I know I’m late on this, but a few weeks ago, Tom Woods invited Bob Murphy and Vox Day to debate the merits of free trade. Murphy argued in favor of free trade while Day argued against it. I thought that Bob Murphy presented a sound case and did a great job of pointing out Day’s inconsistencies and contradictions. I wasn’t familiar with Vox Day before listening to this debate, so I had no idea what to expect from him. I was actually surprised with how poorly I thought he did. His logic wasn’t coherent and his grasp of Austrian economics was pedestrian at best.
It came late in the debate (the 1:16:11 mark), but during the question and answer period Day made a claim that I would like to specifically rebut here. Referring to the idea that a lack of tariffs opens markets up to competition, the question was “Does the competition improve quality?”
Day admitted that in some cases the increase in competition does improve quality, but then gave the example of the European labeling law regarding Parmigiano-Reggiano (Parmesan) cheese to show that this is not always the case. In Europe, a cheese of this style can only be sold as Parmigiano-Reggiano if it is produced from certain regions in Italy.
According to Day, a cheese that is usually sold to compete with Parmigiano-Reggiano is Grana Padano. It is cheaper and apparently not as good (if he wants the best cheese, he should take a look at some Locatelli Pecorino Romano pictured above). So in Vox Day’s world, the competition from Grana Padano does not improve the quality of Parmigiano-Romano.
Are we to assume that because a product is inferior it means that it will not affect the profitability of another competing product? If Parmigiano-Reggiano is the only cheese on the market and then Grana Padano enters the field, the inferior Grana Padano (which is also a different type of cheese) will undoubtedly take some of the business from Parmigiano-Reggiano. Maybe some people would have a preference for it or maybe some would want to pay lower prices for their cheese. This puts pressure on the producers of Parmigiano-Reggiano to increase their quality, lower their price, or do both. The fact that Day has noticed a change in neither the quality nor the price probably means that the market is in some sort of equilibrium.
Furthermore, how can he say that free competition in this cheese market would not improve quality? If the European Union and Italy relaxed their regulations on the production of these cheeses, would the current producers suddenly decide to make poorer quality cheeses? If a competing company sold an inferior cheese as Parmigiano-Reggiano, would that negatively affect the quality of the “authentic” producers? Couldn’t consumers still choose to purchase cheese of their preferred quality?
Vox Day does not actually make a point. He may say some nice-sounding things about the European laws protecting cheese makers, but they don’t address the issue at hand. The issue is this: why would allowing anyone to produce Parmigiano-Reggiano cheese lower the overall quality available in the market?
