by Ari Armstrong
The following article originally appeared at Boulder Weekly on January 4, 2007.
The cornerstone of economic liberty and free-market capitalism is that people have the right to exchange goods and services voluntarily, free from physical coercion and fraud. The government's only legitimate function in the economic sphere is to protect this right. Unfortunately, one Colorado statute instead outlaws certain "capitalist acts between consenting adults," to invoke Robert Nozick's phrase.
Steven Paulson summarizes in a Dec. 18 story for the AP that, under the Unfair Practices Act of 1937, "a federal district court jury ruled this summer that two independent gasoline dealers in Montrose were harmed when King Soopers and City Market sold gasoline below cost. The dealers were awarded $1.4 million."
The proper place for somebody who steals $1.4 million is prison. If any ordinary citizen walked into a King Soopers or City Market grocery store and stole even a fraction of that amount, the police, prosecutor and judge would rightly arrest, charge and sentence the person for a felony.
Yet this court case sanctioned the theft. The reason King Soopers and City Market will pay this extortion money is that, if they don't, the ultimate enforcement mechanism is men with guns. The fact that the theft is legalized does not change its moral status.
This legal charade twice victimizes consumers. First, they are prevented from purchasing gasoline at lower prices. Second, the $1.4 million will be passed along to consumers either in the form of higher prices or reduced service. And this is done in the name of "safeguarding" the consumer. Such laws provide the same sort of "safety" as that provided by the Mafia.
Such displays of legalized force interrupt rational economic planning and destroy wealth. These businesses invested a great deal of money in their gasoline pumps and facilities. They did this based on their expectations of what their customers wanted. Economic planning is destroyed to the degree that politicians prohibit voluntary exchange.
The entire Unfair Practices Act is itself a prime example of unfair predatory politicking. If Democrats wish to demonstrate that they have any economic sense or respect for individual rights, and thereby advance their dominance of Colorado politics, they will act to immediately repeal the Act in its entirety. According to Paulson, politicians from both parties are looking at reforms.
The Act stains the Colorado statutes from 6-2-101 through 6-2-117. Section 6-2-105 states, "It is unlawful for any person, partnership, firm, corporation, joint stock company, or other association engaged in business within this state to sell, offer for sale, or advertise for sale any article or product or service or output of a service trade for less than the cost thereof to such vendor, or give, offer to give, or advertise the intent to give away any article or product or service or output of a service trade for the purpose of injuring competitors and destroying competition."
However, if a grocer wants to sell gas below cost, both the grocer and the customer properly have a right to so trade. If a grocery store wants to pay customers to take gas, that's perfectly moral.
The line about "destroying competition" makes a mockery of the concept. It is this law that destroys competition by outlawing free exchange.
Obviously, if one business more successfully caters to customers, it will "injure" competitors in the sense of winning away business. That is the very essence of market competition. Note also that the law turns on intention. If you sell below "cost," did you do it "for the purpose" of helping your customers or "injuring competitors?" This creates a thought crime. Its enforcement depends on divining the motivations of the accused, not the act itself. The result is an inherently capricious law.
What if a store wishes, for instance, to mark down day-old bread or some product that isn't selling? Well, there's an exception in Statute 6-2-106. The resulting statutory gibberish is itself a crime against the concept of objective law: "In establishing the cost of a given article or product to the distributor and vendor, the invoice cost of said article or product purchased at a forced, bankrupt, closeout sale, or other sale outside of the ordinary channels of trade may not be used as a basis for justifying a price lower than one based upon the replacement cost as of date of said sale of said article or product replaced through the ordinary channels of trade, unless said article or product is kept separate from goods purchased in the ordinary channels of trade..."
The so-called Unfair Practices Act is a fraud against Colorado citizens. It is protectionism and legalized theft masquerading as a public benefit. It undermines competition in the name of protecting it. It sanctions the initiation of physical force under the pretext of preventing "injury." It undermines the legitimate purpose of law by violating individual rights. To a free society, it is an abomination.