David R. Henderson  

Economics Everywhere

David Gordon Responds... The Prevalence of the Populist...

The resourcefulness of free markets.

Most mornings I go to the Starbuck's at the local Safeway to buy coffee for my wife. When I went this morning, I pulled up beside an unoccupied Sara Lee truck delivering bread. Outside the back end of the truck was a pile of trays containing bread. On top? An aggressive crow picking away that had already pierced at least one loaf. I shooed the crow away but, of course, as soon as I turned to go into the store, the crow came back. So I went to the bread aisle and found the Sara Lee guy stacking bread. I told him about the crow. He laughed. I was a little upset that I seemed to care more than he did.

But then I went outside after getting my wife's coffee and he was packing up just as I got to the car. He could tell I was wondering, and so he told me that the bread they were hauling away was old bread. "Do you sell it for animal feed?" I asked. He answered, "We sell it to grocery outlets and the stuff the crow ruined we sell for hog feed." I love how everything gets used.

How did I know to ask about the animal feed? Because a few weeks earlier, I had seen Safeway's doughnut/bagel buy putting the day-old doughnuts and bagels in a big plastic bag. I have doughnuts about once a year because they're fattening and I'm trying to watch my carbs. But cut the price of a doughnut to, say, 25 cents, and then that puts me over the margin occasionally. So I had offered a quarter to the guy for a day-old doughnut. That's when he explained that all that stuff goes for animal feed.

COMMENTS (10 to date)
mdb writes:

If you ever want to look at a sad case of regulations, you should look into Ben & Jerry's and their "factory seconds". Way back when you used to be able to buy factory seconds after the factory tour (think chocolate fudge brownie with no brownie or, the best, only a little ice cream), then the USDA came and said you can't sell factory seconds. So they stopped selling it to people and sold to hog farmers. Next up as the EPA - ice cream is hazardous waste due to the bacteria count. So for at least a couple years they just threw it out - while they went about getting all the necessary regulatory approvals to feed ice to pigs. It always amazes me that the people that decry the homogeneity of our food are often the ones most in favor of regulations, that help no one and eliminate variety.

David R. Henderson writes:

Thank you for that information. I hadn't known any of this. Notice that it means that the feds have raised the cost of food disproportionately to poor people.

Joe Cushing writes:

I think the non-monetary costs of eating a doughnut are high enough that I don't think I'd want to buy a day old one to save $.50. If you're going to enjoy one, get the best. The pleasure of eating an OK doughnut is not worth the cost of eating one. It takes the pleasure of the best doughnut to push me over the edge.

Brandon Berg writes:

A doughnut isn't worth eating if it isn't still hot.

Fmb writes:

In other words (on the donut) you seem to be confusing price with cost

scott clark writes:

Free markets are better still. In high school, I used to work at a donut shop at night, and we did just throw out the donuts at closing time. That donut shop is long since out of business, because there is just no way that a business that wastes like that can compete over time against firms that waste so much less.

David R. Henderson writes:

I'm not sure if you're addressing me. I'm not confusing price and cost. The cost to me of the donut is the price + the damage it does to me. I weigh that off against the pleasure. Unlike some of the other commenters, I don't have a strong preference for fresh doughnuts.

EDG reppin' LBC writes:

The marginal utility of each donut decreases as the supply of donuts increases. This also works with hotdogs, and cocaine. Go figure!

Fred writes:

Funny, i was just thinking about the same thing the other day. Does anyone else remember it being impressed upon them in school that Native American culture was morally superior to to modern culture simply because it used every part of the Buffalo?

Jim writes:

Hog farmers buy spilled and unused breakfast cereal also. Sometimes their kids eat it too:)

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