There is a serious problem in America today; the epidemic of poverty prices.
Across the country, American business owners are being forced by market conditions to sell goods at prices too low to maintain profitability, resulting in over 40,000 bankruptcies last year. Unfortunately, greedy customers continue to force businesses to accept these prices despite experiencing some of the highest living standards in history. It’s time that the government do something to save businesses by instituting minimum price laws which force customers to pay a fair minimum price for cheap products. We need higher prices now!
Of course not all prices should be raised by law. Rather, only prices in industries struggling to survive should be supported. For instance, 70% of restaurants go bankrupt over a ten year period, so the government should institute minimum price laws on most types of food to help these businesses stay open. Legally mandating sustainable airline and car prices would also be effective to combat the historic bankruptcies in these sectors.
Creating minimum price laws are not only about making people wealthier, but they are also about justice. We are all aware of the unfair disparity between consumer and business gains which can come along with the purchase of a cheap product. Over the past fifty years, US per capita income has increased by 1,624%, while prices have only increased by 737%; therefore, consumers have benefited at a much greater rate than businesses from economic growth.
The problem is that modern consumers are selfish. These “all for me” customers spend hours looking for ways to trim a few hundred bucks off the price of a new car while auto-makers struggle to emerge from bankruptcies. There are literally entire websites and forums dedicated to figuring out how best to exploit the business. Consumer price gouging is now so popular that companies are forced to compete with each other to offer the lowest prices possible. This triggers a race to the bottom which further lowers prices and cripples companies.
Minimum price laws are also good for the economy. Businesses not only employ people, but also increase the aggregate supply of goods in the market, thereby helping boost the American economy. But with our current laws, the government continues to allow prices to fall, and therefore causes more businesses to shut down and further weaken the economy as fewer goods are produced for consumption. This downward spiral of poverty is the last thing we need in a struggling economy.
The economic benefits of minimum price laws don’t stop there. Government welfare usage is at an all-time high in the US, while our national debt is similarly perilous. By keeping prices high, and therefore more businesses open, the government can reduce the number of people on welfare and keep tax revenues up due to higher corporate, personal, and sales tax receipts. With these effects, hopefully conservatives can get on board with this common sense policy.
Free market ideologues might say that raising prices would hurt consumers by making it too expensive to buy the products. But these claims don’t empirically pan out. In reality, when companies charge higher prices, they tend to make better products, and therefore don’t lose money from marginal loses in the customer base. Furthermore, when prices aren’t constantly falling, companies don’t have to worry about menu costs, thereby cutting their operating costs and further increasing profitability.
The solution is simple. We need the government to step in when the market fails, and the market is currently failing our businesses by allowing prices to fall. Only by legally mandating a minimum price level on certain goods can we ensure that the American business is not trampled under the feet of the greedy American consumer.