Food Chain Radio Show #1232

Michael Olson, Author & Urban Farming Agriculturalist

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Up Against Goliath I: The Bribes

Guest: Claire Kelloway, Researcher & Reporter Open Markets Institute

It seemed to me that some very big people had it all figured out. But of course, I might be wrong!

Michael Olson Food Chain Radio – Up Against Goliath I: The Bribes – How does big business use bribes to prevent small businesses from competing?

What I think I saw in the Covid-19 pandemic panic was that some very big businesses figured out how to keep their doors open, while most every small business were forced to close their doors.

I saw this when I went to my favorite local garden store at the peak of the panic to buy some plants for the garden, only to find the store locked up and shut down. I then went to my second favorite local garden store and found that it, too, was locked up and shut down. “No problem!” I was told, “The Big Box store is open, but you will have to stand in line and wait your turn.”

When I tell my Goliath conspiracy theory to friends and associates, many of them roll their eyes and back away. Fine! But the fact is, big business does have many ways of fighting off small business competitors. Most all of those ways are derived from their economies of scale. Here is how those economies of scale work:

Farmer Jim has a one acre farm, while neighbor Farmer Jill has a 1,000 acre farm. One day, both Jim and Jill go to town and buy a $10,000 tractor. Now, how much does each farmer pay for their $10,000 tractor? Farmer Jim’s tractor costs $10,000 per acre, as he only has one acre. Farmer Jill’s tractor only cost $10 per acre, because she can spread the $10,000 cost over her 1,000 acres. By understanding this economy of scale, the means by which big business competes with small businesses become readily apparent.

To further bring light to this competition between big and small, we begin a three part Food Chain series called, “Up Against Goliath.” The first episode is titled: “The Bribe.” We begin by asking – How does big business use bribes to prevent small businesses from competing?

Leave a comment below: Does free trade lead to closed markets?

Tune in here, for the syndicated the Michael Olson Food Chain Radio Show #1232 June 6, 2020 Saturday 9AM Pacific