Ending Monopoly Government – Montgomery County’s Liquor Control
A recurring debate between liberals and conservatives centers on a basic question, “Do you think that government tries to do too much, not enough, or does the right amount?” Conservatives emphasize the variety and efficiency that competition among service providers produces. Liberals attach more weight to the “fairness” of offering identical services to all. Additionally, pro-government interests often do not trust the public to make their own “right choices,” insisting on the “expert” guidance of government. In Maryland, this debate is being played out over legislation to permit more charter schools.
Yet, in the continuum of government services that could be best left to private markets, it is hard to imagine a less defensible activity left exclusively to a government agency than liquor wholesaling and the Montgomery County Department of Liquor Control. Yet Maryland state law explicitly prohibits the county’s liquor sellers, such retail stores and restaurants, from selling any alcohol not purchased from the county’s own liquor monopoly.
Frank Shull of the RW Group, which owns restaurants such as the Mussel Bar and Brasserie Beck, recently told the County Council that he probably would not create another restaurant in Montgomery County under the current distribution system. Shull said that restaurants “don’t want to have to deal with the DLC. It is the evil empire to most people in the business. No one is held responsible, we can’t get product, and it makes it very hard to do business.”
Even worse, is the corruption. Local television’s News 4 I-Team spent six months investigating the Department of Liquor Control. Their report uncovered that two-thirds of businesses were being “shorted” in their deliveries. From this merchandise, county employees were then selling the “skimmed” inventory on the black market.
One store owner explained how county deliverymen try to sell beer under the table, asking for cash for extra cases on their truck. As a result of the news coverage, at least four delivery men were fired and another one quit.
Outside audits highly critical of the DLC inventory control process are yet another measure of the DLC’s continuing mismanagement. Despite past warnings, follow-up reviews conclude that these weaknesses still have not been corrected.
Last year, Republican County Executive candidate Jim Shalleck made ending the Department of Liquor Control monopoly a cornerstone campaign plank. A special County Council ad hoc committee is now investigating the Department of Liquor Control and looking at options for reforming a system. Although the Council’s interest is somewhat encouraging, unfortunately it still seems unlikely that the County is prepared to give up the current monopoly profits received from the current system.
Returning to the question of the functions of government, at the very minimum, the County must forego its current wholesale monopoly, and permit competition with private wholesalers. Liquor wholesaling is hardly an activity that deserves protection as a local government monopoly. It is time to let private wholesalers freely compete with the county.