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Which Way?

Here’s another twisty pretzel anti-market zealots get themselves caught in. Many “progressives” are ardent supporters of anti-trust policy. One part of anti-trust policy is that firms can be doing a “bad thing” by offering prices to the consumers that are “too low.” You read that correctly. So not only (as we have explored in earlier posts) do these folks worry about large firms charging exploitive high prices, but now they also worry about “cut rate” pricing. That is not the anomaly I wish to point out here.

Low prices are excoriated because some view this activity as unfair to other businesses that cannot lower their costs as much. The worry is that Walmart will lower prices so low as to drive other companies out of business, and then when all of the other competitors are gone, then Walmart will jack up the prices of everything and take us for a serious ride. Nevermind that this has never been proven to have happened, and nevermind that consumers are big winners here, let’s just look at why Progressives are upset about these policies. It seems to me that they think it is unfair to inefficient, high cost, unprofitable competing businesses. And gosh, we just can’t have them go out of business.

Here is the pretzel twist: how come when these evil, large, greedy, price cutting firms compete in the labor market by offering high wages to workers the same arguments are not levied against them? Seriously. If the University of Rochester really wants me to teach here (for whatever reason) they bid up my wage. And they might bid it up so high that nearby competing institutions have no chance to secure my services. So, Rochester gets the good students, and gets high quality economics courses offered, while Nearby U. gets worse students and lower quality economics courses taught. This has the same competitive impact as U of R charging “cut rate” prices for students to enroll.

So I ask my dear enlightened progressives why is not OK for firms to outcompete other firms by making the lives of consumers better off, and at the same time it IS OK for firms to outcompete other firms by making the lives of other workers better off? You can’t have it both ways, can you?

One Response to “Which Way?”

  1. Speedmaster says:

    Wait, you want them to make sense now?! 😉

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