, higher prices.

Why? Prices go up because large corporations have a legal obligation to return the greatest value possible to shareholders. Price points aren’t determined by competition so much as they are by what the market will bear. And in the case of hard liquor — which is an industry with huge markups over cost even before the high additional rates of taxation — the market will bear a lot.

Moreover, because most big-box stores, supermarkets and pharmacies have an aisle of hard liquor now — not a whole store of it — selection has suffered, too. If you want one of the most popular brands, you can now find it in many more places. If your tastes are more eclectic…well, good luck with that. And good luck with finding knowledgeable counter help, too.

The one exception? Costco, which has enough national bulk buying that it’s keeping its prices artificially low in Washington state to try to force out some of its new competitors, just like it designed I-1183 to minimize its competitors. Once the market shakes out, their prices will go up, too — bet on it.

. PARRISH, Page 5