Bernie Sanders was just today renewing his call for 'nationwide rent control,' but for some reason
it was a negative for Mayor Pete.
Pressed by Times editorial board member Binyamin Appelbaum about his work for a Canadian grocery chain that was fixing bread prices, Buttigieg was defensive in a way he hasn’t been for much of the campaign, uttering a swear (“bullshit”). Appelbaum’s dead-voiced rejoinder—“You worked for a company that was fixing bread prices”—forced Buttigieg to make the distinction that he merely consulted for the company and never, you know, actually fixed the prices.
I understand why I think it's a bad idea to fix the prices of bread,
exceptis excipiendis, but what's the issue for the New York Times? The price was fixed too high? Above zero?
It's of a piece with opprobrium cast on lawyers for representing the "wrong" clients.
ReplyDeleteConsultants consult, just like lawyers lawyer.
Eric Hines
It's really hard to tell from the write-ups what they're talking about, but classic price-fixing is a secret agreement between ostensible competitors to raise prices equally and simultaneously, so neither will have to fear losing market share to the other. How many have to agree in order for this strategy to pay off depends on how many of them together account for a controlling share of the market, i.e., a cartel.
ReplyDeleteAs long as competitors watch each other's prices and match them reactively, you get what looks like similar results: prices may rise across the board in response to various pressures. In the former case, though, the group of sellers function like a monopoly with significant barriers to entry, in that they can impose price increases without fear of losing customers. In the latter case, each supplier can try it, but if his competitors can stay in business without matching the price increase, the price-hiking merchant risks losing customers and may have to revert to the lower price. If he can't stay in business at that price, he's driven out of the market, which is what's supposed to happen to less efficient players in a dynamic market.
I can remember law firm partners decades ago admitting jocularly that all the firms in the city gathered together once a year in restraint of trade and agreed on opening salaries for first-year associates. I'm sure they never wrote the agreement down, but there was a suspicious uniformity in the going rates for new graduates, at least within certain tiers of firms. Even there, competition survived, because the business of being identified in a certain tier was fluid. Pay too much and you lose partners to unhappiness over the net profits per partner, or you lose clients to unhappiness over increased fees. Pay too little and you don't get the cream of this year's law-school crop, which means slowly you lose reputation and clients, or at least you have to switch to clients who expect to pay lower fees for a more pedestrian level of legal expertise.
I await with bated breath the NYT column by Paul Krugman explaining why Democratic proposals for nation-wide rent control are, after all, right and necessary and, above all consistent, with what he and other woke brite and well-educated economists have all written about the topic for his, and their entire careers.
ReplyDeletehttps://www.nytimes.com/2000/06/07/opinion/reckonings-a-rent-affair.html
So the objection is that industry leaders rather than government bureaucrats were setting the price? In the presumptive interest of shareholders rather than bread consumers too, I bet.
ReplyDeleteThat still sounds more like the kind of objection we might make more than one I’d expect from the NYT. But ok.
All sellers set prices, that's not the objection. What they're not supposed to do is collude among themselves to set the prices offered by everyone in the market at once. They're supposed to set them individually and compete with each other.
ReplyDeleteThat's our model, yes, but I think the objection here isn't that they weren't engaged in fair competition. I think they'd be happy, for example, if industry leaders got together to figure out how to fix prices lower -- accepting less profit in return for lower bread prices for poor consumers, say. If the industry leaders were behaving like rent-control bureaucrats, instead of like profiteers, I don't think 'price fixing' would be an objection.
ReplyDeleteThe media might have been, no doubt, because they understand absolutely nothing about either economics or antitrust law. But the cops were after the bakers for straight-up cartel-style collusion in raising prices simultaneously.
ReplyDeleteIt goes without saying that people like to vote for politicians who will fix prices lower. What they're unlikely to consider is that every transaction involves a price on both sides, even if only one is stated in money. The first time they're on the non-money side of the equation, they realize quick enough how unpleasant a low price is: that's what makes low-wage workers and farmers so unhappy. Suppose a politician tried to tell a welder it was illegal for him to charge more than X dollars an hour, for the good of the community, which desperately needs his services? Or to tell a farmer he had to price his wheat lower because children need the bread.
1 Timothy 5:18, I think that is.
ReplyDelete