Making sense of North Carolina's ABC system

No, I am not talking about the public schools.  North Carolina is one of a handful of states where hard liquor sales are restricted to state-run ABC stores.  The stores are widely dispersed, keep limited hours, and offer limited selections compared to other states where the private sector is allowed to operate more freely.  In a recent poll, a majority of 625 registered voters favored privatization.

I live in Cary, a town of 165k residents.  Cary has three ABC stores.  When I lived in Cambridge, Mass. as a graduate student, there were three liquor stores within a block of my apartment.  And they stayed open late.  And now they are open Sundays.

From an economic standpoint, the ABC system acts as an inefficient tax on alcohol consumption.  Every state taxes alcohol because demand is price insensitive (making it a great source of revenue) and excessive consumption yields some nasty negative externalities.  NC imposes an additional tax by raising the transaction cost of making alcohol purchases.

Hypothetically, the state could privatize the ABC stores and raise per gallon taxes enough so that there is no increase in alcohol consumption.  The N&O reports there have been some hearings at the NC General Assembly.   The level of economic literacy in this debate is not high.  A Charlotte legislator was concerned that privatization would result in the loss of the 2870 jobs in the ABC system across the state, apparently ignoring the offsetting creation of jobs in the private sector.

I am not counting on being able to restock my Knob Creek bourbon at Harris Teeter on Sunday any time soon.