The Ghost of the 1970s: When Government Plays Grocer

 

The Ghost of the 1970s: When Government Plays Grocer

History has a cruel way of repeating itself, usually wearing a different hat but carrying the same bag of failed ideas. The recent Treasury proposal to "incentivize" supermarkets into capping the prices of bread, eggs, and milk is less a policy innovation and more a nostalgic trip to the economic disaster zones of the 1970s. It is the political equivalent of trying to stop the tide with a broom, only to blame the ocean for getting your feet wet.

The logic—if one can call it that—is staggering in its simplicity: the government wants to suppress the symptoms of inflation while ignoring the underlying infection. By offering regulatory "relief" in exchange for price caps, the Treasury is effectively asking retailers to subsidize a political illusion. It is a classic move from the playbook of those who believe that the market is a stubborn machine that can be tuned by the right combination of levers, rather than a complex, emergent system governed by the flow of information and scarcity.

There is something inherently cynical about this theater. When the cost of living bites, the instinct of the state is rarely to address its own role in the inflation—the taxes, the levies, the energy policies, and the regulatory bloat—but rather to outsource the blame to the local shopkeeper. Retailers operate on razor-thin margins. Asking them to sell goods at a loss to manufacture a "stable" price is not just economic vandalism; it is a fundamental misunderstanding of the social contract.

We see the same patterns in human behavior that have driven civilizations to collapse for millennia: the desperate desire to find a scapegoat when the reality of scarcity becomes too painful to confront. The conflict in the Middle East and the global supply chain pressures are the true architects of this inflation. However, naming a villain abroad is much harder than summoning a boardroom of supermarket bosses and pressuring them to "do the right thing."

The tragedy is that the "incentives" offered—slight delays in packaging rules or health regulations—are mere band-aids on a gaping wound. The government is essentially offering to stop hitting the retailers on the head, provided they agree to pay for the privilege by starving their own profit margins. It is a deal only a bureaucrat could love.

The market has a cold, hard intelligence that politicians consistently underestimate. When you suppress the price, you don't make the item cheaper; you make it scarce. If we continue down this path of "1970s-style" governance, we should prepare for the inevitable outcome: empty shelves and the realization that you cannot legislate away the laws of economics. The ghost of the seventies is knocking, and it’s hungry.