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 — 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.
And The Seattle Times, in its many pro-I-1183 editorials, never once mentioned that the initiative’s prime retail beneficiaries were among the newspaper’s largest advertisers. Most of the state’s other major newspapers also urged passage of I-1183 while failing to mention that conflict of interest.
Privatization doesn’t pay…us
The point of all this is not to rail against an initiative that was decided months ago. I-1183 is a fait accompli, and voters have every right to decide whether to trade higher prices and narrower selection for more locations, or to trade a short-term state-revenue boost for a long-term state-revenue loss, or how to prioritize the social risk of greater availability of hard liquor.
But the promises with which I-1183 was primarily sold are exactly the same fallacies that have been used to promote Social Security privatization, Medicare privatization (hey, didn’t Plan D do wonders for those prescription-drug prices?), utility companies (one word: Enron), war (two words: Haliburton, Blackwater), private prisons, phone companies, cable companies, ferry service, and on, and on and on.
In a state whose two richest individuals, Paul Allen and Bill Gates, both have links to the charter-school movement, we are looking this year at our fourth initiative effort to effectively divert some of Washington state’s K-12 public-school spending to private entities. This at a time when the state Supreme Court is already slapping around the Legislature for its constitutionally inadequate K-12 funding. And the pro-charter-schools campaign will push the same sort of fallacies: saves money, better product.
The movement to downsize government has become, in large part, a movement to redistribute wealth upward, and I-1183 is a classic case study in how it’s sold to a willing public and how the outcome is inevitably not what was promised.
It used to be that we paid for our booze, and the moderate markup went to overhead and funding public services. Now we pay for booze, our hefty markup goes into less overhead (because wages are lower) and big shareholder pockets and public services go begging.
That’s how it works, every time. It’s class war disguised as a better consumer experience. Watch, learn and remember.
GEOV PARRISH is cofounder of Eat the State! He also reviews news of the week on “Mind Over Matters” on KEXP 90.3 FM.