Consumer Beware

Kelly McCutchen

In her recent book, The Future and its Enemies, Virginia Postrel recounts the story of a visitor to a small Georgia town who set out to trap some wild pigs. Many others had tried to trap these pigs unsuccessfully, but this newcomer had a unique approach. First, he placed some food in a clearing near the pigs. For days the pigs ignored the food. Finally, after one pig curiously tasted the food, the others joined in. The man restocked the food every day. Before long, the pigs quit foraging and became dependent upon the food in the clearing. He slowly began erecting a fence, carefully leaving several openings for the pigs to go in and out. Several weeks later, he waited until all the pigs had come inside the newly completed fence to feed, dropped gates across the openings, and successfully trapped all of the pigs.

Postrel used this story to illustrate how our freedoms can slowly erode over time and be taken away before we know it. The moral of the story is that we must be ever watchful for signs that these events are occurring. Although several events during this year’s session of the Georgia General Assembly served to limit the role of government in our lives, three issues emerged that could set up our own “pig sty” in Georgia.

The first resulted from an executive action by the State Health Planning Agency, which overtly decided to use the certificate of need approval process to slow the growth of assisted living residences in the state. Many elderly Georgians purchase these residences when they are unable to live by themselves, but do not need the additional services of a nursing home. Evidently, the state believes the private sector is building too many of these residences, but just how many assisted living residences are too many? And what gives the state the right to decide? These questions are especially pertinent since this industry receives no government funding and operates in a highly competitive marketplace.

The second issue concerns legislation passed by the General Assembly that would outlaw consumers from buying cars wholesale from manufacturers. Similar sales through the Internet would also be banned. Aside from being bad public policy, this legislation is likely an unfair restraint on trade and possibly a violation of the Interstate Commerce Clause. Of course, retailers lose business when they are bypassed by consumers. For example, book sales over the Internet by Amazon.com are starting to cut into the sales of traditional book retailers like Barnes and Noble. However, the answer is not government regulation — the answer is for the retailers to find a way to compete or get out of the game. Barnes and Noble retaliated by starting a Web site of their own.

Finally, one would think that we would have learned during the Nixon administration and recently with the cable television industry that price controls do not work. However, after being vetoed last year by Governor Miller, the General Assembly again passed legislation this year that allows Georgia to join a multi-state dairy compact. This law would give dairy farmers the right to artificially inflate the price of milk above its market price. It is easy to sympathize with Georgia’s dairy farmers who are obviously struggling to stay in business, but this action again sets a terrible precedent for government intervention in the free market.

Where do you stop on this slippery slope? Should we place a moratorium on fast-growing industries? Should we ban wholesalers? Should we establish price supports for every Georgia industry that experiences difficulties? Although reasonable justifications can be cited for each of these actions, it is worth remembering that well-intentioned government intervention often has unintended consequences. Remember the tax on luxury yachts designed to tax the rich? Instead, it put thousands of blue-collar workers in the boat-building industry out of work while the wealthy simply shifted their interests toward other hobbies.

In a free market, events happen for a reason. Restricting competition or controlling prices limits individual choice and destroys the environment necessary for innovation and progress. Forget this and we may end up like those wild pigs, having lost our freedom without ever putting up a fight.


Kelly McCutchen is the executive vice president of the Georgia Public Policy Foundation. The Georgia Public Policy Foundation is an independent, nonpartisan organization dedicated to keeping all Georgians informed about their government and to providing practical ideas on key public policy issues. The Foundation believes in and actively supports private enterprise, limited government and personal responsibility.

Nothing written here is to be construed as an attempt to aid or hinder the passage of any bill before the U.S. Congress or the Georgia Legislature. © Georgia Public Policy Foundation (April 20, 1999). Permission is hereby given to reprint this article, with appropriate credit given.

 

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