Who Does Not Allow Us To Bargain?

One of the symptoms of economic illiteracy within the society is that we are taught since childhood that bargaining isn’t becoming. “Bargain is for peddlers”, “Where there’s law there’s no bargaining”, “Bargaining like in a marketplace” - here are some Romanian idioms who induce in our minds, directly or in more subliminal way, the idea that it’s dignified and classy to act against our own interests and against the market laws, and that only “lower classes” bargain. This ignores the fact that a quality common to all those who got rich is being skilled negotiators. In short: the plebeians bargain, the elites negotiate, and the middle class should shut up and pay the asked price or get out of the store.

Bargaining, like trading, is natural and as old as the world. Today, it seems a hardly tolerated historic remnant, on the outskirts of economy, in marketplaces, fairs and and flea markets (also online). But across the Balkans, in Turkey or Greece, you can still bargain even in stores within the modern, so-called “civilized” trade.

How was the bargain compromised? How did we get the idea that a direct dialog between demand and supply is embarrassing? It looks like the freedom of negotiation and the price flexibility are subversive for the state and consequently they must be kept under control.

This is obviously detrimental to all trading parties. Consumers are not allowed to get better prices faster. Sellers ready to lower the price have their turnover slowed down, and sometimes their warehouse clear-out sales are compromised, forcing them to accumulate otherwise avoidable losses.

That’s because bargaining - ultimately an ad hoc auction with one bidder - can only result in a lower price (or in the worst case scenario, in the same price, which usually means the transaction has failed). Bargaining never leads to a higher price. And in a world where sales taxes and duties, especially the VAT, are established as percentages of the price, it’s only obvious who is not comfortable with lower prices. A bargain resulting in a lower price is a win-win situation: the buyer saves money, the seller gets cash. Only the state sees its budget revenues dwindle.

Consequently, the prices must be kept as firm and stable as possible by law. Of course, the usual pretext is “consumer protection”. In Romania, a regulation in force since 2000 prevents - in fact indirectly prohibits - bargaining by mandating the stores to display the prices, with all taxes included, visibly and legibly, “so that consumers in the sale area can see them in the locations where they are presented without having to ask a sales assistant.” Because what could be more dangerous than a normal conversation between the buyer and the salesperson? I must mention that this is not a legislation novelty of Romania: it’s the transposition into national law of a 1998 EU directive.

Moreover, another act, also in 2000, simply prohibits selling at a loss as an usual practice. Selling below the purchasing cost are only allowed during “official” sales and warehouse clear out previously announced under strictly regulated conditions.

Last, but not least, a minimum wage is also a barrier against bargaining for a service below a certain tariff. This is why the demand and supply cannot meet. I mean, you cannot negotiate a price of labor below a threshold, as practiced in rural villages when hiring someone to till a piece of land. At the risk for the worker to remain unemployed. All this because the state is not OK with selling cheap goods or labor, because it wants more money from taxes.

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