Friday, January 10, 2014

Of Books, Poverty, and the Like

I ran across an article at Tech Crunch that illustrates why it is so difficult to gain and maintain liberty, at least in the area of economics. (There is more to liberty, but freedom of exchange is essential to it.) The reason is simple: people are often ignorant of how human economic interaction works. Sometimes this ignorance is the result of holding faulty ideologies. Whatever the details of the author’s thinking (which are not all stated in the article), it is an interesting example of what results from this.

The revealing title of the article is “The ‘Anti-Amazon Law’ Is About To Become A Reality In France, But It’s Not A Bad Thing.” With the title, the fun – and the stupidity – have just begun.

This is all about the selling of books in France. It seems that since 1981 the government has established a minimum price for books there. This official price is stamped on books, and it is illegal to sell them for less. (Already, freedom-lovers cannot wait to move to France to enjoy the abundance of “liberty” there!) But wait, it gets worse.

This official book price law allowed for a little wiggle room. You could, if you wished to be a book discounter, sell your book for 5% less than the official, government-imposed minimum price. (Let freedom ring!)

But along came (never quite stated, but implied) evil Amazon. They (thank the almighty French government, may it be praised forever) were required to abide by the official book price requirements just like everyone else. But Amazon came up with a little twist: they discounted by the allowed-by-the-benevolent-state 5%, BUT . . . they also offered free shipping on every order, all the time.

Drat those wicked Amazonians! But, to the rescue came the French Minister of Culture (and, we might add, economic stupidity). She says she has nothing against Amazon, but that horrible free shipping must stop. Thus shall the goodness of government intervention prevail, making life better for everyone.

Everyone, that is, except all those people who want to buy books. What the French Minister of Culture has decreed is, economically speaking, that consumers shall have fewer books. And that, of course, is certain to make any culture better – especially the French culture, I suppose.

Let’s turn to some of the author’s comments. First, “many bookstores chose to take advantage of this exception, but 5 percent was a reasonable price difference.” What, exactly, makes a price difference “reasonable”? What is implied is that too large of a price difference is automatically unreasonable. But economically speaking, this translates into “the ability of people to buy more books is unreasonable.”

Try this one: “Amazon won’t be able to offer free shipping for books in order to protect independent bookstores.” Here, economically speaking, this means “consumers should have fewer books so independent bookstores don’t have to compete in the marketplace.”

The author ends the article by wondering about the effects of the French government’s dictatorial powers. The article ends with this amazing statement: “So the real question isn’t whether the law is going too far, but whether it will be enough to save the 2,500 independent bookstores in France.” Again, in economic terms: has the French government taken enough books out of the hands of consumers to make its dictatorial policy work, or will it need to reduce book consumption even further?

But alas Americans, this sort of economic stupidity is not limited to France. For many decades American consumers of sugar have been forced by our benevolent government to pay more for sugar that the world market would require. All that means is that we have been able to afford less sugar, or less of something else, than we would have otherwise.

This is a common practice of many governments, and we are all the poorer for it.

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