Editing 76-18-B4 (section)

=== Transcript ===
The Joint Economic Committee of Congress commissioned a study which was made
public early this summer. In the report two Wisconsin professors charged that in
1974 the top 17 supermarket chains "over-charged consumers $662 million because
of lack of competition".

Now, with inflation hiking the prices on us every week it's like shooting fish
in a rain barrel to make such a charge. We're all angry enough to believe it. But
doesn't the fact that they could use the term "the top 17 supermarket chains"
(indicating there are others who aren't in the top 17) suggest there must be some
kind of competition?

Why doesn't business itself answer a charge like this? Maybe it does, but not
in an effective way. The chairman of the board releases a statement to the press,
but who sees it or what guarantee is there that it will even be printed? And
telling it t o the Congressional committee is like spitting into the wind.

But they could say, possibly in some of their ads where they'd be sure to be
seen, that the top 17 supermarket chains couldn't have cheated us out of $662
million in 1974. You see, that's more than three times as much as their total net
profit, which happened to be a little less than $200 million.

I n that particular recession year when unemployment was going up -- but not as
fast as inflation -- those 17 market chains averaged a profit margin of less than
one-half of a cent on each dollar of sales. As a matter of fact, the total profit
of all the supermarket chains, including independents, in 1974 was less than $800
million.

The federal government spends that much by about noon every day. But, that's
a mere detail that didn't prevent one congresswoman from charging because of
lack of competition, she says -- that the average consumer family is overcharged
about $300 for food every year.

Now, in 1974 the average family food bill was about $2700, and of that amount
only $11 represented profit for the supermarket. That, of course, is the average
for all supermarkets. If you did your shopping in the most successful of the
chains, that profit jumped to a whole $30. If on the other hand you spent your $2700
in the supermarket chain at the bottom of the profit scale, it lost $16 on you.
So, if you are being "ripped off" (as the Congresswoman says you are) for $300 a
year, you'd better look under the bed, because the market isn't that burglar.

Of course, we could ask the lady if she is concerned because the per capita
cost of government is increasing three-and-one-half times as fast as the cost of
food. Or, how our government can, by its own mistakes, lose -- in Medicaid and
welfare -- seven times as much each year as the profit made by the entire supermarket industry?

One of the Wisconsin professors in the congressional study was formerly a part
of the bureaucracy, employed in the Federal Trade Commission. At that time he
claimed supermarket profits were one-and-a-quarter billion dollars too high.
That was double what they actually made. Now he's charging it is $662 million
more than it should be, but that's only for the top 17 market chains, and -- as I said
that's more than three times as much as their actual profit.

What reason can there be for this assault on a business our best economists say
is highly competitive? Can it be just a bias against the free market system or
is it the old Washington game of looking for a scapegoat-- someone else to blame
for the inflation Washington itself is causing?

One footnote in closing; this year's federal deficit alone would pay one-half
of the food bill for the entire nation.

This is Ronald Reagan.

Thanks for listening.
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