The Daily Item, Sunbury, PA

July 1, 2013

Undermining the purpose of government

Daily Item

---- — It appears that the great liquor sell-off is heading toward the same pointless ending that befell the great lottery lease-off, leaving Pennsylvania little likelihood of cashing out by abandoning the pretense of regulating drunkenness and gambling through state-managed operations.

This was a fiscal plan borne of the necessity to plug some $40 billion gap created by underinvesting in pension funds. The needed cash was to materialize by leasing the state lottery to a British management firm and eliminating state liquor stores by selling more liquor licenses throughout the private sector.

The lottery deal fell apart when a newly elected attorney general from the opposition party informed Gov. Tom Corbett that he lacked the constitutional authority on his own to strike a bargain for state assets.

The liquor privatization appears to have floundered on the reality that monopolizing both wholesale and retail operations for adult beverages produces major margins and is a better long-term revenue prospect than privatization.

The Corbett administration's twin debacles of liquor and lotteries demonstrated that people who run a state-owned and regulated economy -- commonly termed socialism when it is done by someone else -- are virtually lost in a marketplace fraught with risk, competition, investor caution and consumer choice.

That is as it should be. Government is not established to boost sales and maximize returns. A consideration in any government policy should be the effects on the public good.

But the Corbett plans were neither to create nor operate a major statewide consumer-supported revenue stream, but rather to sell off mature money makers with proven assets -- cashing out on decades of public investment.

The lease-out and sell-off would have removed the public brand from these activities over time.

With that turn of purpose, Harrisburg would have effectively abandoned regulatory motive to manage potentially destructive behaviors and social costs that associate historically with gambling, drunkenness, addiction and prostitution.

In the role of banker or investor, the state would have unburdened itself from ownership responsibility for consequences. That undermines one purpose of government.

The financial meltdown of recent years that, by some estimates, destroyed up to 40 percent of our wealth, was possible because credit ratings agencies and securities regulators benefitted from enabling risk and turning blind eyes to the practices that were designed to crash.

The watchdog who depends on the intruder for supper has little reason to bark and no reason to bite.