24 August 2022

Supermarket competition - the morons are trying to fix a problem their friends create

I'm fairly convinced that the Cabinet of the Ardern Government is dominated by complete morons when it comes to economics.  It is akin to a selection of the candidates that Jim Anderton's New Labour Party/Alliance put forward in the 1990s, a team of well-meaning, earnest, but limited people who had supreme confidence in their ability to play the public and businesses as pieces on a chessboard, without much of a clue as to unintended consequences.  The key being they "mean-well", they think they are doing good for "ordinary" people (for they are not far removed from being ordinary themselves), by their wielding of heavy handed control over businesses and people who put their money and time on the line to be productive.

The announcement that the two dominant supermarket chains will have to provide access to their wholesale supplies is exactly of that ilk. To those who don't invest their own money or are directly responsible for investing other people's money (in that they lose money if they fail), this seems like a great idea to enable new supermarkets to be able to access supply chains, but it smacks of naive student politicians who have no sense of the consequences of their clunking fist.

The barriers to competition in supermarkets are not in accessing groceries from suppliers, but in obtaining sites where supermarkets could be built and resource consent to actually build them.  However, the ideological allies of the Ardern Government, in the form of the majority of local politicians across the country, have done all they could to make this difficult.

The Resource Management Act has enabled the supermarket duopoly by empowering local government to not enable zoning of more supermarket sites, and to require local government to pay regard to the supermarket duopoly when any business wants to build another supermarket.

It's got so silly that in Havelock North, with a new New World supermarket being built to replace the existing one on a constrained site, that Hastings District Council thinks it is optimum value for the community to buy the old supermarket so that it can demolish it and expand the local car park.  This is ridiculous.  Hastings ratepayers shouldn't be destroying a supermarket building so that a surface car park can be expanded, it should be up to investors to decide whether another supermarket might be opened, or a different large retail outlet.

Dr Eric Crampton of the New Zealand Initiative amply described the restrictions that well-meaning, earnest, but limited people with supreme confidence in their abilities impose on supermarket development in local government:

very little land is zoned for larger footprint grocery. And land with the right zoning is often tied up by restrictive land covenants forbidding their use in grocery retail...

If the would-be entrant managed to find the right set of sites, there’s another problem. Council consenting can take anywhere from months to years – or even a decade in some cases. And councils too often decide that a new retailer should be blocked if it would hurt the amenity provided by other retail centres

Then there is the Overseas Investment Office, applying its xenophobic approach to investment from foreign supermarket chains, with the full consent of the Ardern Government, along with liquor licensing laws (which are highly restrictive, and still absurdly prohibit sales of spirits in supermarkets). 

Instead of liberalising foreign investment rules on supermarkets, liberalising liquor licensing for supermarkets and forcing local government to remove barriers to building supermarkets, the morons have decided to take the approach that any anti-capitalist, socialist student politician would prefer - forcing supermarkets (retail outlets) to WHOLESALE the goods they buy from other wholesalers and suppliers, to rivals.

How would that work? (The morons in Cabinet would just assume some public servants can work that out, because they are clever people, like them)

Where on the planet do ANY supermarkets acquire their goods from their rivals on any meaningful scale? (Aotearoa's "special" so don't ask such a ridiculous question)

What incentives are there on an encumbent to not provide goods near expiry, or not supply only the goods that sell the worst to rivals? (Oh more public servants can fix that right?)

What's the deadweight cost of employing an army of inspectors to check whether each supermarket is appropriately supplying the right goods at the right price and quality to rivals? (JOBS JOBS JOBS.. with a fair pay agreement underlying them, WHY DO YOU NOT WANT WELL PAID JOBS THAT HELP THE POOR?)

Who is going to pay for the cost of administration of supermarkets wholesaling goods to rivals and who is going to pay for the regulators? (You, but you'll be grateful for how much less you're paying, eventually).

It's mind numbingly stupid. If you think the Greens are the dominant provider of stupid hard-left economics, then don't worry, they wholesale ideas to Labour, and Labour is now Labour of old. 

Labour that absolutely disowns the lessons it learned in 1984-1990, that even disowns how much Labour of 1999-2008 was aware that it couldn't turn its back on those lessons.

We can only hope that National WILL disown 1975-1984, because Jacinda Muldoon and her Cabinet of Muldoons are hell bent on policies driven by short-term populism and an overinflated sense of their own ability to change the world to fit what they want.

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