Zack Polanski’s war on carrots

Zack Polanski is one of the most dynamic politicians in the UK. One day he argues for a wealth tax to help the poorest in our society, the next he is critiquing their ability to purchase cheap, abundant produce.

Polanski has spent the week venting his frustration at the media for twisting his words, tweeting that The Telegraph was “literally making up quotes” and misrepresenting his claim that food in this country is too cheap.

But, as any politician should know, words carry weight. With nearly 200,000 followers on X alone, Polanski’s carry further than most. And in his defence, he did not, in fact, call for price controls in supermarkets — merely price controls on the produce that supermarkets buy from their suppliers. If you are paying 7p for vegetables, “something is not right,” he said. Whatever Zack meant, the logical end point of Zackonomics is the same: prices go up.

His solution to such an outcome is for the economy to pay its workers more. Employers, of course, cannot be trusted to do that of their own accord — so he would mandate it, with a £15 national minimum wage.

Consider what that demand actually means. When the minimum wage was introduced in 1999, it stood at £3.60 an hour. Today it is £12.71. Had it merely tracked average earnings since 2000, it would stand at about £8.73. In other words, the minimum wage has not just kept pace with average wage growth — it has outrun it by over 40 per cent in relative terms. Yet, rather than acknowledging the minimum wage has become unaffordable for most employers, there are calls for it to increase by a further 18 per cent overnight.

Ultimately you cannot force employers to employ people at a rate they are not worth to them, and this is unfortunately just one example of a litany of other economic misunderstandings that have been in the zeitgeist of late.

The central one is this false narrative that supermarkets are wallowing in profit. They are not. Tesco’s profit margin runs at about 3.3 per cent. Sainsbury’s manages 2.1. Polanski calls these “record profits”, floating round billion pound figures that sound enormous, but only until you notice that they were earned on some £70 billion of sales.

Together it is thought that the big supermarket retailers form what is called a monopsony — a monopoly’s lesser-known cousin. This is the theory that a handful of supermarkets, as the only buyers in town, can dictate pittance prices to Britain’s farmers. This is important, because such a scenario does not deliver a truly competitive market.

However, producers in this country can sell to countless buyers: Tesco, Sainsbury’s, Asda, Morrisons, Aldi, Lidl, the Co-op, Waitrose, M&S, Iceland, Ocado — plus the wholesalers, processors and food manufacturers as well. If the supermarkets really were squeezing farmers and trousering the difference, this would show up in their margins. It does not. Instead, two or three pence in the pound is the whole haul.

Adam Smith explained why, 250 years ago this year. In a competitive market, prices gravitate toward their natural rates. When efficiency lowers the natural cost of production, competition pressures businesses to cut their prices in order to attract buyers and maintain a profitable share of the market.

So Polanski is waging a great battle of ideas with Smith. To put both their theories to the test, I went hunting for this 7p vegetable on the websites Tesco and Sainsbury’s. The only item that fit the bill was a Sainsbury’s loose carrot at 6p (4p cheaper than Tesco for all you bargain hunters out there). Sainsbury’s claim their carrots are sourced from the UK, so taking into account the raw production cost of a single British carrot — seed, fertiliser, land and harvest — it comes out to just over one 1p.

Now, as we established, a Sainsbury’s carrot sells for 6p. Nearly all of the difference is the real cost of getting it from a Norfolk field into your hand. In Smith’s vocabulary, the 6p market price sits remarkably close to its natural price, proof of how brutal grocery competition is, not how soft.

Zack Polanski is in politics for what I hope are very noble reasons. He wants to improve the lives of those with the worst livelihoods. The way to do that is to make the things they buy cheaper and more abundant, not dearer and scarcer by decree. If he wants more people to be able to afford the competitively priced groceries in this country, let’s make it easier for them to find jobs, not attach unaffordable, inflation-beating salaries to their employment. Polanski could discover as much by reading a copy of The Wealth of Nations — and I would encourage you, the reader, to do the same.