All Commentary
Thursday, February 1, 1962

Eating is Essential

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. England es­tablished socialized medicine in order to provide better medical services at lower cost to its citi­zens. Result? The quality of medi­cal care declined, and a person in serious need of medical service encounters difficulty, due to the heavy demand on the doctors by the citizenry who receive many frivolous benefits “free” of charge. Meanwhile, the cost has increased rapidly. Moreover, the quality of socialized medicine will continue to decline, for young men of ability will be less and less at­tracted to a profession demanding such skill and technical training and knowledge when the rewards are not commensurate.

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!

  • John C. Sparks, who died on March 27, 2005, served on the board of trustees of the Foundation for Economic Education for many years. In the mid-1980s, following his retirement from business, Mr. Sparks served a term as FEE’s president.