Again I heard on the radio that the LCBO (liquor control board of Ontario) was great for Ontarians because it generates a profit. This is hogwash.
The LCBO is a pure monopoly with a product that is relatively price inelastic. Inelastic means that if the price changes, sales do not change by much. If the price of a 6 pack goes up by 1$, I will still by the six pack (my name is not Joe).
The LCBO generates a profit by inflating prices with the full knowledge that sales won't decline by much. Who pays the bill? Me the consumer and other business. If I have $100 of disposable income per week and I pay $13 for a 6 pack, I have $87 to spend elsewhere. If the price was $7, I would have $93 to spend elsewhere. I lose by not being able to buy an additional $6 of other goods and other business loses by not selling me an additional $6 worth of goods. Should I decide to save the $6, the banks have more money to lend to a budding entrepreneur.
Government should not be in business. Government business reduces disposable income and crowds out other business.
Right On
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If Americans have Joe Six Pack, do we Canadians have Jacques Two Four ?
ReplyDeleteI have a very different perspective. I too enjoy a drink, but living in Wales, where liquor and beer are amazingly inexpensive, I see the danger of a free market for alcohol.
ReplyDeleteAlcoholism is a serious problem here, and there is little regulation on the sale or consumption of beer, wine, or spirits. The result is rampant drinking at all times of day on all days of the week, simply because it is so affordable.
There is a social benefit to moderately expensive liquor. The LCBO, as well as the beer store, play an important role supporting public health by establishing reasonable minimum prices for booze.
I know we all want our cheap fix, but it comes at a high price.
The LCBO is one of the reasons why the Progressive Conservative Party must elect a genuine small-c fiscal conservative leader.
ReplyDeleteA truly fiscal conservative would immediately privatize the LCBO.
This conservative government would not require the funds earned annually by the LCBO since it will be downsizing government, cutting employees,cutting useless programs, and selling other crown corps such as TVO.
Time to turn the LCBO back into the marketplace.
The first thing a newly elected PC of Ontario leader should do is eliminate the term "progressive". The second thing should be to act conservative.
ReplyDeleteDitto for BC
ReplyDelete