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Written by Tom Bowman
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Thursday, 01 November 2007 |
There were raised eyebrows when a recommendation
of the All-Party Parliamentary Group for Small Shops secured a
Competition Commission inquiry (another one) into alleged
anti-competitive practices of supermarkets. It was pointed out that the
register of interests revealed
that the Independent Retailers Confederation (via Quintus Public
Affairs Ltd) provided secretarial support for the group, which cast its
recommendations in another light.
The Commission's preliminary findings, just published, are remarkably sensible. As James Harding puts it :
Peter Freeman, the Competition Commission chairman, has
avoided populist politics and cheap headlines to steer a sensible path.
He has not succumbed to heckling from the small business lobby,
rejecting the notion that independent, local stores have been hampered
by the supermarkets’ growth. Nor has he sought to meddle too much with
the relationship between suppliers and retailers. And he has rejected
the claims of rival supermarkets that Tesco should be punished for its
success.
What the preliminary report does recommend is that planning rules be
changed so that where there is only one supermarket, it will become
easier for a competitor to gain approval. It says that consumers will
gain from more competition. Indeed, yes, though I don't imagine that
those who engineered this enquiry expected "more supermarkets" to be
the answer!
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Written by Tim Worstall
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Saturday, 27 October 2007 |
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As somebody who lived in Russia for most of the 90s I of course take great interest in this story :
Russia is introducing Soviet-style price controls on some
basic foods in an effort to prevent spiralling prices from denting the
Putin administration's popularity ahead of parliamentary polls in
December.
The country's biggest food retailers and producers have reached an
agreement, expected to be signed with the Russian government on
Wednesday, to freeze prices at October 15 levels on selected types of
bread, cheese, milk, eggs and vegetable oil until the end of the year.
Now these sort of price limitations for a few months won't cause all
that many problems and it'll certainly bring political benefits
(although as no one is seriously suggesting that Putin or his nominee
are going to lose the election I do wonder why they're bothering) but
the problem is in the longer term: if people start thinking that prices
should be set any other way than the market then we get to situations
like Zimbabwe (showing quite how much ruin there is in an economy) or
indeed Russia in the 1980s.
I'm told that the winter before my first arrival there such
foodstuffs as beetroot and turnips were actually rationed: certainly,
in the February of my arrival (just a few weeks after prices were
liberalised) my having the equivalent of a month's wages as a daily
subsistence allowance didn't prevent me from having to hunt around for
2 hours each day to find food: never mind the price, it just wasn't
there. The story of the next few years was that as that price
liberalisation spread throughout the economy food became easier and
easier to find: by the time I left in the late 90s no, it still wasn't
quite like popping around to Tesco's, but the hours and hours spent
searching for food were over.
As for such price controls making food easier to come by for the poor:
well, the Soviet system didn't even do that. I sub-edited a piece of
market research for Commersant once and 60 percent of Russians claimed
never to have bought a potato and 2 percent claimed to keep chickens.
What happened when prices were kept too low was not that food was
cheap, but that it reverted to being a peasant economy, a barter one,
where familes often grew most of their own food.
Let's hope that the controls ("voluntary" though they are) don't last
past the elections. I'm not sure that Russians deserve to be forced
back into that nightmare that was the Soviet food distribution system.
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Written by Tim Worstall
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Thursday, 18 October 2007 |
t behooves a man to have a hobby and mine, sad as it is, is to try and
spot special interest group pleading. You know, the anguished pleadings
that something should be banned ("for the children" of course) said ban
having the entirely unexpected result of driving up the profits and
incomes of those doing the pleading. Entirely unexpected .
A powerful coalition of companies - whose members include
the supermarket Waitrose, baby food manufacturer Organix, chocolate
maker Green and Black's, and Britain's biggest organic brand, Yeo
Valley - has accused the government's Food Standards Agency of failing
to consult it over new guidance for parents on the side-effects of
E-numbers, and of ducking the opportunity for tighter regulation.
...
Organic food, as defined by the EU and Soil Association
Standards, has always prohibited the use of all the additives that were
identified in the report as having a "significantly adverse effect" on
children, and also of many other additives.
Something of a classic case there I think. The actual research on the additives (colourings and a preservative) showed that some children were affected. Just as some children
are affected by, say, nut allergies. The correct public policy response
therefore being what we do with nuts (no, not elect them) which is to
add their presence to the contents label and assume that consumers are
rational: they won't feed things to their children which they are
allergic to.
The organic producers have much higher production costs because
they don't use these colourings or the preservative: thus, "tighter
regulations" (most of those calling for them are in fact calling for a
complete ban on their use) will reduce their cost premium over the
alternatives. To the great benefit of their profits and incomes.
Entirely unexpectedly, of course.
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