In a free-market system, people need to be able to vote with their wallets, to exercise their consumer choice among competitors
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The inevitable result of an increased cost of living, especially on food prices, was always going to be a significant rise in grocery theft and attempts at consumer boycotts, such as the one being organized against Loblaws.
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On this issue, there seems to be a fundamental misunderstanding of economics by some.
A free market, capitalist system is dependent on supply and demand. Suppliers provide goods and services while consumers vote with their wallets in choosing who they will purchase these goods and services from.
Any legal supply and demand action is normal.
A society will move to make things illegal or government-controlled with regard to supply and demand for three main reasons:
1. To maintain a moral or ethical standard. An example would be the fact that murder-for-hire is illegal.
2. To achieve an objective perceived to be in the national interest. For example, government-funded healthcare.
3. To protect the market itself, an example being anti-monopoly legislation contained in Canada’s Competition Act.
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When individuals decide not to shop at a particular grocery store, they are simply voting with their wallet.
So long as they are not forcing other people to do the same and are not breaking the law, there is nothing wrong with this. This is simply the free market doing its thing.
But one criticism of the Loblaws boycott relates to the issue of what are known as “food deserts.”
This term is often used to describe an area or a community that has little access to affordable food options.
Essentially, the argument is that many individuals who choose to boycott Loblaws will not have a realistic means to go to any competitor and will eventually be forced to break their boycott and go back to Loblaws.
For these individuals, this particular grocery store is effectively a monopoly to them, because they cannot vote with their wallets by shopping somewhere else.
One example would be an elderly person with mobility issues who does not have the means to go to an alternate location, since he/she cannot drive and public transit is too far away or inconvenient.
There is a strong argument that the Canadian government has a duty to ensure citizens can exercise some degree of consumer choice – voting with their wallets – in the marketplace.
After all, Canada is a free market, capitalist system, not a communist one.
If people cannot vote with their wallets and if genuine competition does not exist, this creates a significant issue.
One logical conclusion could be that boycotts are insufficient and that government intervention is required in order to correct a market that, due to a lack of competition or access to competitors, is no longer “free.”
My personal belief is that the large grocers are aggressively competing with each other and the cost of food is more expensive for a variety of factors, not just because of the pricing policies of one particular grocer.
There is, however, one remaining issue with this.
That is the 2001 to 2015 bread price-fixing scandal within the supermarket industry, indicating that Canadians cannot always trust big grocers to participate in the market fairly.
The bread price-fixing scandal is what an introductory microeconomics course would classify as a “cartel” or cartel-like behaviour, leading to a monopoly on pricing.
In a free-market system, people need to be able to vote with their wallets, to exercise their consumer choice among competitors.
If they are doing so, that’s normal and it is how the system should be operating.
If they cannot do so, the end result can be an existential threat to the free market itself.
– Vezina is the CEO of Prepared Canada Corp, teaches Disaster and Emergency Management at York University and is the author of Continuity 101. He can be reached at info@prepared.ca
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