I don't think you know what "on the margin" or "opportunity cost" mean. What I stated are economic INEVITABILITIES. There are exactly 0 logical reasons for farm subsidies.
Subsidies don't drive the commodity markets,. Commodity prices adjust to what the market can bear, and are usually affected greatly by the price of oil. Shitty quality food is cheap because shitty quality food costs less to produce. I don't think farmers are more special than people in other trades either, but we do encounter a lot more risk than your average business. We depend on the markets and the weather. If prices drop and input prices stay high, a lot of farms end up taking the big dive. Same thing happens if you have shitty weather all year. And it's not just small operations. Big farms have larger cash flows, and can go belly up just as easy as the little guy. I saw it happen after the prices spiked in '07, and I'll see it again after the current spike in prices falls off. If I didn't have a decent amount of working capital built up, I'd be scared shitless right now. Hell, I'm still scared about what could happen this year. Things can take a turn for the worse in a big fucking hurry for producers. It happens often and it's usually not the producer's fault.
Let's hold up a second here. Aside from DDT, which was used prolifically in the 1940s, but has been banned in the US for the last 40 years, can you name me a single pesticide that is being CURRENTLY used and causes any of the health risks you claim? Really? I clicked on the link, and it was merely a research paper on how to test whether the amount of bromate in baked goods exceeds 20 parts per billion (the threshold they consider dangerous) or not. It says absolutely nothing about the current levels of bromate in baked goods. Does that make a lick of sense to you? You're saying that pharmaceuticals, a $650+ billion industry, don't have enough juice with the FDA to pass the drugs they want. Instead, they spend over a decade and a billion dollars just trying to get a breakthrough new cancer drug approved. Meanwhile, some company of farmers worth 0.1% of that have the FDA in their back pocket? That's ridiculous. I love how so many people use words like "large multinationals" the way other people use "neocons" or "liberals"...as dirty, pejorative terms. Why not just call them "companies" instead? That's what they are. I clicked on those two links, but what are they supposed to show? The first looks like an old piece of lettuce, no different than many of the bumped or withered fruits and vegetables I see at organic farmers' markets and grocery stores alike. The other is cheese in a container, probably not the freshest or best food, but certainly nothing dangerous, either.
Yes, they do. Food is like any other good. Both supply and demand drive market prices. If subsidies increase demand by lowering production costs, this will drive down the commodity's price. And if subsidies were to lower the production costs of certain ingredients compared to others, what would the logical consequence be? If some ingredients become cheaper because of a subsidy, wouldn't rational people want to use that ingredient in more foods? I'm not trying to be a dick, but I don't see why that implies subsidies are a good idea. It's a volatile and risky occupation. But why does that make them particularly deserving of subsidies?
Sorry, but now I do have to be a bit of a dick. You do not understand basic economic principles, please go learn them. I'm not going to teach micro principles here. At the very least, read wikipedia articles on marginal analysis and opportunity costs. Even if the subsidies had a negligible impact on profit, they are still inefficient in that they divert value unfairly in the form of real currency from taxpayers and in the form of opportunity cost, and create a deadweight loss. The only time a subsidy makes sense is if the production from American farms generated a positive externality. This is not the case.
Okay, yes, in our society corporations are vital. But to say that they are the most efficient ways of doing things is completely wrong. When you say a corporation is efficient, what does that mean? Look at the agribusiness industry. A typical feedlot has hundreds or thousands of animals. Yes the farms produce lots of food, but that does not mean that the land is being used efficiently, nor the resources involved. To run operations you are ruining the quality of the land, you have to truck in feed from hundreds of miles away, you have to keep pumping animals with anti-biotics because of the squalid living conditions, and then you have to deal with removing the massive concentration of animal waste produced. It seems pretty clear that the end product is not as healthy to consume as something grown from a local farmer (some of you will argue this, fine). So compared to a local farm, what is so much more efficient about this model? It seems like inefficiency is the exact thing corporations strive for. Look at the current technology industry. Their current business model is to make sure you are buying a new phone/computer/gadget every few years or so. Do they make their products easily updatable so you can just replace a part when you want a faster phone? No. But that would be the efficient way of doing things. Instead you have to buy a completely new phone/computer/gadget. And at today's rates, whatever you buy seems to be obsolete in about 10 years. These old products may get recycled, or they may just get thrown away. Making these products easily upgradable would be efficient: the company wastes less resources producing items, and you would save money not having to buy something every few years. But the profitable model is to make you keep coming back every few years. Yes, corporations are responsible for a lot of great advancements, but this idea that they are a necessity, and that we would still be in the stone age without them, is wrong. Look at Salk, Tesla, the Wright brothers. These are people that came up with major advancements that improved society without any help from corporations. I'm harping on this one issue because so many people seem to forget this. What is an economy supposed to do? To economize, right? To use resources in a smart and efficient way? That seems to never happen with our current setup.
Yes, but farmers aren't going to undertake a net-unproductive activity. We grow what is productive for our area, and that's it. If a farmer can't make money off a certain commodity, he won't grow it in the first place (I suppose he would if he's a fucking moron, but he wouldn't last long). We don't get enough from subsidies to float us along with a non-producing commodity anyway. The whole idea is unrealistic. My operation would be growing corn and soybeans whether we received subsidies or not. We grow what produces, just like every other farmer. Why in the fuck would we use government aid to try to produce something that isn't worth a shit, when we can pull good yields with what we have? [/quote] I wasn't. I was suggesting that subsidies don't encourage higher commodity market prices. Subsidies definitely increase production, I agree with you there.
You are somewhat right, but also misguided. This isn't a debate about the merits of capitalism, which is what you're turning it into with your post. Mods, I humbly request that you delete his and this post, they will only send us off on a pointless tangent.
I have a better idea, why don't y'all just stay on-topic, and if you want to propose a debate on the merits of capitalism, there's an app for that.
Wrong. You're confusing a bunch of thoughts there; planned obsolescence and efficiency among them. It is incredibly efficient for a company to manufacture large volumes of one-off devices using cheap components. As soon as you have to take part replacement/upgrades into account, it's very, very difficult. Accessibility and form factor become an issue, never mind nonpermanent connections of components. Never mind that it's probably damn near impossible to plan for from a pure engineering standpoint what technology will be the rage in a year. Go take a look at the guts of an iPhone 3GS and 4, and tell me how you could upgrade components without reverting to the Motorola Brick form factor. The reason a lot of phones break is because they have been made at as low a cost as possible, which means inferior, low quality pieces-parts and manufacturing/assembly processes, which is very efficient for the corporation, and sucks for the consumer. Right now the ability to upgrade a phone's firmware is a huge step in the right direction, like the iPhone or Android, but from a physical component perspective, it's just not realistic for so many reasons.
I doubt this is what he had in mind when he wrote the post, but there is some truth to his nonsensical rambling. Sometimes industries can become become sort of locked in to an inefficient process which carries on due to inertia. Simply put, while an alternative process may be more efficient, the challenge of switching or inertia can be a deterrent (see: metric vs. american standard). IF we were able to rebuild from scratch, we'd do it totally different, but now that one process is entrenched, other potentially more efficient processes aren't adopted. Further, industries can also become entrenched in an inefficient location for similar reasons. Executive summary: Inertia is a colossal force in many markets, and can lead to inefficient outcomes in terms of opportunity costs. I'm not sure if this is what he was talking about or not, but he also seemed to raise a point of benevolent social planning vs. pure capitalism. Yes, pure capitalism will display greater societal inefficiency in comparison to benevolent social planning. However, I hope we don't have to have a debate about why this line of thinking can lead to idiotic conclusions. Nettypoo, I know you are raising a different(and absolutely correct) point, but I feel the above does warrant being said.
Silly me... I subscribe to the concept of if you want to say something, say it... don't make me interpret your schlock through some sort of pseudo-intellectual decoder ring from a Cracker Jack box.
If it's any consolation, I doubt he'll ever post on this board again unless it's an epic meltdown, in which case, we all win.
Except agricultural products are different from other products. If some event occurs that increases the cost of LCD TVs, well, LCD TVs will go up in price and less people will buy them, but that's life. Society is considerably less tolerable about such occurrances in the food supply; as a society we demand stable and low prices for our food, regardless of what market fluxuations would dictate. This stability is basically what agricultural subsidies pay for.
Here's a simple (albiet very cynical) way of saying it: Companies are motivatied by self-interest, which in most cases is maximizing profits. (Almost) all companies are beset by competition, and there are fundamentally two ways of triumphing over your competition - you either get better (through innovation, superior product) or you make your competition worse (lobbying for legislation that creates barriers to entry for potential competitors, for example). Since innovation isn't really something that you can conjure on the spot, and having a wholely superior product may not be possible, sometimes it makes more economic sense to take the low road and make it more difficult for your competitors to operate. Reduction of competition is pretty much synonymous with decreased efficiency and poorer choices for consumers.
I get that... but that's not what he was saying, was my point. If you're going to say something, at least try to make it somewhat clear, and not require interpretation or "I think this is what he was saying". Actually, I'd probably say "increased competition creates pressures to increase efficiency and tends to result in better choices for consumers". A slightly subtle difference, for sure, but one that I feel is more accurate.
Diazinon Aldicarb Paraquat Chlorothalonil Tiabendazole Imazalil Pyrimethanil Here is a photo I took at the local Walmart of one bag of fruit (three of the chemicals are listed above). What you're also not taking into account is a good portion of food is imported from other countries which do not have the same strict standards we do and the rest of the products in the store which rarely (if ever) list the chemicals like above. Take for example, three cases found of mad cow disease in the US. If one tenth of one percent of cows are being tested for this, what about the rest of the cows? <a class="postlink" href="http://www.consumersunion.org/pub/core_food_safety/003616.html" onclick="window.open(this.href);return false;">http://www.consumersunion.org/pub/core_ ... 03616.html</a> I can't find anything on the actual current use of bromate (it is not banned in the US though), however I'm wondering if it might possibly be disguised on the label. <a class="postlink" href="http://www.cspinet.org/reports/chemcuisine.htm#potassiumbromate" onclick="window.open(this.href);return false;">http://www.cspinet.org/reports/chemcuis ... iumbromate</a>
I'm about ready to cry uncle. Futures markets do a much better job of providing price stability than subsidies. In fact, I can think of no mechanism by which subsidies would promote price stability. For fucks sake, prices aren't even all that stable in this market.
Surely anyone questioning this can look past the immediate dollars and cents of the matter. Yes, subsidisation does have the potential, and real, effect of encouraging inefficiency; but there's more to that argument than simply making the statement. The first principle is to determine whether domestic producers are inefficient as against other domestic producers, or as against international producers. This is important because in a free market, on equally available and perceived quality products, choice is primarily made by price (forgetting service, assume the products are both available under the same conditions). Sometimes the choice is made on price regardless of other factors. When imported products are cheaper to bring to market than domestic products; the domestic market runs a greater risk of not making the sale. And without going and digging up a lot of research that I don't have the time to do, it comes down to the means of production being more expensive in first world countries. When a third world country can produce a product cheaper, and are allowed to freely market that product in a first world country, there is a risk the domestic industry can be wiped out. The next issue that goes along with that is that when the means of production are expensive, the ultimate product must correspondingly be more expensive than if the means of production were less expensive (duh...). Increased point of sale price can have flow on effects in two (at least) direct streams: either people have less money through scarcity of resources and their standard of living goes down, or incomes rise to meet risen costs and this permeates throughout all costs and you get inflation. Both of those are a very simplistic view of things to save a ton of space. By subsidising agriculture and keeping the ultimate price down, the government can help control the likelihood of suffering either of those two negative outcomes. Then there's the issue that is reputational in nature, and economic in reality. Could you imagine what would happen to national morale if all the farmers went broke? What about the national balance of payments (which is mostly up the shit anyway)? How about all the third world countries sniggering amongst themselves that the big countries can't even feed themselves? You think fighting a war over oil is bad, try fighting a war over corn. Let alone the generations of farmers who will find themselves without anything left to their name because the bank has had to sell them up. And sell them up to whom? If there's no farmers left, who will buy from the bank? If the bank can't recoup their funding, there's a chunk of money out of the economy that's sitting idle. I'm creating more questions than I'm answering, because there is just not enough space to do the issue justice. Subsidising any industry is a complex question, and you can't just throw the word "inefficiency" in and expect it to wash.