Human beings, who are almost unique in having the ability to learn from the experience of others,
are also remarkable for their apparent disinclination to do so.
Douglas Adams
Whose Birthday is Today? Not Just Sean Hannity's...
Big Dairy vs. the Free Market
The Agricultural Act of 1949 sets a minimum price for certain commodities (for purposes such as school lunch programs and veteran hospitals); this is based on parity with relevant (but obsoleted) prices approximately a century ago. Milk prices are indirectly supported through purchases of milk products, like dry milk, cheese and butter. Typically relevant support prices are set through multi-year farm bills; but they revert to the price supports in the permanent act if a farm bill expires like it may do later this week. The problem is the existing minimum price is about half of the perm support price. Government purchases will basically bid up the price of milk sold at retail.
This blog considers price-fixing by the government as a fundamentally unacceptable intervention. One objection to the farm bill is the Dairy Market Stabilization Program, which taxes over-quota production, i.e., penalizing efficient producers. This is in the context of the government protecting producer margins (given high feed prices) vs. prices.There are related issues at play: liberals reject attempts to reform the food stamp program, and conservatives/libertarians object to protectionist crop subsidies.
Any business faces uncertainty (including industry overcapacity). We don't have-or need-government meddlers setting minimum prices or production prices for widgets or barriers of entries to widget producers. Not only do I reject the farm bills: I would like to see the 1949 law repealed.
Crony Socialism?
Mark Perry cites a female Cuban blogger whom speculates on why only pricey foreign-produced foods (e.g., chickens from Canada, butter from New Zealand, beef from Argentina, or cheese from Germany). She mentions that an economist friend whom during her government service noticed high freight charges for basic foods, and the friend was warned against pursuing the matter, suggesting that powerful Cubans have ownership interests with foreign suppliers. I would simply describe these rumors as indicative of corruption.
I instinctively recoil from conspiracy theories. Consider the following discussion:
Just a few years ago, the state employed more than 85 per cent of Cuba’s labour force, but that is changing as the government battles heavy indebtedness, economic stagnation, poor retail services and pilfering. The number of private, or “non-state” workers as Cuba calls them, rose to 1.1 million jobs, double the number reported two years ago. The majority of the non-state workers, or about 610,000, were farmers, whose numbers have grown under Mr. Castro’s agricultural reforms, which include leasing state lands to individuals. The goal is to stimulate local food production and cut the need for budget-draining food imports.High prices on foreign-produced foods should spur local production assuming this is not a law of comparative advantage issue and/or barriers to entry to markets. The law of supply and demand: high prices mean limited sales (say, to foreign visitors or privileged Cubans). I think Raul Castro's attempt to implement a Chinese-style fusion of political monopoly and private-market reforms will also fail in the long run.
Musical Interlude: Christmas Retrospective
Casting Crowns, "Away in the Manger"
