Recently, I was standing in line at a supermarket and I overheard the following conversation:
“Why do we have to pay more just that Jewish people can keep kosher? Why should we be paying a Kosher Tax?”
“It’s not really a tax, I think. It’s a kosher symbol that shows a Rabbi blessed it and that the food is kosher. The signs are a k or a U.”
The truth is that when a company displays a kosher symbol on a product the Rabbi doesn’t actually bless it, nor from an economic perspective does it make the food cost more – it actually brings down the price of the food.
How do we know this to be true?
If we answer the following four questions we will see that
1] QUESTION: Do CEO’s wish to maximize profits for their company? Yes or No?
ANSWER: Yes. Chief Executive Officers answer to shareholders who want the company to make more money.
2] QUESTION: When a company increases the volume of their sales of the product what generally happens to the price? Does the product generally cost more or less?
ANSWER: It generally ends up costing less. Adam Smith, the great economist explained that when companies can produce more they can take advantage of greater economies of scale. The unit cost is cheaper for them to produce. Companies can then afford to be more competitive by reducing the prices.
3] QUESTION: When a new group of consumers starts buying a product does that increase the volume of sales or decrease it? Are there more people buying the product?
ANSWER: Yes, when a company figures out ways to introduce their product to new markets sales are increased. More people buy the product and as explained above – this brings the costs down.
4] QUESTION: When a Kosher symbol is on the product will more Jews, Vegans and Muslims buy the product or will less of them buy it?
ANSWER: More Jews, Vegans and Muslims will buy it. Traditional Jews buy products with a kosher symbol. Vegans like kosher products because it generally shows that animal products are not contained in the food. Muslims eat meat called Hallal but also trust the kosher symbols too.
Does the kosher supervision cost the company money? Yes, of course. But it is overset by the increase in profits. Otherwise, the company would not hire the extra supervision.
In short, Kosher supervision is not a tax at all. It is a means of advertising that the companies use to attract greater sales volume. The greater sales volumes brings the prices down and the savings to you.