February 24, 2006

Protectionism, bane of the consumer

Where is the sense in this? I mean, really, what is the sense in penalizing someone who has found a way to sell his gasoline cheaper than everyone else?

Sure, if this guy prices it low enough, everyone is going to go to his station for gas and ignore the higher priced outlets nearby. Yes, if that happens long enough then the higher priced outlets will have to find a way to sell their gas for cheaper or go out of business.

So what?

Here we have an example of blatant protectionism at a state level which rewards those business which either are unable or unwilling to find a way to make their product less expensive for the consumer. Or perhaps they have found that way and to preserve an increased profit by way of state mandated minimum pricing.

Imagine, if you will, that you can find a way to make your product 1%, 2%, maybe even 3% cheaper than your competitor's product. At the price of gasoline now, even 1% can make a big difference in making your product more competively priced.

You could lower your price by some portion of that amount to increase your business and still make a profit that is comparable to that of your competitor. Or you can keep your price inflated, rake in those extra dollars, and no one can say a single damned thing about it. You can even argue that you can't lower your prices because the state maintains that you have to charge a minimum amout for your product.

The state and the consumer groups that probably wholeheartedly endorsed this law will argue that it protects the consumer by eliminating unfair competition. Those companies which either cannot or will not be competitive must be protected, you know. They might lose all of their customers and go out of business and woe be unto them! Oh, and then that eeeeevil little underpricer will be the Only Game In Town and will gouge those same consumers with inflated prices and these poooor little consumers will have no choice but to Pay Pay Pay! Oh My G-d, the State must Protect the Consumer!

You know that's how they got public support on such an insane law. And you also know just how incredibly naive such thinking is.

If by some chance Bloato Oil cannot or will not price itself competitively with EastTreestump Petrolium, then it may go out of business. That does not mean that now EastTreestump Petrolium is the only game in town by any means or stretch of the imagination. Snapping at the heels of EastTreestump is a whole pack of other oil retailers: Snail Oil, Decathalon Oil, Snitish Petrolium, Flexico, and a host of others. But we both know that Bloato Oil will never go out of business because the state is protecting it from the cruelty that is economic Darwinism.

And the only "species" that actually suffers under state protection is the consumer.

Posted by Delftsman3 at 09:49 PM | Comments (2) | TrackBack