Lessons from a Washington State Liquor Referendum

A friend in Seattle recently drew our attention to a citizens-initiated referendum in Washington State on privatising the state’s liquor stores.  The vote, part of last month’s US general elections of public officials and sponsored by shopping warehouse chain Costco.

Washingtonians supported the initiative, with a 20 percent majority. Back in 2010, 53 percent of voters had rejected a similar motion.

The first interesting point, given the tendency in New Zealand to portray privatisation as a ‘right wing’ policy, is that on both occasions support for ending the state monopoly came mainly from typically Democratic-voting counties, while Republican-voting areas were most opposed.

This was hardly surprising. Governments of all stripes from around the world have gone to the polls with platforms that include the privatisation of government businesses and have been elected with sizeable majorities.

Apart from some minor modifications, this year’s liquor store sale initiative in Washington State was remarkably similar to the one in 2010, which raises another point of interest: what happened between the two votes?  The major factor, according to my colleague, was intensive public debate.  There was plenty of coverage in editorial pages, arguments from politicians of all persuasions, and pitches from supporters and opponents in advertisements and interviews.  As we know all too well, democracy is improved by informed debate, and voters, given adequate information, will on average and over time make sound decisions at the ballot box.

Another lesson from the Washington State elections, where the liquor store vote was just one of three such referenda, is the much greater acceptance of a role for referenda generally.  This is true throughout the United States, and other countries, such as Switzerland which is famous for the number of decisions it puts to its citizens via referenda.

Of course many complex matters are best delegated by voters to elected officials; but there are plenty of propositions on which voters, given adequate information, are well placed to make their preferences known directly.

Our recent referendum on MMP is interesting in this context.  The choice between MMP and its possible replacements was a complex one, and public debate and information was very limited.    Plausibly, many voters did not think they were well enough informed to do justice to the issue.  In the event, over 25 percent of eligible voters did not vote. In addition, 34.1 percent of these who did vote in the referendum voted informally when it came to choosing a preferred alternative to MMP.

But whether or not a better public debate would have changed the outcome, and whether or not we like the outcome, at least we have it, and we can accept its legitimacy because the people have spoken.

Another interesting aspect of the Washington referendum was the high profile role in the public debate taken by Costco, under the leadership of co-founder and chief executive, Jim Senegal.  Costco contributed over $20 million to the campaign.  It rallied the support of restaurant owners, local wineries and some supermarket chains that all wanted to do better for their customers.  In doing so it took considerable flak from the unions and other interest groups who spent millions of dollars opposing the initiative.

Without Senegal’s leadership, the initiative would almost certainly not have made the ballot a second time nor would it have passed so overwhelmingly.  As Seattle Times columnist Bruce Ramsey said “Most retailers don’t do this sort of thing. In matters of public controversy they are chickens.”

At the national level in the United States, Whole Foods supermarket chain CEO John Mackey is another notable exception to the rule, having argued against President Obama’s healthcare reforms and more recently discussing the need for economic freedom and less government spending.

As in the US, New Zealanders look to their political leaders to show conviction and courage when the going is tough and bold measures are required, as they are right now.  But politicians can’t progress reforms alone.  As in previous periods when New Zealand has made progress, we need business leaders to throw their weight behind the changes that are needed to ‘make the boat go faster’.

Providing business leaders with a stronger, united voice to achieve that is a key focus of the current merger talks announced last week between the Business Roundtable and the New Zealand Institute.

Bryce Wilkinson
Acting executive director