HOW PRICES GET TWISTED OUT OF SHAPE
Robert Kuttner places the blame for Britain's prices on the wrong party (''Globalization's dirty little secret,'' Economic Viewpoint, Sept. 7). The answer to his question ''Why, then, do Levi's jeans cost double in London what they cost in New York?'' is simple: It's the government, stupid! The fact that Britons pay nearly double for some goods has nothing to do with ''monopoly pricing'' or U.S. multinational greed. Only when governments intervene (through regulation, tariffs, favoritism, etc.) does the law of price break down.
The exorbitant prices in Britain are the result of British government collusion with foreign corporations. If governments let corporations compete without intervening via regulations or by playing favorites, competition will ensue and lower prices will prevail. The solution is less government, not more.
Lance M. McInerney
Updated Sept. 17, 1998 by bwwebmaster
Copyright 1998, Bloomberg L.P.