In times of inflation
Back when Greece was still using the drachma as it currency, there was a bakery on downtown Athens’ Kaningos Square that didn’t sell bread, but just made it. It was located in the basement of the then ministry of commerce, and it was where wannabe ministry bakers made all kinds of goods in order to ascertain their “fair” price. The price of bread, like of almost all other products, was controlled. In today’s terms, there was a “cap on its retail sale price,” as various leftists and far-right politicians have been urgently requesting.
We don’t know where all that “fair-priced” bread made by the ministry ended up. It is very likely that the employees took it home. What we remember is that inflation was running at 20%-25% and the newspapers had the permanent headline “Bread to become a luxury product.” The issue of inflation was also a concern for Greek households during the era of “strict controls,” and along with inflation we were talking about scandals of “concerted practices” – not between companies, but between ministers and industrialists, for the exact “fair price” of, for example, flour.
When we say that the issue of inflation was of concern to Greek households, we mean it as a matter of discussion and not of any kind of reaction. Greece never had a consumer movement and the very reasonable practice of looking for the lowest prices in the market is a recent habit. In the decade of fake prosperity, the 2000s, everyone was moaning about the price of plain milk (not formula). It was the highest in Europe. Then a new company entered the market selling it 30% higher than everyone else and immediately it gained a significant market share. At that time, looking for the best price and buying the cheapest product was almost shameful.
This irrational (for the science of economics) mentality had a logical explanation. The state corrected market distortions through handouts (we call them “passes” today) and wage increases. As soon as prices rose, which happened all the time, everyone took to the streets to protest, which also happened all the time. They did not protest about prices but about wages. It was interesting that pensioners’ trade unionists headed the marches holding a Greek koulouri bread ring. They weren’t shouting about its excessive cost but the fact that the pension increases weren’t enough to buy it.
Market controls are necessary, especially in Greece, which has oligopolies in a number of consumer products. But we must not return to the era of price caps. After all, if the state is unable to control basic issues, such as harmonized practices, how will it succeed with complex problems such as price formation?
