Government Interference Always Means Americans Pay More

Written by Michael Cummings on October 22, 2018

We in the United States of America don’t live in a free-market society.

If you have a product to sell me, the price I pay will be determined by a number of factors like supply of alternatives, my degree of need, and market conditions, but it will mostly depend on the law of comparative advantage that says whatever money I decided to part with for your product is less valuable to me than your product. In other words, I want what you have more than the money in my pocket.
Thresholds reside in that argument. For example, the country will grumble when paying $4 for a gallon of gas but if it shot up to $50 a gallon, guess who’s walking more? Depending on the product and the market, at some point we stop paying.

Let’s talk tuna:

StarKist Co. has reportedly agreed to plead guilty to charges of price fixing as part of a conspiracy with two of its competitors to keep the price of canned tuna high. Federal prosecutors announced the plea agreement on Thursday, which includes a fine of up to $100 million, according to The Associated Press. In the same deal, a former StarKist executive and two former Bumble Bee Foods executives pleaded guilty to price fixing.

StarKist’s plea comes amid a government investigation of the canned tuna industry that’s been ongoing since at least 2015. StarKist and Bumble Bee, along with Chicken of the Sea are accused of conspiring to fix prices. Altogether, the brands control around 80 percent of the U.S. canned tuna market.

Last year, Bumble Bee pleaded guilty to conspiring to fix U.S. prices between 2011 and 2013, and paid a $25 million fine. A week after Bumble Bee’s plea, Walmart alleged in a lawsuit that the company was part of a conspiracy with the two other tuna canning companies.

Price fixing as defined by the Federal Trade Commission:

Price fixing is an agreement (written, verbal, or inferred from conduct) among competitors that raises, lowers, or stabilizes prices or competitive terms. Generally, the antitrust laws require that each company establish prices and other terms on its own, without agreeing with a competitor. When consumers make choices about what products and services to buy, they expect that the price has been determined freely on the basis of supply and demand, not by an agreement among competitors. When competitors agree to restrict competition, the result is often higher prices. Accordingly, price fixing is a major concern of government antitrust enforcement.

This is absurd. If we operated in a purely capitalistic society, price fixing would be allowed. If tuna gets too high for the perceived value, we stop buying it. “That’s unfair!” you say. “We need government to make sure we’re not getting screwed.”

Do we?

Let’s say you’re the best cake maker in the industry. The taste of your cakes and the designs you create call in people from around the world to pay top dollar for what you sell. What is top dollar? That’s up to you. If you can get a million dollars for an oil baron’s daughter’s wedding cake, that’s your choice. What if a competitor surfaces who charges half your price for the same quality? You’ll have to come up with a reason for people to buy your cakes or lower your prices. And let’s say if, before your next transaction, it was proven that your cakes make people five times fatter for the same amount of cake over anyone else’s, you’re out of business if you don’t change your recipe. Like it should always do, the market decided who wins and who loses.

The government should have precious little to do with how much anything should cost.

Arguments for government interference can be made for certain products we can’t live without and that have dire implications for a functioning society, like energy, especially in the absence of competition – but here there’s always a strong case to open markets to competition to lower prices (see the cosmetic surgery industry).

Right now, most of us can’t choose a utility provider to light our homes so when we see the entrance of solar panels in the market, we cheer. Cheaper power, right? Not really, when you consider the American taxpayer is subsidizing the solar industry at nearly 30 billion dollars a year. If we had to pay for all of it ourselves, the value drops off the cliff — much like Tesla automobiles and light rail transit.

From tuna to cars, shoes to sports stadiums, to a college degree, get the government the hell out of our business, and I promise you we will all pay less.

Image: CC) Creative Commons; Excerpted from:

Michael Cummings
Michael A. Cummings has a Bachelors in Business Management from St. John's University in Collegeville, MN, and a Masters in Rhetoric & Composition from Northern Arizona University. He has worked as a department store Loss Prevention Officer, bank auditor, textbook store manager, Chinese food delivery man, and technology salesman. Cummings wrote position pieces for the 2010 Trevor Drown for US Senate (AR) and 2012 Joe Coors for Congress (CO) campaigns.