Monday, January 17, 2011

The Socially Acceptable Price of Fried Chicken

I have The .Plan to thank for all these surprising phrases I never thought I'd hear or read on the politics of food, the story from mid-December:
$4.40, is the price of the most politically charged bucket of fried chicken to hit South Korea.

In four days, the chicken has generated impatient three-hour queues, street protests, a regulatory investigation, national soul-searching on the ethics of competition and condemnation from the office of the President. ....

The poultry-centric controversy began late last week when Lotte Mart, one of South Korea's biggest retailers, began selling its fried chicken at a level that undercut the prevailing market price by more than 60 per cent. ...

That was the cue for a verbal bombardment from Kyochon Chicken, Goob-ne Chicken and hundreds of small restaurants and shops across South Korea that make their living from fried chicken, who fear they would be thrust out of business. Their trade body, the Korea Franchise Association, quickly weighed in with a threat of legal action and allegations of “fried chicken dumping”.

At first, the public shared their rage and seemed ready to be worked up by the media into passionate defence of the little guy against rapacious giants such as Lotte. Then they smelt the chicken, realised they could feed their families for roughly the price of a bus ticket and joined the monstrous queues at branches of Lotte. ...

South Korea's co-prosperity committee, a body established to ensure balanced growth between big and small business and designed with precisely this dilemma in mind, met overnight for the first time.

Lotte announced that it would stop selling the fried chicken this week.
--Leo Lewis, The Australian, on the socially acceptable price of fried chicken
Additional thoughts from the article:
South Korea's presidential secretary for political affairs bristled in a blog that, even on a crude calculation of raw materials and processing, Lotte Mart appeared to be losing about 1200 won [~$1] every time it sold a serving of fried chicken from one of its 82 stores.

Korean fried chicken (the other KFC) is fried without the skin, typically as a whole chicken because Korean chickens are smaller than American chickens. From the NYTimes, who won't give us a recipe per se, but most of the cooking methods:
“Living in the South, you think you know fried chicken,” he said. But in Seoul, he said, “there is a mom-and-pop chicken place literally on every corner.” Many Asian cooking traditions include deep-fried chicken, but the popular cult of crunchy, spicy, perfectly nongreasy chicken — the apotheosis of the Korean style — is a recent development.

Time for me to wear several hats.

Austrian hat: This is the problem with laws about "anti-competitive" practices. A bunch of people are getting chicken for half-off; people who weren't consumers decided to join in; it's growing in popularity and making life for thousands genuinely better off ... and that's anti-competitive? This IS competitive, folks! Wide swathes of people are made better off and we want to stop this??

Small-business hat: There are also a lot of people made worse off. There are apparently many small business owners who are chicken franchise owners [see below]. This could potentially put a lot of people out of work quite rapidly which is not the best policy during a recession.

Development hat: Okay, so what is development? Is it reducing hunger by reducing the prices of food; encouraging industrialization and diversification of the economy; preserving employment even in less efficient jobs; are these the kind of small businesses that drive economies or are they a sign of stagnation?

The split-the-difference question is if there is really a necessity for the government to get involved in choosing what the large firm is doing. I don't believe there is. That doesn't mean there isn't a potential role in working with the small businesses to help them diversify into other avenues, in ensuring the food safety of both large and small food businesses, is the cost savings achieved by means that would harm consumers, and so forth. The business is not about reducing hunger per se since the fried chicken is mostly snacking food rather than meals, so it's obesity policies that matter more than food security.

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