An Ol’ Broad’s Ramblings
One Smart Cookie
If you were up early enough last Friday, you would have seen the colossal stream of hunters leaving their homes before the sun came up to search for their prey. These hunters had spent the previous evening dreaming about the hunt and researching their target. Of course I am talking about those hunters who kicked off the unofficial opening day of the Christmas season by elbowing their way into the retail wilderness in search of a trophy bargain.
The bad news for Wisconsin’s shoppers is that for many items they will not get as good a deal on many of their purchases as their fellow shoppers in other states. Wisconsin law forbids it.
A relic of Wisconsin’s socialist past actually forbids retailers from selling their goods below a specific profit margin. Specifically, the Unfair Sales Act, also known as the minimum markup law or the mandatory profit law, begins, “The practice of selling certain items of merchandise below cost in order to attract patronage is generally a form of deceptive advertising and an unfair method of competition in commerce.”
You read that right. A retailer who wants to bring customers to her store by offering a fantastic bargain will have Wisconsin’s government enforcers on her like white on rice for being unfair to her competition.
This is the reason why people in other states are able to buy generic prescription medications at Wal-Mart pharmacies for $4, but not in Wisconsin. This is the reason that gasoline is required to be sold at a minimum profit of 9.18 percent in Wisconsin while consumers in other states can buy gasoline for less. This is the reason that Sportsman’s Warehouse can’t sell sabot shotgun shells for below cost in the hope that hunters will also buy the rest of their hunting gear there.
Wisconsinites pay more for many things because their government requires it.
The justification for the mandatory profit law is rooted in a manifest distrust of the free market. The supporters of the law are fearful that a retailer like Wal-Mart will sell gasoline, for example, at below cost in order to bring consumers into the store. This, they contend, will drive smaller gasoline retailers out of business and then Wal-Mart will hike its gasoline prices through the roof.
The problem with that thought process is that in every state without a mandatory profit law it has not happened. No company can continually sell products at a loss and if they increase their prices too high, other competitors will enter the market.
History has shown that the free market and the competition it fosters is the best system for bringing goods and services of the highest quality to consumers and for the lowest cost. We are better served by putting our trust in the people of Wisconsin than in the arbitrary market controls of government.
Realizing that government-mandated profit was more than a bad idea but also an abridgement of our liberty, in October the United States District Court for the Eastern District of Wisconsin ruled the Unfair Sales Act unconstitutional. The law, however, is still on the books and is still being enforced. The good news is that someone is paying attention over in the Wisconsin Assembly.
Reps. Leah Vukmir and Bill Kramer have begun circulating a bill that would repeal the Unfair Sales Act and replace it with the Competitive Marketplace Act. It will state, in part, “The proper functioning of a free market necessarily requires competitive rivalries where each competitor leverages strategic pricing and innovative practices intended to obtain a larger share of the market from other competitors. Such practices, while potentially injurious to less efficient competitors are beneficial to consumers and serve the public interest of fostering a robust free market.”
Gov. Jim Doyle has already called for the repeal of the Unfair Sales Act and free marketers everywhere agree, but groups like the Wisconsin Petroleum Marketers and Conven-ience Store Association and others who like to have their profits guaranteed by law are going to fight tooth and nail to keep the law in place.
The minimum markup law is a law that should have never been passed, has been ruled unconstitutional and is costing Wisconsinites millions of dollars. It’s time to repeal it and bring Wisconsin into the 21st century.
Ya know what Owen’s problem is? He’s using common sense where previously, none has existed.
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