Saturday, May 17, 2008

Modular Units

I was driving home from a dentist appointment the other day when I heard a piece on the radio about a proposal in the federal Parliament. The proposal is to require grocery stores to post unit pricing for every product in addition to the total price already published. As the MP who was talking put it, “This is a no-brainer.” Is it really? I’m not so sure about that.

To be sure, this isn’t the biggest, most earth-shattering law government can devise, and it does have a good ring to it: Giving the Australian family a little bit more information in the constant battle with their grocery bills. But, like all laws, there is a dark side. And it’s an excellent example of why good intentions aren’t enough.

First, like all regulation, this is one more expense which will be passed on to consumers. So, while it may help some customers to pay less, we’ll all pay a little bit more which will mitigate it some. Not to mention the extra cost for the government, which will be seen in our tax bills. What’s worse, in my opinion, is that this regulation will make it even more difficult for a small company to enter the market, keeping the large companies that much further from competition. Regulation’s deep dark secret is the power it gives to large companies to abuse their market positions. It’s not much, I know, but it’s one more cut added to the other 999.

Second, what will happen if this actually works and consumers start buying the cheaper items? Since the overall demand for certain products won’t actually be changing, just shifting from one to another, it’s going to cause the lower priced items to increase in price. I’m already smart enough to bring a calculator with me to the store, so I know unit prices. It will mean a price increase for those of us who already shop smart. That doesn’t exactly tickle me. But it will probably be mitigated by the third item:

It’s probably not going to affect many shoppers. The unit price is already available for anyone who knows how to divide two numbers. Many stores already display this information (Aldi, for example, does this). Are consumers presented with this information more inclined to use it? Some, perhaps. But the barrier to getting this information is already very small, so eliminating that already tiny barrier isn’t going to cause a flood of people to change the way they shop.

In the end, this law is just one more (albeit small) example of government wasting its time in a place it doesn’t belong. Why is this even on the radar of government anyway? Is it really the intention of the government to round off all of the corners in the world to create utopia? I can’t see good things coming from this constant accretion of micro-management layers.

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