Free Markets Make Food Affordable
by Ari Armstrong, September 11, 2007
Free markets help the poor. I am discussing a consequence of free markets, not their justification. First and most obviously, free markets enable employers to offer jobs. True, a person with few skills and little education will likely enter the job market at a relatively low rate of pay. But job experience is precisely what enables people to earn more money over time. Alternately, people are free to start their own businesses, even though this process is made much harder today to the extent that our markets are not free, but rather strangled in red tape and high taxes.
Free markets reward intelligent investment, which drives economic growth. With more productivity comes more wealth, which means higher wages and greater security. America's poor generally are much wealthier than were average workers of a few centuries ago. In ages past, starvation was a major health problem among the poor. Now the problem is obesity.
As people earn more wealth, they are also better able to donate some portion of their earnings to charity. While voluntary charity is consistent with individual rights, the forcible redistribution of wealth is morally wrong. Yet, in a truly free market (which, again, we do not have), not much voluntary charity is needed, because nearly all people can find an adequate job. Maintaining a healthy, free economy in which people can earn their own money is far more important than redistributing wealth.
These are all pretty basic points. But, after spending August eating for $2.57 per day, I wanted to mention a few other ways that free markets help the poor.
Within a few paces at the local grocery store, a shopper can find fresh vegetables for less than a dollar a pound and more than $12 a pound. Wild salmon goes for upwards of $20 per pound at the fancier stores, while boneless, skinless chicken breasts can be purchased on sale for $2.50 per pound. I've purchased chicken with skin and bones for as little as 69 cents per pound. Wild salmon contains healthy Omega 3 fat, you say? True, but bulk flax seeds, which contain even more Omega 3 fat for the weight, cost around $1.50 per pound at Whole Foods. (I use ground flax seeds in smoothies.)
What's happening is that stores are making most of their money on wealthier shoppers who have neither the time nor the inclination to look for the lowest price. The pre-washed, pre-cut organic greens in the fancy package cost many times what cheaper vegetables do, but some people shop for convenience, and some people shop for bargains.
I don't know whether local grocery stores use actual "loss leaders" -- sale items on which the stores lose money in order to attract shoppers -- but stores certainly run outstanding sales every week. Shoppers on a tight budget will buy the sale items and little else. Stores make their money on the shoppers who also buy the items with higher profit margins (usually more-processed foods).
Then there are mark-downs. Milk, meat, and eggs about to expire often are put on sale at steeply reduced prices. I don't know whether grocery stores sell mark-downs at above or below cost, but the stores can't be making much on these items. However, once a store has purchased an item, the store does better by selling it below cost rather than throwing it away. Many shoppers don't worry much about the price difference, and they'd rather not worry about the expiration date. So these items are left on the shelves for those on tighter budgets.
Indeed, between loss leaders and mark-downs, I suppose that grocery stores make little or nothing from shoppers on the tightest budgets, or even lose a bit of money on them. Yet it's still a mutually beneficial relationship, and grocery stores are able to extend these deals because they make more money from their shoppers who have more money to spend.
So grocery stores already enable the poor to buy food at ridiculously cheap prices. But many grocery stores do more than that -- they make a positive effort to give food away to the poor. What makes this possible to such an extent is the opulence of modern industrial society.
To take just one example, Kroger reports:
Each year, The Kroger Co. Foundation provides charitable assistance in the hundreds of communities across the country that our customers and associates call home. Foundation grants help fund non-profit organizations doing important work in the areas of education, diversity, women's health, community need and the fight against hunger. In the past three years alone, that support has added up to more than $8 million. ...
These donations are voluntary, made possible by the wealth of the typical American shopper.
The left pretends to care about the poor. If the left actually cared about the poor, it would not bash free markets at every opportunity. For free markets and economic liberty are the institutions that most assist the poor, and, more importantly, enable the poor to earn their way into a more comfortable living.