tag:blogger.com,1999:blog-1141932539860553199.post7532799425197619276..comments2024-03-05T10:52:24.691+00:00Comments on Mark Wadsworth: The Invisible HandMark Wadsworthhttp://www.blogger.com/profile/07733511175178098449noreply@blogger.comBlogger47125tag:blogger.com,1999:blog-1141932539860553199.post-48310275136244613432014-02-18T15:18:55.958+00:002014-02-18T15:18:55.958+00:00@MW "If I sell my goods to somebody who sells...@MW "If I sell my goods to somebody who sells then at what I consider to be too thin a margin I can simply stop selling to them."<br />Not in the EU you can't : in the USA you can thanks to Leegin Creative Leather who did this and under the previous legislation got taken to court (by PSKS dba Kays Kloset).There is a legal state of flux in China with some rulings going against RPM some for.DBC Reedhttps://www.blogger.com/profile/17891849727783879145noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-47732853775362151132014-02-18T10:16:24.516+00:002014-02-18T10:16:24.516+00:00Problem is that the supermarket cartel has too muc...<i><br />Problem is that the supermarket cartel has too much buying power - great for customers, not so good for suppliers. </i><br /><br />True, which is why the RPM conflict in the US is centered around online retailing of other goods than food, which is not a cartel, despite what some people conjure up about Amazon and the like. And it (not banning RPM), would probably not affect supermarkets that much.Kjhttps://www.blogger.com/profile/13530243002915410700noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-68412137577607002612014-02-18T10:01:16.581+00:002014-02-18T10:01:16.581+00:00Kj, fair point, but the IH will always find a way....Kj, fair point, but the IH will always find a way. If I sell my goods to somebody who sells them at what I consider to be too thin a margin (why would I care), then I can simply stop selling to them.<br /><br />Problem is that the supermarket cartel has too much buying power - great for customers, not so good for suppliers. <br /><br />TS, I grew up in the 1960s/1970s and then it was already perfectly normal to do the big weekly shop by car at one of various supermarkets within ten minutes drive of our house, "the high street" had already started dying out even then.<br /><br />But as you say, fridges and freezers were perfectly affordable to all by then.Mark Wadsworthhttps://www.blogger.com/profile/07733511175178098449noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-12556201057068231332014-02-18T09:34:30.784+00:002014-02-18T09:34:30.784+00:00Mark/DBC,
DBC, fridges and supermarkets came toge...Mark/DBC,<br /><br /><i>DBC, fridges and supermarkets came together, that's the IH at work. one without the other is pointless, you need both :-) </i><br /><br />Fridges and washing machines liberated women from having to be at home every day. And as that started to happen, so supermarkets started to appear that saved time.<br /><br />And as more and more home tech appeared like freezers and microwaves, so this grew.Tim Almondhttps://www.blogger.com/profile/13369256383976094670noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-91210710033605740782014-02-18T09:18:51.633+00:002014-02-18T09:18:51.633+00:00If I am a manufacturer, I can choose who I sell to...<i><br />If I am a manufacturer, I can choose who I sell to. If I don't want to sell to online retailers, then I don't have to. Or I can sell them online myself.<br /><br />I didn't express myself very well. Of course a contract is a contract. And people can contract how they like, the government is not stopping them, the government is not interfering.<br /></i><br /><br />Yes they are. You can choose who to sell to, but any agreement that is considered "price fixing" from manufacturer to the retail level is prohibited. So again, RPM is a contract provision, not government interference. I don´t have much of an opinion on the specifics of how that would work out, but I can only note that where it is legal, in the US, it is used enough to annoy the likes of eBay, hence not insignificant.<br /><br /><i><br />Yes, planning is another reason. But councils don't refuse planning simply because they are nasty or stupid, councils refuse planning because that's what other landowners want.</i><br /><br />Well quite often they do actually. Ignoring brown envelopes, councils often take it upon them to plan what they believe is "the right" amount/type of businesses in the right place, which is done sometimes as a service to landowners, and sometime in direct opposition to said landowners, and yes, they are sometimes nasty, stupid and work against the IH for no apparent reason.Kjhttps://www.blogger.com/profile/13530243002915410700noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-54578099628989860572014-02-18T07:38:44.139+00:002014-02-18T07:38:44.139+00:00Kj: "with the Leegin decision, many manufactu...Kj: <i>"with the Leegin decision, many manufacturers are hunting down online retailers selling below set prices and cutting off their supplies, Cohen said"</i><br /><br />If I am a manufacturer, I can choose who I sell to. If I don't want to sell to online retailers, then I don't have to. Or I can sell them online myself.<br /><br />I didn't express myself very well. Of course a contract is a contract. And people can contract how they like, the government is not stopping them, the government is not interfering. <br /><br />Yes, planning is another reason. But councils don't refuse planning simply because they are nasty or stupid, councils refuse planning because that's what other landowners want.<br /><br />That is as damaging to the economy as if the council could stop the supermarket from selling meat because the butcher's shop down the road complains. That is like every new business having to get permission from all existing businesses before it can start, in which case there would never be any new businesses.Mark Wadsworthhttps://www.blogger.com/profile/07733511175178098449noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-512225387757345062014-02-18T06:38:00.069+00:002014-02-18T06:38:00.069+00:00MW: because it is a contract. You called it govern...MW: because it is a contract. You called it government intervention, and it isn´t, it´a contract. To the specifics of it, I only know of the norwegian exemption for publishers, where the common arrangement is to specify a date from release of a title, to when the retailer is allowed to reduce the price, which is known as the "mammoth sale", and you also have agreements on the return/destruction of books.<br />In the US, where this is legal, it´s been common enough to be a source of a congress hearing, and I quote from <a href="http://www.pcworld.com/article/165195/article.html" rel="nofollow">this</a> article:<br /><i>Old-line manufacturers and retailers are threatened by the Internet, where innovative small companies are using technology to drive down prices, Cohen said. But with the Leegin decision, many manufacturers are hunting down online retailers selling below set prices and cutting off their supplies, Cohen said.<br /><br />"There is evidence that small and midsized Internet retailers are the primary target of aggressive RPM policies," Cohen said. "Many eBay sellers have been targeted by manufacturers and large retail partners with various tactics to take down their listings and discredit their sales."</i><br /><br />To how this affects supermarkets, I have no opinion. I agree with you, there is no IH in land etc. But I would add that planning is also a reason. When a major retailer applied to build a supermarket/multi-retailer warehouse in the center of my town, had the land, had plans for all the parking it needed, required very little in the way of infrastructure improvement, the council retards said no.Kjhttps://www.blogger.com/profile/13530243002915410700noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-73065576125820587992014-02-17T20:11:37.726+00:002014-02-17T20:11:37.726+00:00Kj, DBC, how can it be a contract?
Let's agr...Kj, DBC, how can it be a contract? <br /><br />Let's agree that the manufacturer/wholesaler can agree, by private contract, a fixed retail price with all retailers.<br /><br />What happens if...<br /><br />a) The retailer ends up with unsold stock at the end of the season? Does the wholesaler have to take them back?<br /><br />b) A powerful retail cartel (i.e. supermarkets) tells the manufacturer/wholesaler than in future, they'd like the retail price to be dropped a bit?<br /><br />c) The powerful cartel sets the retail price so low that small retailers, with their high overheads, cannot possibly make a profit?<br /><br />Shiney Mart can tell you what would happen.<br /><br />d) TS hits the nail on the head anyway.<br /><br />e) DBC and IB bemoan the presence of supermarkets within easy travel distance. And supermarkets would love to be nearer where their shoppers are. Why doesn't this happen?<br /><br />Returning to the original post, it's because there is no IH in the land market.Mark Wadsworthhttps://www.blogger.com/profile/07733511175178098449noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-516527962850784552014-02-17T19:02:39.951+00:002014-02-17T19:02:39.951+00:00MW: in defense of DBC, the existence of RPM is a c...MW: in defense of DBC, the existence of RPM is a contract, and not allowed currently because of competition law. So you cannot say that RPM is government regulation.<br />That being said, TS makes an excellent point, it´s jus a matter of producing own brands or finding another supplier.Kjhttps://www.blogger.com/profile/13530243002915410700noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-72297977108669242092014-02-17T18:23:58.134+00:002014-02-17T18:23:58.134+00:00DBC, fridges and supermarkets came together, that&...DBC, fridges and supermarkets came together, that's the IH at work. one without the other is pointless, you need both :-) <br /><br />And of course supermarkets arose "naturally". You cannot claim that RPM was somehow the natural order of things, that was a government regulation.<br /><br />As a separate issue, if there's one reason to dislike supermarkets (especially TESCO), it is their PROPERTY divisions, who go round gaming the planning system at everybody else's expense - because that is where the IH does NOT work and where SENSIBLE government intervention is required. <br /><br />Finally, my Dad was an outrageous chauvinist, but even he was perfectly happy to drive to the supermarket (my Mum never had a driving licence).<br />Mark Wadsworthhttps://www.blogger.com/profile/07733511175178098449noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-85911627166243527172014-02-17T17:05:57.480+00:002014-02-17T17:05:57.480+00:00@TS
Would have thought that fridges became more po...@TS<br />Would have thought that fridges became more popular after the onset of supermarket shopping: after people started to do the shop for a whole week; not really necessary before.Packaging also became a lot more durable with stuff being stored at home.Previously the packing, in greaseproof paper etc,was just to get stuff home, where it might rest on a marble slab in a cool <br /> larder or meat safe then be consumed pretty pronto.<br />Cannot see how washing machines affected shopping; just freed up time to go down the shops.<br />Cars are another matter: people could obviously go shopping in supermarkets more easily.But except in households where women had gone to work after the children had gone to school, most blokes of whatever class would have looked gone out at the suggestion of driving to go shopping at the weekend. DBC Reedhttps://www.blogger.com/profile/17891849727783879145noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-6056402387353045192014-02-17T12:05:44.489+00:002014-02-17T12:05:44.489+00:00DBC Reed,
No workings of Invisible Hand whatsoeve...DBC Reed,<br /><br /><i>No workings of Invisible Hand whatsoever: supermarkets did not evolve naturally (the word that Adam Smith uses about fifty times on the first page of W.o.N).</i><br /><br />RPM was not really part of it anyway. Supermarkets came about because of fridges, cars and washing machines and expanded further as freezers and microwave ovens arrived. If we'd kept RPM then supermarkets would have just sold own brand goods competitively.Tim Almondhttps://www.blogger.com/profile/13369256383976094670noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-52049115510327551072014-02-17T09:48:34.788+00:002014-02-17T09:48:34.788+00:00@MW & IB
An exchange of e-mails at 7.30 in the...@MW & IB<br />An exchange of e-mails at 7.30 in the morning!<br />I'm afraid IB's geometry is up the pole: a ring road such as in Northampton (where he lives) linking Weston Favell, Riverside, Mereway, Sixfields and sketchily Waitrose is on a circumference which is 3.147 x the diameter of the town: the most direct way right across town in the classical case would be on a diameter; journeys into the town centre would be on a radius, or fraction of.Centralisation would be the most efficient logistically.. if everybody was on foot or public transport.However, with the introduction into the equation of supermarkets and the cars necessary to shop at them all this natural use of land goes out of the window.<br />Ian B is right about modern Northampton: the shopping is arranged on a circumference (which is why I have to motor ten miles a day) but this is a planned response to a brutal political,social engineering , decision i.e. to knock the traditional RPM on the head ,done by Edward Heath to get into the EU.<br />From Bartlett's "History of Post War Britain"(1977)"This was done ...very much at the behest of Edward Heath, the Secretary of State for Industry, despite opposition from within the party and despite its unpopularity among small traders ,one of the traditional bastions of the Conservatives...it encouraged and was assisted by the spread of supermarkets." Believe me (I am very old) there were no out-of-town supermarkets in 1964 when RPM was abolished (during Home's interregnum.)<br />No workings of Invisible Hand whatsoever: supermarkets did not evolve naturally (the word that Adam Smith uses about fifty times on the first page of W.o.N). DBC Reedhttps://www.blogger.com/profile/17891849727783879145noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-28367964704458766062014-02-17T07:39:01.316+00:002014-02-17T07:39:01.316+00:00IB: "Why is the natural place for a supermark...IB: <i>"Why is the natural place for a supermarket in a town centre?"</i><br /><br />Because all things being equal, that is where supermarket owners would like to put them, i.e. where they get the most shoppers (assuming there is adequate parking etc). If a large site comes up in a town centre, supermarkets are delighted if they can get it. <br /><br /><i>"Any point within the circle is the same average distance from all the other points in the circle."</i><br /><br />No, the point in the centre has the shortest average distance. But it is not absolute distance which matters that much, it is journey time, which includes finding a parking space.Mark Wadsworthhttps://www.blogger.com/profile/07733511175178098449noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-18328269826806988672014-02-17T07:24:03.863+00:002014-02-17T07:24:03.863+00:00Why is the natural place for a supermarket in a to...Why is the natural place for a supermarket in a town centre? Most people visiting a supermarket are just visiting the supermarket, they're not pottering around doing "browsing", they just want to buy two weeks' food, stuff it in the boot and go home. Hence, it doesn't need to be in a town centre near a haberdashers and a model railways shop, or what have you.<br /><br />There seems to be a misunderstanding here (possibly) that a shop in the centre is a shorter journey than a shop somewhere else. Not so.<br /><br />Think of a circle. Or draw one, if you have a poor visual imagination. Any point within the circle is the same <i>average</i> distance from all the other points in the circle. A shop on the perimeter of the circular town will have the same average shopping distance for all customers as one in the middle.<br /><br />This is for the same reason that a body inside a spherical massive shell experiences a net zero gravitational pull. Sort of.<br /><br />The "town centre" was just a thing of groping many shops together. Once they don't need to be grouped, you can stick them anywhere in the town. On the perimeter being good, because of the roads, available land, etc.Ian Bhttps://www.blogger.com/profile/15436369802742523036noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-62082169640325815782014-02-16T23:07:34.397+00:002014-02-16T23:07:34.397+00:00DBC: "I don't believe in the Invisible Ha...DBC: <i>"I don't believe in the Invisible Hand to start with which in Northampton appears to mean everywhere you need to shop is miles away ( shopping trips are on average ten miles a time)."</i><br /><br />Well clearly there is such a thing as the IH or the economy would not function at all.<br /><br />But there is no IH in the land market, or else supermarkets would be in town centres.<br /><br />Let's not bicker about how the continentals manage it. The point is, if it wasn't all nicely laid out, you wouldn't go there on holiday.Mark Wadsworthhttps://www.blogger.com/profile/07733511175178098449noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-27499112679906205052014-02-16T22:27:23.102+00:002014-02-16T22:27:23.102+00:00DBCR, whilst not wishing to dispute that RPM would...DBCR, whilst not wishing to dispute that RPM would have helped to slow the decline of the High St, I still think that the two major factors are the decline in the non-working housewife as a species and the reduction in the number of people actually living in our town centres. The latter is mainly down to chains buying up town centre shops and taking out the side stairs to the upper floors for extra retail space and houses in the "retail district" being converted into shops, which was still being done in the '80s. If you have to get in your car to go to the shops, you won't mind driving to the nearest out-of-town supermarket half so much as if the alternative is to nip round the corner on foot. Bayardhttps://www.blogger.com/profile/15211150959757982948noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-71108299822385826212014-02-16T19:44:17.613+00:002014-02-16T19:44:17.613+00:00In Bayard's case the supermarket was proposing...In Bayard's case the supermarket was proposing to move next to the High Street (Abington St) and might have attracted some shoppers locally: in Northampton, which Ian B is describing, the big supermarkets are on the outskirts and the "High Street" is groggy.<br /> I am struggling to get my head round MW's concept of No Invisible Hand in the property market. I don't believe in the Invisible Hand to start with which in Northampton appears to mean everywhere you need to shop is miles away ( shopping trips are on average ten miles a time).Meanwhile on holiday I can walk to get a paper or to a huge independent department store ,afterwards, much deserved walk to a waterside hotel bar (where I once saw a luxury cruiser marketed by a firm called LOLA also a hommage to The Life Aquatic ).<br />RPM stopped small shops fucking each other over because they could not undercut each other on the price of the same branded goods and because the manufacturers had a tied relationship with their shopkeepers which cut both ways. Manufacturers had a rock solid base for specialist distribution and nothing to fear from general manufacturers loss leading on their specialty (say,rather wildly, toasters)while cross subsidising on other goods.Laissez faire it aint ( finished in UK by Joe Chamberlain in 1870's). Competition will only break out by force and under very tightly controlled and unnatural conditions. DBC Reedhttps://www.blogger.com/profile/17891849727783879145noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-8428415178099036592014-02-16T19:20:58.545+00:002014-02-16T19:20:58.545+00:00Mark, actually, quite a few shops were/are tenants...Mark, actually, quite a few shops were/are tenants. The agent would have known as he was agent for most of the landlords in the town. I wonder if he asked them? Mind you, it was them who were probably behind getting the supermarket in in the first place, come to think of it. (Small market town, landlords all locals, went to school together, in local Rotary Club, Chamber of Commerce, Freemason's Lodge (yes there was one) etc.)Bayardhttps://www.blogger.com/profile/15211150959757982948noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-23420116103166558252014-02-16T19:03:46.224+00:002014-02-16T19:03:46.224+00:00D, let's not over-intellectualise this.
We ha...D, let's not over-intellectualise this.<br /><br />We have the perfectly workable concepts of "public goods", "the invisible hand", "the nation state", "free markets", "land ownership" and "monopolies", it's a question of knowing which one applies where.Mark Wadsworthhttps://www.blogger.com/profile/07733511175178098449noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-2921191482630414802014-02-16T18:56:26.679+00:002014-02-16T18:56:26.679+00:00The question of when the Invisible Hand produces t...The question of when the Invisible Hand produces the best outcome and when it doesn't is an interesting one. There must be situations where it works and situations where it doesn't Definitely worth looking into.Derekhttps://www.blogger.com/profile/06296053477905542366noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-37719106585307746002014-02-16T17:53:38.573+00:002014-02-16T17:53:38.573+00:00B, no, you have never mentioned that before and I ...B, no, you have never mentioned that before and I am pleasantly surprised that all but two shop keepers were that enlightened.<br /><br />But I was looking at the issue at the level of "maximising the rental value of all the land in the vicinity" and not the supposed self-interest of individual owner-occupiers. <br /><br />Had all the canvassed shop keepers been tenants, and had the estate agent canvassed their landlords instead, surely they would all have voted for the supermarket? (draws the crowds, provides parking etc).Mark Wadsworthhttps://www.blogger.com/profile/07733511175178098449noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-88012944070605437492014-02-16T17:08:48.087+00:002014-02-16T17:08:48.087+00:00I'm sure I've made this point before, but ...I'm sure I've made this point before, but years ago, when I was on the Town Council of the town I lived in, there was a major supermarket, I forget which, who wanted to build on a site just behind the main shopping street. The company engaged a local estate agent to go round all the existing businesses and ask them if they were for or against the proposal. Much to his surprise, all but two were for it, because they realise exactly what Mark has postulated above: the supermarket would bring in the shoppers and provide parking and the shoppers would then patronise the other shops before they went home. Nothing happened for ten years because the council got its knickers in a permanent twist about parking and space therefor.<br /><br />Anyway I disagree with Ian B: all the High Street shops that compete with the supermarkets have long since gone, save the odd deli or butcher which survive on the patronage of people who shop there because they offer a better product and are not the supermarket. I am not sure that RPM would have saved them, either. Supermarkets can offer the unbeatable combination of parking and late opening hours, never mind the prices. The "traditional" High St has declined along with the non-working housewife: what's the use of a shop that's only open when you are at work?Bayardhttps://www.blogger.com/profile/15211150959757982948noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-83170928941268830042014-02-16T12:57:41.828+00:002014-02-16T12:57:41.828+00:00DBC, again, you are getting off the point that spl...DBC, again, you are getting off the point that splitting land up between lots of small owners leads to a worse outcome than having one person or organisation own the whole lot.<br /><br />You can do what you like with planning reg's and RPM, that's just the way it is.<br /><br />LVT would ameliorate this to some extent, but ultimately it can only be fixed if lots of small landowners on one "High Street" agree to transfer al their little bits into one company (which they can own in their respective shares) and then get a proper manager in to look at the larger site which is now available and make the best of it - which will probably be a big supermarket, a big car park and then lots of smaller units rented out to the "remora".<br /><br />They would always end up better by doing so, and being forced to realise that running a loss making shop is never as good as collecting a positive sum in rent from the new tenants.<br /><br />Those who run a genuinely successful business will win on both fronts.Mark Wadsworthhttps://www.blogger.com/profile/07733511175178098449noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-87372229247257051062014-02-16T12:41:14.537+00:002014-02-16T12:41:14.537+00:00The traditional high street is shit now because it...The traditional high street is shit now because its been hollowed out by big out-of-town supermarkets on cheap land as MW says. Sixfields,Weston Favell,Mereway: all points of the out-of-town compass.The traditional High Street was based on Resale Price Maintenance,a freely entered into contract between manufacturer and shop by which the shop agreed not to sell below the recommended price or else the manufacturer would stop selling to them .RPM has been legalised in the US by the Leegin Creative Leather case. It is strictly banned in the EU but our traditional pattern of retail was based on it. <br />There was nothing wrong with High Street shops which could be of some size. I worked in several traditional Sainsbury's stores which had two counters down the length and a wide tile space between which I had to clean at close of play ( I started at 7.30 am).The counters were served by dumb waiters from the prep room below where the Morlocks like us had to cut cheese into blocks ,chop up rabbits etc all of which were by modern standards incredibly fresh.As well us there were Macfisheries selling fresh wet fish and several huge shoe shops which ,as you know, were bought up by Charles Clore then sold and leased back (if they were lucky).Also socialist oddities like the Gas Showroom (very useful) and the Electricity Showroom (less so).Delivery by boys on bikes was going out in my day but women used to scoot round in their lunch hours to pick up provisions.People worked in town centres in those days.<br />Miles better than going to the supermarket which is expensive because you have to have a car, while queues in supermarkets round here are enormous and you can also spend loads of time looking for things .<br />It is strange that the Invisible Hand Gang which you would think would favour small shops is instead besotted by the retail cartel.<br /> DBC Reedhttps://www.blogger.com/profile/17891849727783879145noreply@blogger.com