Do we have any right to complain about the prices of things? Is there anything we can do about them? Does it make economic sense to complain, or are they truly fixed by some untouchable economic laws that are beyond our poor powers of comprehension? In short, do we just have to sit down and take it, when someone asks us to pay $4.00 for a gallon of gas, $3.50 for a half-gallon of orange juice, or $2.00 for a little carton of yoghurt? I mean, does yoghurt really cost that much? Do oranges cost that much?
If you talk too loud about the price of things these days, there will always be some glasses-wearing, brainy-smurf-esque economist dude who begins lecturing you in a nasal voice about how prices are set by supply and demand, and that the prices of most things are just, because the market determines them. If you force companies to lower prices, they will not make enough profit to make production worthwhile, and they will invest their money and efforts into making something which is more profitable. So, in short, the free-market economists have straight-jacketed us with their current ideology, which holds that any “messing with the market” puts us in imminent danger of world economic collapse.
In many ways, however, this laissez-faire extremeism has more than proven itself to be quite flawed. It was this type of thinking which led Alan Greenspan and his libertarian buddies to attempt to do away with federal regulation of the banking system, which directly led to the 2008 economic crash, which has since that time been causing misery for the majority of people on the planet. The fact is, as most economists acknowledge, the economy cannot exist without a strong framework of regulation. Without regulation, as any economist knows, one company would soon eat up all the others: coke would eat pepsi, Wal-Mart would eat K-Mart, etc. It’s a very basic law of economics. Also, without regulation by the federal reserve and other overseers, economic booms and busts would be far far wilder than they are today – it would be like the early 20th century over again, and we’d have huge 1920s-style booms, followed by gigantic, 1930s-style busts.
So, the point is, the “free market” theory of prices is not necessarily entirely correct. Prices are probably open to much more manipulation than we suspect. In other words, we could all be paying much lower prices for many basic commodities, and the companies in question would still be making plenty of profit to make it worth their while. For many basic products, we are clearly being shafted. Here are a few examples that I have noticed:
1) At your local Indian grocery store, you can buy a gigantic bag of peppercorns, a cheerios-box sized package, for like $4.00. If you go to your local big-chain grocery store, you will find a tiny jar of Mc Cormick peppercorns, one pathetic pepper-shaker full, for $4.00. It’s as though peppercorns were worth their weight in silver. What gives? Does it really cost McCormick 20x more money to make and package peppercorns than it takes for those Indian dudes to provide you with peppercorns? (more…)