A mild slap on the wrist

Dear editor: Proponents of a market system, where supply and demand determines the price of a commodity, are often apt to cite a book “The Wealth of Nations” by Adam Smith (1723-1790) to validate their belief.

Smith, a Scot, is considered by many to be the first economist of the industrial era.

Smith’s most notable contention was that the marketing and production supply system of a nation is best determined by the “invisible hand” of supply and demand with non-interference by governments or their agencies.

However, he also wrote “that people of the same trade seldom meet together, event for merriment and diversion, but the conversation ends in a conspiracy against the public or in some contrivance to raise prices.”

History has shown us that regulations by governments are often an integral part of an economy, the existence of which is often attacked by proponents of deregulation, especially in this age.

A recent situation uncovered by Competition Canada involved the price-fixing of bread and related products in Canada by the Loblaws group of companies including Weston bakeries over a period of some 14 years. The government agency reportedly announced while their actions are against the law, no individual or company will be prosecuted for this offence because they are “cooperating” with the government agency and have publicly acknowledged their actions.

As a sop to the public, Loblaws is offering a $25 voucher to those who wish to apply as a form of compensation for the price-fixing of bread purchased.

This price-fixing has resulted not only in higher prices for individuals, but higher costs for all of society in, for example, purchases by public and private institutions including hospitals, schools, prisons, etc. The government response is tantamount to a mild slap on the wrists of the offending companies. Hopefully one or more of the announced citizen class action suits against the price fixers will prevail.

Smith would no doubt be dismayed by the company’s collusion as it is contrary to a true free-market economy.

In conclusion, it does give one a cause of concern thinking of other price collusion schemes possibly yet to be uncovered. Bill Boyd Kelowna