KE Cellars

The miracle we take for granted.

grocery-store

Click here to listen to the broadcast of You Tell Me on Newstalk 600 KTBB, Friday, March 6, 2009.

The market has been dropping like a stone, incinerating trillions of dollars worth of wealth in the process. To begin to understand why, let’s go to the grocery store.

I love the grocery store. The grocery business is so intensely competitive and the margins are so razor thin that you have to be very, very good at what you’re doing to succeed in grocery retailing in America. As a consequence, our grocery stores are just fabulous. They’re big, clean and filled to the ceiling with the most amazingly beautiful food.

Every time we go to the store together, my wife has to again hear me say that I think the average American super market is a miracle.

I recently read that the average American super market stocks over 60,000 different items. That those items get there in the first place, get priced to sell in a hyper-competitive market, get put on the shelf in such a way as to make it easy for me to find then, compare them and make a decision to buy them and are almost instantly replaced with new stock when they are sold, is astonishingly under-appreciated. How does this miracle happen?

The answer is that it happens because of private enterprise and naked, unapologetic self-interest.

Let’s take one grocery item. Just one out of 60,000. Let’s consider the tomato.

The guy who runs a farm producing tomatoes doesn’t really care whether my family is prosperous and well-fed or not. That’s not to say he is unfeeling or unconcerned with his fellow man. But he doesn’t get out of bed worrying about how the Gleisers are doing. He gets out of bed worrying about how his own family is doing. And so he works hard growing tomatoes so that he can sell them at a profit and provide for his family.

He also doesn’t care what happens to his tomatoes after they are sold. He knows that some of them will ultimately be sold as whole tomatoes. But some will also turn into condensed canned soup, some will become pre-packaged spaghetti sauce and some will become canned tomato paste. How much of each? That’s not his worry either. Nor is there any necessity for a government “tomato czar” to allocate tomatoes to the various tomato using constituencies.

No, with respect to tomatoes, the market does its magic. For all of the tomatoes grown in the United States, thousands of processors and resellers of tomatoes will compete in the open market to buy them, each according to his or her own self-interest and each paying exactly what those tomatoes are worth to them.

Beyond a nominal human decency, none of the people involved in growing or selling tomatoes really cares much about the general welfare. Every one at every point up and down this supply chain for tomatoes is concerned solely with his or her own well-being.

And yet the Brookshire’s on Rieck Road not far from our studios has plenty of tomatoes and will sell every one in the store in a matter of a day or so only to have more tomatoes arrive just in time to take the places of the ones just sold. The same is true for all 59,999 other items in the store today at Brookshire’s. [editor's note: the Brookshire Grocery Company is a privately-held retail grocery chain with stores in Texas, Louisiana, Mississippi and Arkansas and headquartered in Tyler, Texas, the point of origination of this post.]

The miracle is that thousands of people who will never meet one another act selfishly but wind up working cooperatively to deliver tomatoes to every single super market in America.

Now, try to imagine the federal government taking over and managing the inputs necessary to the tomato business. Imagine trying to coordinate the fertilizer, the trucks to deliver the fertilizer, the acquisition of the tires to put on the truck to deliver the fertilizer, the making of the sack that contains the fertilizer, the insecticide, the trucks for the insecticide, and so on and so on and so on. It is not hard to imagine that it takes millions of inputs, working independently, in order for you to be able to go to Brookshire’s right now and buy a tomato.

Multiply our tomato illustration by 60,000 to fill up one grocery store and then multiply our grocery store by some unknowable huge number to constitute a working economy and you quickly come to understand why the centrally-planned Soviet economy ultimately collapsed. They still don’t have grocery stores like ours in Russia.

When you next go to the grocery store, take a look around and ask yourself if the federal government could offer you the same shopping experience as the fabulously wealthy (and by Obama’s estimation under-taxed) Brookshire family. When you arrive at the only possible answer, use that answer as a cautionary tale as you consider the massive increase in the size, scope and involvement of the federal government in our economy as being promoted right now by President Obama.

You will then understand why the Dow has shed more than 30 percent of its value since Election Day.


  1. Lauren K. Minze says:

    Mr. Gleiser:
    KUDOS!!! As always, great insight!
    I listen to WBAP online at work and just wanted to let you know that he spoke of you and KTBB this morning with great respect. He mentioned that you, as owner, attend all the important national functions along with radio’s “biggies”. He LOVED your tomato analogy and reiterated it to his listeners.
    Please continue to inform and educate!!

    Thank you for your time.
    Lauren Minze
    Longview

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