Friday, November 25, 2016

How the Free Market Works

An article on how prices for chicken are set.  Not so much by the free interplay of supply and demand among willing buyers and willing sellers, but by negotiations between big consumers (supermarkets, fast food chains) and big suppliers (Perdue, Tyson), using a reference price supplied by the Georgia Department of Agriculture.

Sort of reminds me of the scandal over LIBOR, where a handful of bankers collaborated to set rates which didn't reflect reality.

Lesson:  just because something is denominated in money, doesn't mean the market economy is operating.

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