Why consumers won't resist an anti-dumping ban on potatoes, even though they should

In my ECONS102 class today, one of the things we discussed was rational ignorance - the idea that some people who are negatively impacted by a policy will not fight against it, or even make themselves aware of it, because the monitoring costs of watching the government's decision-making are greater than the costs that the policy would impose on them. It is rational for people to remain ignorant of the policy and its consequences. The example I use to illustrate this in class is trade restrictions on sugar in the U.S. (as I outlined in this 2017 post). However, an example much closer to home could be arising this week, as Radio New Zealand reported:

Potatoes New Zealand is asking the government to ban heavily discounted frozen potato fries from arriving in the country.

It says global potato prices have collapsed and there is a mountain of product sitting in European cool stores.

Potatoes New Zealand chief executive Chris Claridge believed heavily subsidised European producers were eyeing up world markets to dump surplus product.

He said the EU currently had 2.6 million tonnes of surplus frozen fries.

Claridge said the local industry, whose annual production is only 150,000 tonnes, is already having to absorb its own large losses from the lack of demand in the past two months.

He said the industry could not wait for the fries to arrive at the wharf and cause long term harm that it might not recover from.

"We want the government to immediately implement short term safeguard measures to protect our industry from dumping. We are not asking for a handout, we are just asking for a level playing field," he said.

Let's be clear. Cheap potatoes from overseas are a good thing for New Zealand potato consumers. Banning discounted frozen potato fries from overseas would have the effect of increasing the price of fries, compared to what the price would have been without a ban. Should consumers care about this? As a group, New Zealand fries consumers will end up paying a lot more for their fries. However, individual consumers probably don't spend a whole lot of money on fries, so even if the price of fries was 20% higher as a result of the ban, the higher cost of fries each consumer faces is probably much lower than the cost (in time and effort) associated they would face in lobbying the government not to impose a ban. So, even though a ban would make consumers worse off, they are actually better off remaining rationally ignorant of any policy.

In contrast, potato farmers are likely to be made much better off if they don't have to compete with cheap imported fries. Each farmer (and farm worker) will likely gain substantially from a ban. The costs associated with not having a potato ban in place are likely to be very high for farmers and farm workers, and much greater than the monitoring costs those groups face. Farmers have a strong incentive to lobby the government to impose a ban on imported frozen potato fries (and indeed, that is exactly what they are doing).

Rational ignorance leads to a situation where, if the costs of a policy can be spread over many people, and the benefits concentrated among the few, inefficient policy (i.e. policy that reduces total welfare) and policy that protects the interests of favoured groups and makes the majority worse off, can be introduced by government almost without incident. Someone needs to stand up for the consumers before the government seriously considers this policy, because the consumers are not going to resist it themselves.

[HT: Mrs Piercy-Cameron, and see this post by Mark Johnston at Econfix that covers the topic as well]