September 2001
The Great Coffee Maker Experiment, Chapter 4 of The Memoirs of Frederic Bastiat
by Michael Gemmiti
They called it a national emergency. Deep Roast, the Canadian coffee and donuts superfranchise, was on the verge of bankruptcy and the federal government was determined to save it. A Canada without Deep Roast, the government argued, was like a Canada without hockey: it did not exist.
Prime Minister Rousseau went further saying, "Given Deep Roast’s place in our nation, not saving it would be the equivalent of cultural and economic suicide. If we let it fail, Canada would be susceptible to American domination."
The solution, the government decided, was to increase the demand for Deep Roast products. Though any plan was sure to be controversial, what the government eventually came up with was far more insidious than anything I had anticipated, and would change the Canadian political landscape forever.
To increase demand, the federal government passed a law forbidding the sale of, and the possession of, coffee makers. This was buttressed by massive tax increases on all competitors of Deep Roast, both foreign and domestic.
The Prime Minister extolled the virtues of his plan. "By creating demand for Deep Roast, not only is Deep Roast saved, but a plethora of Canadian industries will flourish. As customers flock to Deep Roast stores, the suppliers of baked and other goods will certainly see their revenue increase as well. These benefits will then further ripple through the economy. Not only will we be providing jobs for young Canadians, but Canada’s retail sector will experience increased revenues as young people, who are notorious spenders, will spend their newfound disposable income. Canada will surely boom.
"Just think about it. More income means more tax revenue means more spending on things Canadians care about—education, health care, and the environment. This equation for a better Canada is something that all true Canadians can rally behind. "And the cost? A measly coffee maker."
As the leader of the Official Opposition, I was aghast at this malicious plan. As I have written elsewhere, the legislator has, "no authority over our persons and our property, since they preexist him, and his task is to surround them with guarantees" (Bastiat, pp. 97115). When rights are properly protected, Canadians are capable of acting, by obtaining and supplying goods and services, to ensure their personal wellbeing (For an exhaustive examination, see von Mises). And if this means a Canada without Deep Roast, then so be it: the government should not violate the liberty of all for the privilege of a few.
"Not so," replied the Prime Minister to my arguments. "Reasonable Canadians will agree that the government has a role to play in protecting Canada’s health, culture, and economy from the vicissitudes of the market. We must remember that people, not property, have rights. Property is a relationship between at least two people and the state, and it is the state, democratically elected, that defines this relationship. Citizens are permitted to do what the government does not forbid them to do. Up until now, Canadians were permitted to possess coffee makers—now they cannot. There is nothing more to be said."
The coffee maker ban came into effect on May 1. Canadians, in general, were upset by the ban, but were far from revolt; after all, it was "just a coffee maker."
Three years later, the country in chaos, my party formed the government. The effects of the ban had been disastrous. Immediately after the passage of the Bill, Deep Roast stores sprouted up all across the country to accommodate massive crowds. As expected, revenues grew not only in the immediate sector, but in others as well as the newly employed youth spent freely.
But then the unexpected happened. People became frustrated at Deep Roast for increasingly poor service and not always having fresh coffee, (as now, free from competition, Deep Roast took its "assured" customers for granted). And as is always the case, even in heavily regulated countries, the free market started to take over. Caffeineaddicts began to substitute cola for coffee. Sales at Deep Roast began to decline. In response to this apparent defeat of their plan, the government acted decisively. The supply of cola was severely restricted by the banning of pop machines and the sparse issuing of "cola licenses" to merchants. The price of cola quintupled and, once again, Deep Roast boomed.
Then a funny thing happened: there was a fundamental change in consumer preference. The latest craze was to forgo increasingly expensive caffeineated products and donuts for water and vegetables. Sales at Deep Roast slumped. The government, in response, proposed a hefty tax on both water and vegetables. People’s food and beverage choices were to be further limited.
Fortunately, a federal election was due. As already mentioned, I won.
After lifting the coffee maker ban, as well as the other related laws, sales at Deep Roast plummeted. Stores had to be shut down, thousands of people lost their jobs, consumer spending dropped, and retail stores became overstaffed and had overflowing inventories. Due to the malinvestment inspired by the government dictated increased demand, a deep recession gripped the Canadian economy; millions of dollars of capital had to be relocated to profitable ventures.
The downturn was inevitable if Canadians were ever to get their dwindling freedom back. Canadians were not willing to give up their lives and liberty for a cup of coffee and a buoyant economy initiated by "increased demand" and followed by diminished rights.
In the end, the lesson was twofold. First, the free market cannot be denied. Only by supplying goods demanded by consumers, as reflected by the price structure, can producers succeed in the long run. Second, and relating to the first, the market can never be free unless property rights are properly defined and protected. Our economy, and our very freedom, cannot be left subject to government discretion. After all: "the right to property once weakened in one form, would [will] soon be attacked in a thousand different forms" (Bastiat, p. 111), and as we saw, replacing sovereignty over our decisions with government discretion is a recipe for disaster.
Note
The Memoirs are a fictional creation by the author to help illustrate an idea. All words attributable to the real Frederic Bastiat are cited appropriately.
References
Bastiat Frederic "Property and Law." In Selected Essays on Political Economy. New York: Foundation for Economic Education, 1964.
Mises, Ludwig von. Human Action. IrvingtononHudson: Foundation for Economic Education, 1996.
Michael Gemmiti is a law student at the University of Western Ontario. He holds a B.A. from Trent University in Peterborough, Ontario, with a major in Economics.
info@fraserinstitute.ca
4th Floor, 1770 Burrard Street, Vancouver, BC, Canada, V6J 3G7
Tel: (604) 688-0221 Fax: (604) 688-8539 Book Orders: 1-800-665-3558 ext. 580
You can contact us at the above email address for any comments or information requests. Please report any dead links or technical problems.