Stupid government tricks

Last night's chat with Bryan Crump on RNZ Nights covered the ComCom supermarket inquiry.

Remember the old Johnny Carson Stupid Pet Tricks bit?

This stuff should be classed as stupid government tricks.

Here's the trick.

First, set a pile of rules that make it neigh-on impossible for new competitors to really set up. If you want to open up a new supermarket chain in New Zealand, just think through how impossible it would be. Not many sites have the right zoning. Of those that are zoned, many will be tied up in covenants preventing them from being supermarkets.

If you find a network of sites that might work, you face impossible-to-gauge months to years of consenting processes before you find out whether you'd be allowed to put a supermarket on the spot. So you can't plan out a distribution network. And remember that consenting processes treat competition as a harm to be mitigated rather than a benefit to be sought. 

And who knows whether the Overseas Investment Office would decide that, because your proposed site is adjacent to a reserve, everything gets additional holdups. 

Small countries with difficult logistics can't set up these kinds of regulatory barriers to entry if they want people to consider opening here.

The whole thing is set up to make it effectively impossible to enter. Maybe that wasn't the intention of anyone along the way, but it's the effect.

So government sets a pile of rules that act in restraint of competition. 

Then it observes that grocery prices are higher than government would like.

So it sics the Commerce Commission onto the supermarkets to run a two-week beat-up of supermarket chief executives about the apparent lack of competition. They didn't haul a single Council Planner over the coals for making it impossible to build a new supermarket. Funny that. 

Government gets to play the hero coming to the rescue, and nobody much notices that there'd have been no monster there to fight in the first place if government hadn't put it there. None of the proposed remedies will help either, except ones that free up entry. That's the underlying problem. Some government-backed KiwiGrocer would fail for exactly the same reason KiwiBuild failed - it didn't address the underlying problem. 

So that's the stupid government trick. Cause a problem in a way that nobody will blame you for, then come charging out with a bunch of nonsense populist purported solutions that draw plaudits from those who neither understand the underlying problem nor care that the proposed solutions won't work. All they care about is the perceived monster-fighting. 

Bit depressing. 

But makes for a fun chat with Crump. You can listen here.