The Guardian really doesn’t get this economics stuff
THE Guardian newspaper has not a clue when it comes to economics. They claim the following:
How much is a fair price for a pint of milk? The answer is: whatever price allows everyone in the supply chain – farmer, dairy, supermarket – to turn an honest profit.
Dear God, that’s just insane.
Cast you minds back a few years. Think of when all the banks were losing tens of billions of quid. Did we see The Guardian claiming that the price of banking was too low? That we all ought to pay more so all suppliers could make an honest profit?
No, we didn’t: for the quite obvious reason that no one at all is due a profit, honest or otherwise. A profit is a happy outcome of the value we consumers place on your production being higher than the cost of your production. That is, if you’re adding value. A loss is the opposite and a sign that you are subtracting value. It costs more to make than we are willing to pay for it. Thus we’d like you to stop doing it and a loss is a good little nudge for you to do so.
I have a feeling that this new definition of just prices and honest profits comes from the way that The Guardian lost £40 million last year…..