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Minimum markup law: Why is this relic still on the books?

By MIKE NICHOLS

One of my favorite quotes is usually attributed to Thomas Jefferson:

“The natural progress of things is for government to gain ground and liberty to yield.” But there’s a corollary (one I just made up) that is, I think, just as true: Once government gains ground, it is almost impossible to ever reclaim it.

A prime example: Wisconsin’s minimum markup law, a relic of the Great Depression that tells retailers and wholesalers where to set their prices.

It’s easy to understand how it was born back in the Depression. It was born out of fear and conformity. It was modeled on legislation pushed by a national group of food and grocery interests trying to protect themselves from competition during an unprecedented economic calamity. There wasn’t enough money to go around, and the law guaranteed that a certain percentage flowed to them.  

Seventy-seven years later, the law is still on the books, and although it’s almost impossible to find a legislator willing to defend it on policy grounds, it’s also impossible to find a legislator willing to even hold a public hearing in Madison and risk rankling the special interests that continue to benefit at the expense of competitors and consumers.

WPRI’s Special Report, “Putting the Squeeze on Consumers: Real-World Impacts of Wisconsin’s Minimum Markup Law,” provides synopses of various studies on the issue and includes excerpts of key Federal Trade Commission findings over the years. Minimum markup laws discourage competition, protect small retailers and wholesalers at the expense of consumers, appear arbitrary and are basically unnecessary, the FTC has found.

But we also tell the real-life stories of the people and businesses directly affected. We look at how small businesses are thriving throughout America — even in states without minimum markup laws. We document how Wisconsin has taken a go-easy approach to enforcement — and saddled small businesses with the hassles and costs. And, while we try assiduously to avoid politics, we remind legislators that there was a time when the debate over this law was not in any way defined by which side of the aisle one sat on.

You’ll find the whole report at www.wpri.org. You’ll also find a few of the stories in this special edition of PRImings. We hope you’ll read them and join a growing chorus of Wisconsinites waiting for legislators to tell us why, after all these years, this law still exists.

Mike Nichols is president of WPRI.

© 2015 Wisconsin Policy Research Institute, 633 W. Wisconsin Ave Suite 330, Milwaukee, WI 53203
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