Inspired Idiot: Genghis Khan strikes again (at your wallet)

Rumor has it the Chair of the Federal Trade Commission (FTC), Lina “Genghis” Khan, has set her wrath on a major US liquor distributor for the egregious crime of selling in bulk.

The company in the path Khan’s fury is called Southern Glazer’s Wine and Spirits; they distribute alcohol to bars and restaurants across the country… and like any rational business, they offer discounts for large, bulk purchases.

Some guy who stops off at a gas station to buy a Corona beer is obviously going to pay a higher price (per beer) than a huge restaurant chain that buys tens of thousands of Corona bottles at a time.

But to Genghis Khan, all prices should be the same.

A mom-and-pop shop that buys a few dozen at a time versus a major retailer than buys thousands of cases, should pay the exact same price per unit.

Not only does Genghis Khan not understand this very basic business principle… but she’s apparently never been to Costco either.

Costco has 100+ million members, and Sam’s Club has 50+ million members, all of whom understand that when you buy in bulk, you should pay a lower unit price… and hence save a lot of money.

What rock has she been living under that she can’t understand why bulk purchases result in substantial cost savings?

It’s the rock known as academia— in which Genghis Khan spent her entire adult career writing strongly-worded papers about the dangers of competition and capitalism, before being hired by Joe Biden to run the FTC.

It’s clear that if she gets her way, Genghis Khan will only succeed in driving up prices even further.

In fact the obscure law that Genghis Khan is using to justify her raid on Southern Glazer’s is called Robinson-Patman Act, which dates back to 1936.

Congress passed it over nine decades ago to help protect small grocery stores who were suffering from rising food prices due to the Dust Bowl. It states that suppliers cannot “discriminate in price” among their customers… and from Day 1 it was a terrible idea.

The government’s own analysis showed that the Robinson-Patman Act actually caused prices to increase, rather than keep them stable or fall. Perhaps this is why no one has bothered to enforce the Robinson-Patman Act in decades.

But Genghis Khan is resurrecting this old law to drive prices higher in America. And it’s not even her first effort to do so.

A few months ago I wrote about her lawsuit to block a proposed merger between two grocery store chains: Albertsons and Kroger.

The crux of Khan’s argument— which she offered zero evidence to substantiate— was that the merger “may lead to higher prices and reduced services for consumers.”

Sure, why not. It might also lead to alien invasions or the Dallas Cowboys actually winning the Superbowl.

But if Khan had any business sense whatsoever, she’d recognize that a merger between two grocery store chains would create substantial cost savings— savings which would be passed on to consumers in the form of lower prices.

A merger also allows the combined chain to remain competitive against the vast amount of competition in the grocery industry— from Amazon and Walmart, to farmers’ markets and co-ops.

Competition is one of the key forces of capitalism that helps keep costs down. Competition forces companies to cut costs, innovate, and provide more value to customers.

But Khan is always trying to disrupt that competition. It’s the opposite of what she should be doing.

That she fails to understand such basic principles is pretty scary given her substantial level of authority. Seriously, how out of touch do you have to be to not understand bulk discounts?

New parents don’t go to 7/11 to buy a few diapers at $1.50 each. They buy the 192-pack at Costco for 23 cents each.

Genghis Khan was never elected. She has never run a business or even worked in the private sector. She is as unqualified to run the FTC as she would be to run NASA or the US military.

And yet Joe Biden thought it a good idea to give her an enormous amount of power to destroy competition and make things more expensive.

I also have to point out whenever I talk about Genghis Khan that she’s widely disliked within her own agency and appears to be a terrible boss.

An internal government investigation showed that Khan consistently mismanaged government resources and abused her authority. Career professionals within the FTC said that she is “making decisions for headlines” as opposed to following the law.

The investigation also found that the FTC is “beset by dysfunction and chaos stemming from poor leadership and ideological bullying of its Chair and her leadership staff. These findings reinforce the results of repeated government-wide surveys that found the FTC to have a toxic work environment under Chair Khan.”

That’s the energy that Genghis Khan and her inflationary horde are bringing to the US economy in their efforts to stifle competition and keep inflation high.

Frankly it is beyond comprehension how this person has not been impeached by Congress. And that’s another good reason to have a Plan B.

Source

Simon Black is an international investor, entrepreneur and permanent traveler. His daily letter is both educational and entertaining, and we suggest that those who want unbiased, actionable information about global opportunities sign up for Sovereign Man’s free, actionable newsletter at http://www.SovereignMan.com.

From Simon Black of SovereignMan.com