The Office of Fair Trading is concerned about supermarkets' pricing behaviour. The dominance of the four supermarket giants Tesco, Asda, Sainsbury's and Morrisons is to be investigated again, the third time in seven years. The stores control almost 75% of the £120bn grocery market and the OFT is asking the Competition Commission to investigate.
The watchdog said there was evidence that the buying power of big supermarkets could distorts competition and producers complain that they are squeezed down to selling at rock bottom prices. There are also concerns about planning rules and supermarket land holdings.
There is an underlying problem here which is being ignored. Where land is freely available, it is easy for individuals to start up in business, whether as producers or retailers. But where all the land is occupied, then ownership is effectively monopolised - unless there is a holding cost on land, such as a land value tax. In the absence of such a tax, there is every reason for supermarkets, house builders and all sort of other large corporate players to buy up land and sit on it whilst they wait to get what they want.
As long as Britain's present no-charge land tenure system continues, more and more of the economy will be concentrated into the hands of fewer and fewer agglomerates.
I got involved in a discussion with a Youtuber called “Philosophy all along”. This was in connection with criticism of Trump’s policy of deporting illegal migrants, which he argued would be bad for the economy as it would reduce demand. This implies that there is a need to import people to sustain demand. There is no obvious reason why a population should not be able to consume everything that the same population produces. If it can not, then something else is going on. It is a basic principle that wages are the least that workers will accept to do a job. Wages are a share of the value added by workers through their wages. The remainder is distributed as economic rent, after government has taken its cut in taxes. Monopoly profit is a temporary surplus that after a delay gets absorbed into economic rent. Land values in Silicon Valley are an example of this; it's like a gold rush. The miners get little out of it. Rent and tax syphon purchasing power away from those who produce the g...
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