Thursday, 29 November 2012

Food is too Cheap in Norway!

Eienar Enger, chairman of Felleskøpet Agri, a cooperative in Norway owned by approximately 43,000 farmers, today came with a brilliant statement (here and here): "Food is too cheap in Norway"! He is advocating an increase in food prices as Norwegians only spend 10% of their income on food (or alternatively he says, farmers need higher subsidies from the government to be profitable). Great idea from Enger! Why don't we at the same time call for higher prices for clothing and air travel and everything else that have become cheaper over the years due to efficiency improvements and innovation. Before you bite his head off, he is simply doing his job since according to Felleskjøpet's web site "Our main objective is, and always has been, to improve the financial position of its members". So engaging in rational economic argumentation is not exactly on top of his agenda.

The really sad thing in Norway though is that people don't appear to realise the extent to which farmers in Norway is feeding off the tax payers through huge direct subsidies and tolls on imports. If they did the politicians would not be able to continue this rip off. Food prices in Norway is already way too high (as it is artificially kept high) and would become considerably cheaper if the free markets were allowed to function. And the choice of foods would greatly improve (shopping at Norwegian grocery stores is a miserable experience I can assure you, unless you don't like fresh food that is). This is a cost born directly by the Norwegian tax payer and consumer and a substantial indirect tax. And as food is an important part of life the policies in Norway protecting the monopoly farmers diminishes quality of life and freedom of choice.

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