Wednesday, February 04, 2009

Cameron, Tesco and the price of carrots

Tough talking from Simon Heffer in today's Telegraph as he says that Cameron's "moral capitalism is no better then socialism".

Let us mark one thing: that a Conservative victory some time in the next 16 months will have nothing to do with the alternative that party offers to the electorate, other than the specific alternative of its not being the Labour Party.

I generally agree with Heffer's assessment of Cameron and the Tory party. Nor do I fundamentally disagree with Heffer's interpretation of capitalism already being moral, but I do have issues with what he writes. Particularly this.

I can only construe from his words that this is a world where, for example, there are more corner shops and fewer Tescos. But why is Tesco so powerful? Because its customers, exercising their free will, have made it so.

Well, not quite as it happens. Although it is true that Tesco customers are indeed exercising their free will, they are not doing so in a free and fair market.

Tesco has been around since 1919 - and for most of those 90 years was just another grocer. It's sudden leap in the last 20 years or so from being just another supermarket to the dominant force in high street consumerism is not due to buyers exercising their free will, but to the rise of globalisation, corporatism and international trade regulation.

Before we joined the EU and subjected our trade to the whims and ministrations of various unelected bureaucrats things worked more or less like this. Our farmers grew produce - lets say carrots - and grocers competed with each other to buy those carrots. Because Tesco were competing with other grocers to buy those carrots it ensured that our farmers got a fair price for what they grew. If Tesco couldn't get what they needed they'd have to buy elsewhere and pay import duties making their carrots slightly more expensive than home grown carrots - but the people they bought from still received a fair price for their carrots all the same.

Fast forward a few years and those restrictions have gone - and with it the internal competition for home grown produce. Now Tesco can force British farmers to sell at a much lower price or they will take their business elsewhere. Because British farmers are required to sell their goods at much lower prices than they otherwise could, this means that foreign suppliers who make up the shortfall have to reduce their prices as well - no one gets a fair price for their carrots anymore.

The other thing is that Tesco, being a large corporation can lobby internationally and skew the market in its favour - something independent grocers can not do. Tesco bypasses the instrument of democracy and goes straight to the real powers - the corporate bodies that dictate the regulations by which international trade happens; the EU, WTO, UN and so on.

There is no doubt that we have benefited from this in terms of lower food prices, but at what cost to our economic viability? Personally, I believe that we have done considerable damage to our long term future which will take a long time to put right - and the longer we put off doing something about it, the harder that will be.

The sooner we start moving back to being an independent and largely self-sufficient nation again the better our long term prospects will be. Neither Cameron nor any of the other mainstream political parties are offering that as an alternative so it may take some time yet.


Anonymous said...

"Revealed preferences" to you, mate.

People - such as yourself - may claim that they'd prefer to park half a mile away, go to several different small shops, lugging their accumulated purchases from each to the next, stand in multiple queues (while carrying said accumulated purchases) to select from a poor choice at high prices, then finally carry the whole lot the half-mile back to the car park, often in the rain. And manage all that between 9 o'clock and 5 o'clock on weekdays only - except for early-closing day, of course. (I paraphrase, perhaps).

But when the chips are down, they go to Tesco's. Just as you do, I bet.

If you don't like them, don't shop there. If enough people agree with you, Tesco's will disappear. Yes they will, don't deny it. Your problem is that NOT enough people agree with you.

That being the case, why should your view prevail over theirs?

Stan said...

I don't shop there. Slough is home to one of the larget Tesco's in Europe and I've only ever been inside it once to buy a newspaper while waiting for a bus - it's next door to the bus station - and I never actually got my newspaper 'cos I gave up after 10 minutes queuing to be served.

We don't use supermarkets except on rare occasions, we do use local shops and services - especially those that use local suppliers. We buy our food fresh (we only have a small freezer mainly used for ice cream and ice cubes) and it tastes far better than any crap you'll get from any supermarket freezer aisle.

But our weekly shopping bill is no bigger than any of my friends with similar sized families - and very little goes to waste. Not only that, but our total weekly shopping time is half that of some of the people I know who use Tesco. We spend less time in queues, less time looking for what we want and less time looking at things we neither need nor want. If you want to save time because you're so busy - don't go to Tesco. Try it for a month and surprise yourself. It's amazingly liberating.

As I pointed out in the post - people do use their free will to shop at Tesco, but that doesn't excuse the skewed market conditions under which they operate. I notice you didn't disagree with that once - perhaps because you know that to be true.

The question isn't whether my view should prevail over that of other shoppers but why should Tesco's view prevail over that of independent grocers and the electorate?

Anonymous said...

"why should Tesco's view prevail over that of independent grocers"

Because they provide what their customers want.

Why is this so hard to understand?

Stan said...

"Because they provide what their customers want."

So do porn sites - does that mean they should have more say in pornography law than anyone else?