Given that they are almost certain to win the next election anyway, you'd think the British Tory party might at least flirt with a bit of decent public policy. But now: given they chance to do something right, they've opted instead to throw their hand in with the most mindless kind of economic populism. The culprit is (drum roll) the big grocery stores, who, blast them, insist on trying to lower prices.
It was from, ironically enough, John Kenneth Galbraith that I first learned what every good economist knows: that a big retailer is essentially a buying club with the clout to extract savings from suppliers which, in a competitive market, they can then pass on to customers. That's how Wal-Mart does it, and so, apparently, the big four British grocers (one owned by Wal-mart). The Tories have now promosed to put the squeeze on the biggies to prevent them from squeezing their suppliers.
And it appears they intend to go aobut it in the worst possible way. They'll take the big grocers to create a new regulatory framework (actually, this part is okay). But then they apparently intend to create (wait for it) an "ombudsman" to police supposed negotiating abuse.
Right, just what Britain needs: one more publicity-grabbing political hack ready to grab (state subsidied) television time to whine about the evils of grocer power. Although I have to admit--the "ombudsman" part is perhaps the tipoff that the Tories don't really mean it after all: what they seem to be designing is a system which will transfer a bit of wealth from the grocers to the political apparatus, but without the intention of ever actually doing much of anything except posturing before the camera.
Afterthought: Yes, I know--if you are a little supplier, you know it hurts like hell to be bullied. IHey, I've seen these guys down round the bankruptcy court. If you sleep under the umbrella of a gorilla, and the gorilla rolls over, you are going to get crushed. Back in the early 80s, when interest rates went through the roof, Sears called all its suppliers and said guess what: we're not going to pay in 30 days any more; expect more like 45. I saw first-hand the travail of a little furniture maker. In some ways, he was the model of enterprise: a first-class product, and a pretty good employer. But he just couldn't hack it on the new terms. And the sad truth is that's one thing our system does (or has done) pretty well: wash out marginal producers for the greater good of the public weal.
The only way I know to avoid that is to embrace some kind of state syndicalism. And I don't want to be excessively ideological here: it may be that some sort of syndicalist model can be msde to work. But it's certainly not what the Tories claim to embrace. If they want to go to the voters on a syndicalist platform, God bless them. But as long as they claim to be the party of free markets, they should take this nonsense and stuff it in their hat.
H/T for the pointer: the Kansas bureau. Thanks, John.
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