Mr. Sparks is a businessman in Canton, Ohio.
To my knowledge no one has yet devised a convenient and inexpensive way to eliminate eating without also eliminating life. There are other essentials to maintaining life, such as air, water, and certain basic clothing as dictated by the climate; but none of these presents an economic problem comparable to the continuous daily provision of food for one’s body. It came as a shock when I thus realized how important it is to maintain the "supply line of food" for oneself and his family every day of the year. Our family, including my wife, one daughter, two sons, and one cocker spaniel, consumes over 6,500 meals in one year, the uninterrupted supply of which is necessary to sustain our lives.
For the first time, I realized that none of our food had been provided directly by me, nor did I even know how to provide more than an infinitesimal quantity of what we consumed. Yet, over the years I had never granted this vital matter even a second thought. As I pondered this situation, our grocer with his shelves stocked for our convenience began to take on a special image of heroism. My wife soon shattered this image by explaining that she shops for the best bargains among five or six neighborhood groceries, several supermarkets, a home-delivery bakery, and a dairy, as well as miscellaneous rural suppliers of home-processed meats, eggs, and fresh vegetables. She further revealed that she knew the names of only a few of these purveyors of food upon whom we depended, and she did not consider the matter of much concern. Since the lives of my loved ones seemed to hang by such a thin thread, I felt it my responsibility to learn more about these food merchants.
I discovered that in our community, with a population of over 200,000, there are between 250 and 300 retail suppliers of food. They are successfully meeting the need for approximately 219 million consumed meals a year not including between-meal snacks. Hardly any grocer stocks fewer than 2,000 items on his shelves while some of the larger markets handle more than 10,000 different items. The problem of providing all of the families of the area with food and meals—the basic essential to life—is one of extreme complexity.
However, I soon learned that this was but the beginning of the complexity. These grocers, bless them, select each of the 2,000 to 10,000 items from numerous wholesale grocery-supply companies in quantities and at prices which will enable them to competitively price their merchandise for the retail trade and yet obtain ample gross margin (they hope) to pay their rent and the wages of their employees, and have enough left over for themselves and their own families. Beyond this, they also have to anticipate the multiple likes and dislikes of all the housewives and other shoppers, as affected by the seasons of the year and the days of the week. Scarcely anyone lets a grocer know in advance when he or she intends to shop, but nevertheless the grocer must foresee who, when, what, and how much.
How the grocers can do all this with so little apparent fuss and bother is an amazing feat and holds my genuine admiration. These little and big grocers, dairies, and other suppliers of food have not looked upon themselves as heroes or mental giants; nor have they held, until now, any special place in my mind. From now on I will look upon this whole operation as one requiring a substantial bit of magic, more than a light touch of supernatural power, and a generous helping of pure luck to be able to anticipate so very accurately what we plan to eat next week.
A major reason why I am flabbergasted by the magnificent job being done by our community food merchants is the contrast I see between them and the big government bureaus in Washington, which find such fantastic ways to get themselves tied up in huge messes in regard to one product—wheat. Now, there is something I am aware of. Not many people seem happy about the wheat situation. The farmer grows more than an economic quantity of wheat because our politicians guarantee to pay him for everything he does not sell. Of course, there is an effort to place some top limit on the quantity produced, but obviously with very little effect. There are old liberty ships, unused movie theaters, old and new warehouses, and other storage facilities bulging with these excessive quantities of wheat. Such is the contrast between the centrally-planned, politically-powered spending of fabulous sums of other people’s money and the amazing efficiency of private food merchants, each acting independently and assuming his own risks and responsibilities in open competition.
When Government Interferes
Since independent businessmen, both small and large, operating in the free market do such a splendid job in the vital areas of supplying the daily food requirements of nearly 200 million Americans, one could logically look to the free market for the accomplishment of other important tasks.
The record shows that wherever it has been allowed to operate, the results have been excellent.
However, those who have little faith in the independent daily decisions of millions of individuals in a free market unfortunately have placed many segments of our lives—economic and otherwise—under government control and bureaucratic decision. Disregarding the highly satisfactory results in an area as vital as supplying groceries, the crusading government interventionists seek ever more opportunities to "move in" on the freedom-loving citizen and to take away his right to decide for himself.
We have already noted that these busybodies have supplanted the free market in the wheat business—with sorry results. The objective was simple enough: to keep wheat prices from declining. Now, almost everyone knows that the price of anything tends to fall as the supply becomes greater than the demand. The clothing store conducts a "sale" in late summer to get rid of the excess supply of summer clothes. The important feature of such a sale is the reduced price; excessive supply must be avoided if a price level is not to decline. But, what is the basic approach of the government farm program? A price guarantee! It is hard to imagine a more attractive incentive to a producer than to guarantee purchase of his product; this is an incentive to produce. But remember, to maintain a high price level requires less production, not more! The government program creates a condition worse than before, and no easy solution is in sight.
The solution, of course, is to discontinue the government price supports. But, government intervention makes that increasingly complex. While enormous amounts of farm products glut storage facilities, rental and other business contracts have come into existence to accommodate the government’s uneconomic program. Farmers and allied businesses are up to their necks in transactions based on unnatural economics. The cure may be distasteful, but it is badly needed; and now!
The Problem Is Magnified
Why does any attempt of government to maintain a certain level of prices through a price support program inevitably result in failure? Simply because it discourages the consumption and encourages the production of an even greater quantity of the very item claimed to be in abundant supply at the outset.
A theoretical example, in a business not connected with farming, shows how a governmental price support program works. Chewing gum manufacturers, let us say, are fearful that their potential production capacity will cause too large a supply and consequently tend to reduce the price level. So, members of the industry seek governmental price-support action through their representatives in Congress. It is argued that chewing gum is essential to dental care, assists in weight control, and so forth and so on—important to the welfare of Americans. The industry is threatened with a decline in prices and a chance of losses. If this occurs, workers in chewing gum factories will be out of work and unemployment will plague the economy.
Suppose that Congress then passes a law to purchase all chewing gum unsold at the end of each month at a price of three cents a pack, a price slightly lower than manufacturers currently receive from snack counters all over the country. Mr. Smith’s company has a factory that can produce five million packs a year, but production has been cut back to match sales at a rate of three million a year. When the price-support bill becomes law, Mr. Smith will immediately increase his output to five million packs. The same change will occur at all chewing gum factories, thus assuring the excess of production originally feared—the exact opposite of the result needed to solve the problem. Attendant unhappy results are waste of taxpayers’ money, and great quantities of unchewed gum stored in government-leased facilities. Most important, the problem has been worsened by the interventionist action taken.
Government price supports always will encourage the output of unwanted products, which is the opposite of the intended result. Wheat or chewing gum produced in excess of economic needs are of no more value than mud pies.
We have examined an actual case and a theoretical example of the distressing results of a government price-support program. Now, let’s take a look at a government ceiling-price program.
It is easy to observe that prices tend to rise when the demand exceeds the supply. The demand for personal TV appearances of Roger Maris undoubtedly exceeds the time the brilliant young home-run king has available for such activities—so the price runs high. For the same reason the price of fresh strawberries is especially high when strawberries are "out of season."
What happens when government intervenes and places a ceiling price on a product? Let us assume that vitamins are sold to the consumer at a retail price of $1.00 a bottle, that the manufacturing cost is 600, and that the druggist pays 750 to the manufacturer. Public benefactors reason that more people would buy and consume the healthful vitamins if the retail price were limited to 500 a bottle, and they obtain legislation to that effect.
What happens? The manufacturers of vitamins simply stop manufacturing, because a product costing 600 at the factory cannot be retailed at 500 without leading to bankruptcy. Has the ceiling price fixed by government brought about greater vitamin consumption? No, quite the opposite! Vitamins no longer are available to anyone.
Again, government intervention in the free market produces results contrary to those desired.
Case after case of government interference with the natural laws of economics can be cited—all with the same result.
Government interference in affairs between employer and employee has existed for several decades, presumably to protect labor from exploitation by management. But the result of these laws favoring unionism is that exploitation and dictatorship over the union membership by their own leaders is pricing the individual worker out of the market. Thus, the door is opened to importation of goods produced by foreign labor, and customers are encouraged to find substitute products or services. Again, government intervention brings about the opposite of the hoped-for result. These are only a few random examples of the many available for examination.
The Result Is Chaos
There is a wealth of convincing evidence that private ownership of all creative facilities will yield results far surpassing any and all attempts at government ownership and control. The grocers near my home quietly conduct their business and solve the critical daily problem of feeding me and my family. Private owners, when not interrupted by government, are continually making sensational advances in industry, science, medicine, and all the comforts of living. But when government steps in with its irresponsible bureaucratic substitute for private ownership, the trouble really begins. The certain result is that the desired goal will recede from our grasp, and we will harvest the grotesque and the unnatural instead.
It would appear that an axiom or law of human action applies in situations where government interferes in the private lives and decisions of the citizens. Every interventionist program, attempting to reach a generally desired objective by an artificial method running counter to the natural course of a free market economy, inevitably leads away from, rather than toward, the proper goal; and the result is chaos. Whenever government departs from its appropriate role of policeman and soldier, the painful application of the foregoing rule overrides all the prior good intentions.
Our progress depends upon our ability to recognize unwarranted government intervention and our determination to eliminate it. If we fail to restrict government to proper size, we may not eat! And eating is essential!