UNINTENDED CONSEQUENCES

Atlas Shrugged is perhaps the most well-known anti-socialist novel ever written and is a favorite among all of us who love free enterprise.  France, of course, is Europe's most socialist country, giving us a look into the future of our rapidly socializing America.

 If one thing characterizes socialism it is centralized manipulation.  If you take away the pleas to help the poor, rein in corporate greed, stop climate change or whatever macro-problem du jour exists, what you have is an underlying assumption that centralized power can manipulate integrity and cure into reality.

 So in a sincere effort to make sure French farmers and small-scale food producers get paid better, the French government recently passed Loi Alimentation.  Its signature mandate is that no food can be sold for less than a 10 percent profit margin.  Remember the intent:  to give farmers and small food artisans a higher price.

 The problem is that all of those types of items already enjoy margins more like 30 percent.  The low margins are on things like Coca-Cola, Nutella, snack foods and commodity staples.  These have always been sold at low margins not only because they are shelf stable (nothing living in these puppies) but as a means to get folks into the store to buy other higher margin products, like local foods.

The unintended consequence of the policy, therefore, has not been to put more money in local farmers' pockets, but to deprive them of the market share they previously enjoyed because now the staples are higher and shoppers have less discretionary money to spend on artisan fare.  It's exactly OPPOSITE the desired outcome.  And of course supermarkets (5 control 80 percent of the French food market) are already circumventing the law by giving out loyalty cards when people purchase the commodity items.  The Economist carried a nice synopsis of this program and provides the background for this post.

 This whole program is just one of the catalysts for the gilets jaunes protests (yellow shirts) upsetting the country.  The marketplace is far too sophisticated and responsive to be manipulated this way.  And yet every day people think that some Wizard of Oz in some phalanx of egg-head offices is clever enough to manipulate fairness into life.  It's impossible and the more centralized bureaucrats try to tweak it, the more unfair and chaotic it becomes.

 Health care?  Let's have more manipulation.  Income disparity?  Let's have more manipulation.  Education?  Let's have more manipulation.  Soil erosion?  Let's have more manipulation.  In every case, the manipulation results in poorer policy and worse conditions than existed before. 

 Can you think of any area where more centralized manipulation would be beneficial?