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Markets are terrible things. Nobody really likes them. They take too much effort, and they end up making us feel like suckers: someone smarter than us, or more organized, or better able to tell a lie always takes our money.
In the countries east of Europe, you have to haggle. I say my scrawny chicken is worth five dinars. You offer three. I throw in a few carrots for chicken stew. You offer three and a half. We settle on four dinars but with fewer carrots. Everyone walks away just a little bit unhappy—but usually satisfied.
In the west, we don’t haggle. The price of chicken in the market is five dollars. You buying? No, you think you can find better chicken down the street for less money. You walk away. It’s take-it-or-leave-it, but always with other options.
Either way, you have to expend energy. Either you must meet and confront and put personal space and face into doing the deal, or you have to walk farther to find the deal you want. As a seller, you have to sweat the cost of supply, the display, the price, the terms of the deal. Guess too high, and you’re left with rotting stock you’ve already paid for.1 Guess low, and you lie awake wondering if you could have gotten more for that chicken. Everyone is a exasperated.
Sometimes you find a great deal. Oooh, doesn’t he know how much that guitar is worth? Ahhh, I’ve been looking for one of those for ten years! But that’s in your head, reflecting the things you know or want or secretly believe.
When you’re dealing for something rather commonplace, like chicken, something that you simply need and don’t want to pay too much for, you have to put in either face time or foot time. That’s the nature of markets.
Alert politicians, always eager to please their potential electorate, hear this call. You don’t like the marketplace? You think the price of chicken or cars or houses or insurance is too high? You think the quality of these items—and for quality read “nutritional value,” “safety,” “fuel efficiency,” or “security”—is too low? Well, we can fix that.
But note the result. Every time a third party with legal authority steps into the picture to establish “value”—whether in the quality of the item or the price you’ll pay for it—the picture becomes distorted. Either the product becomes more costly than you want to pay, or has features you don’t really want, or it disappears from the market entirely because no one will supply it at that price. Sometimes the distortion is minor and you end up grumbling, or it’s major and you end up desperate. (Remember the gas lines of the 1970s? Remember the typical shop offerings in the Soviet Union?)
As sellers, we can bemoan the obstinacy and stupidity of the shoppers. As buyers we can berate the greed and deceit of shopkeepers. But, from cars to corndogs, only the actual parties to the deal can establish value. Disinterested third parties, even those with the best of intentions, only create confusion and increase the misery.
This is not to say that governments should not impose some regulation. Someone has to rule on the things that cannot be seen or easily detected, like salmonella in the chicken or a faulty fuel system. And we all can agree that monopoly power by itself distorts the market. For this measure of safety and protection we will agree to a modest distortion in perceived quality and price. But when the government determines what shall be offered and how it shall be priced, the merchandise in question usually disappears.
And then no one is happy.
1. The one exception is the local bookseller. It’s a little known secret that a big chain bookstore owns virtually nothing. The shelves, the cash registers, the posters on the wall maybe. They rent the storefront, and the books are all supplied by publishers or their distributors on consignment. The store pays nothing for the books it holds—until they sell, in which case the chain keeps part of the list price and pays an agreed-upon amount to the publisher. If the book doesn’t sell, the store boxes up the hardcovers and ships them back. For paperbacks, it rips off the covers and sends them back as proof of unsold status; the rest of the book goes to be recycled. If the book is remaindered (check out the “Bargain Books” table), the publisher has declared he doesn’t want the damn things back, and so the store sells it for whatever people will pay and keeps the whole amount. Really, a book is a just wad of paper with black marks on it, having no commercial value until you take it to the register and open your wallet. For those of us who believe in books, that’s a pity. But it’s the marketplace.