December 13, 2011

Holiday Butter Shortages

In a recent article by David Charter a crisis in Norway was
discussed. They ran out of butter.
analysts say that the root of the problem is the near-monopoly held by the
giant domestic company Tine, which controls 90 per cent of the butter supply in
a country protected by trade barriers from European Union imports.” Norway,
which is one of the richest countries in Europe has an outdated state monopoly
system. This was created to keep prices high and protect local farmers.
From an
Austrian perspective this all rings true. Monopolies are unable to detect
changes in consumer demand because the price they set is the price consumers
must pay. Monopolies are possible only through state mandates. Otherwise,
butter competitors would have pushed Tine out of the competition or forced it
to lower its price.
Even more
exciting to see, however, from the perspective of a student fresh with Austrian
ideas is that exchange finds a way. The market finds a way.
“A man in
Lillehammer who advertised half a kilo of butter for sale received bids of up
to 3000 kronor ($A500), making it almost as expensive as silver at around $A30
an ounce. A Russian man was caught trying to smuggle 90kg over the border from
Sweden last week.”
Traeland Rostoel, 20, a student at Oxford, said he was taking a few slabs home
in his suitcase for Christmas.”
You cannot
suppress the world of human action.

No comments: