Louisiana Milk Consumer Learns About American Price Commissars (Corrected)

There are people in this country who still think that we live in a nation that recognizes the right of consenting adults to buy and trade freely in legal products. (We all know there are illegal products that are prohibited, and call down SWAT teams on people—like raw milk and other dangerous substances—but I’m only talking about legal products). Kenneth Daigle was one of those people. He thought that, if a grocery store wanted to get milk off their shelves, and he was trying to save money, that the store manager could lower the price of milk in order to clear it out, and he could decide to pay the non-monetary costs of such milk in order to get a lower price in money. In this case, the non-monetary expense was planning his milk purchasing for Tuesday, when the store had a regular special sale.

Daigle was deluded. Allowing stores to set their own commodity prices is, it turns out, a dangerous practice for society. Instead, there are special bureaucracies that have the power to protect the economy from dangerously low-priced milk. Daigle was woken up at the cash register one Tuesday when he discovered the store had been force to raise the price.

“‘Any type of commodity, the prohibition of selling below cost is because if you sell these products below cost, either one, you’re marking up other products to make up for that loss of. Or two, by unfair business competition you can drive your competitors out of business. If your competitors are driven out of business, then what generally happens is that the price is marked up significantly because there is no competition,’ Department of Agriculture and Forestry Commissioner Mike Strain said.”

First of all, we are talking about one and only one store, not some sort of mega-chain in a small town that is trying to drive out of business the one remaining independent retailer. In fact, the story of temporarily below-market prices in order to drive a competitor out of business in order to raise prices later is largely a myth. A strategy of under-pricing a product in the hope of a future monopoly in which higher profits will make up for the loss is an extraordinarily risky endeavor. Typically, when companies go out of business, they liquidate products and even further cut down on prices. Then you have to hope that no one near the area has the capital to swoop in and compete at a time when you have already extended yourself by selling at a loss.

As far as marking up other prices, so what? It is not anyone’s business how a grocery store strategizes to make a profit by selling to consumers. Besides, if people are hunting bargains they would typically be willing to buy milk there and then go to another store for other items. I make these sorts of decisions all the time. Other people have enough income that they don’t care. By this sale, the store attracts both kinds of customers. Some show up on Tuesday for the milk and other just go there any day they want for other reasons because it is not worth their time to bargain hunt.

Stores have other needs. They have shelf space they need to clear. They have to make room for new inventory. In this case, the store probably found that Tuesday was a really slow day and they wanted to get people to stop clogging their aisles at other times by giving some people an incentive to shop on Tuesday. They also need to make sure they clear their inventory of milk before the expiration date is passed. For all we know the bureaucrats’ intervention in the marketplace is going to force the store dump out more milk rather than sell it.

It is bad enough we have Commissars in this country who can make store “owners” do what they say. It raises the question if they really own their property at all. But it is much worse that we now have people spelling out basic economic fallacies to the medial.

We don’t need tax-fed agents of the state controlling the economy on the pretext of “protecting” us.

[js-disqus]