All Commentary
Sunday, December 1, 1963

Riding a Rocking Horse

From The Wall Street Journal, August 16, 1963.

Prodded by a bombardment of clever television commerials, we recently decided to buy a rocking horse for the toddler visiting our house. The one that caught our eye bore the brand name of a lead­ing toy producer; it was beauti­fully designed and could whinny and ask for hay. The suggested retail price was about $45—as our rocking horse might say, that ain’t hay.

But a check of several stores disclosed that the highest price actually quoted was $34.95. We finally bought it at a discount house for $27.95.

Hardly an unusual experience. And we are sure that the millions of other Americans who do this sort of thing every day feel that their bargain-hunting and price-comparing is not only proper but prudent, as well as good for the national economy.

A number of gentlemen in Con­gress, however, want to change all that. Surprising though it may seem, it is quite possible that the “quality stabilization” legislation now in the works may get enacted. Under that fancy label, the owner of a brand name would be able to enjoin a price cutter from adver­tising his product below the price which the brand owner specifies.

Now why would anyone want to do that? Mainly the drive is sparked by small manufacturers and retailers who object to price cutting. Certainly some of them do face formidable competition from discount houses and regular stores that also discount. Unfortunately, “quality stabilization” is o answer to their problem.

If prices really could be pegged t a certain level, it would disarm the discounters for a time. But it would give the independent at best a short-term advantage, and we could expect to see the discount houses meet this challenge with brands of their own which a dis­cerning public would quickly snap up.

In fact, any form of price-fix­ing—the true name for this sort of legislation—raises more ques­tions than it answers. As the OPA showed during World War II and Diocletian found in ancient Rome, it simply defies administration. People are capable of considerable agility in getting around rules that violate common sense and normal instincts.

Even the manufacturers them­selves, whatever their public pro­nouncements, don’t demonstrate much confidence in pegged prices. For brand owners’ products could hardly arrive on the shelves of discount houses without their tacit consent. The volume of discount business is just too great to for­feit.

For these reasons, similar “fair trade” legislation (wonderful the euphemisms these people dream up) has been repudiated in the market place, overturned in the courts, and abandoned by various state governments. The new effort is testimony that the would-be price-fixers don’t give up easily. Apart from the impracticality, what can be said of the quality of the thinking of quality stabili­zation’s backers? Are they not trying to wreck the very market place in which they and most of their customers have to earn their living?

Are they not asking for a priv­ilege which would amount to an indirect subsidy? Forcing their customers to pay higher prices than would otherwise be asked? Adding their own weight to that philosophy which would force the hand of government into every act of exchange?

The best that can be said for such legislation is that it fosters a temporary delusion of protec­tion. The worst is that it seeks the “stability” of stagnation through the discredited mech­anism of government controls.

Meanwhile, the young rider looks pert in the saddle of his articulate rocking horse. What makes the two of them especially authentic is the little cowboy hat and jacket we bought to go with the horse. We were, of course, able to do that with the $7 we saved in today’s unstable markets.