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March 22, 2007
Evolution and Supermarkets
Another lovely idea from the new economics foundation.
They correctly note that the economy is rather like an ecosystem. Competition, red in tooth and claw and all that. They then say that we must have regulation to stop companies from competing too well.
Err? If we've accepted the analogy, then shouldn't we rather be praising those who compete well? They are, in that evolutionary sense, showing that they are fitter than the others aren't they?
March 22, 2007 in Economics | Permalink
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Comments
True, but we don't want to be in the situation that humanity finds itself in, having squashed all other rivals and laying back. It's the chase for profits that keeps the companies lean, not the profits themselves, as you yourself have said in the past.
Posted by: sanbikinoriaon | Mar 22, 2007 11:13:22 AM
I'm surprised you're lending dignity to such drivel by attacking it.
Posted by: William Norton | Mar 22, 2007 12:04:39 PM
Yes, but these giant supermarkets always come a cropper in the end. Sooner or later, their management's ego becomes so big that they feel the urge to expand abroad, take over another supermarket chain or a non-food retailer, at which stage huge losses ensue and a smaller nimbler rival steps in.
Sainsbury's/Homebase
Wm Morrison's/Safeway
Somerfield/Kwik Save
Marks & Spencers - racked up huge losses in France (hence ECJ cases on tax relief for losses)
Kingfisher/Woolies - ended up getting demerged
See also, Daimler/Chrysler - possibly being demerged again
How long it will be before Wal-Mart dumps ASDA I do not know.
Funnily enough, these sort of mergers work fine with banks, presumably because taking deposits and lending money is so standardised, people couldn't care less who gives them a mortgage, economies of scale really work. Ditto mobile phone companies.
Posted by: Mark Wadsworth | Mar 22, 2007 2:09:15 PM
[If we've accepted the analogy, then shouldn't we rather be praising those who compete well? They are, in that evolutionary sense, showing that they are fitter than the others aren't they?]
the answer is in the actual article Tim - no, otherwise we would be praising cane toads and Japanese knotweed. Instead, what we do is try to manage the process of evolution in order to promote species which are beneficial to us, rather than those with the best intrinsic reprodutive fitness. It's called "agriculture". Maybe in Portugal farmers look at a field of nettles and say "Well done! You are certainly better adapted to the environment than those lettuices I was thinking about!" but I actually think they are more likely to reach for the weedkiller.
Tim adds: Here they set the goats on the nettles. Predators, competition, rather than regulation. Terribly advanced here.
Posted by: dsquared | Mar 22, 2007 2:18:03 PM
The analogy's too simplistic.
It sort of works on an anarchocapitalist level, but the rule of law kicks it into touch.
As DS notes, the cane toad was introduced - it was not indigenous and required an external actor's intervention to get it into an environment where it could become top dog.
Similarly, if an economy's like an ecosystem, why do we bother having competition laws? Specifically because the public instinctively know what Smith articulated about cartels/monopolies screwing them.
A prey will run away - but a polity has the choice to regulate.
Posted by: Martin | Mar 22, 2007 2:34:58 PM
[Tim adds: Here they set the goats on the nettles. Predators, competition, rather than regulation. Terribly advanced here.]
if your political point is meant to rest on an anology with the relative agricultural productivity of Portugal versus the UK, I think you may be a little bit disorientated here.
Posted by: dsquared | Mar 22, 2007 5:27:33 PM
