Archive for the ‘#freemarket’ Tag

Farm Subsidies Hurt Us All   1 comment

Putting myself into the community of Emmaus required that I study up on agriculture in the United States and I discovered some ugly truths about farming in America that really pissed me off. While the web of farm regulations and subsidies will mean my characters go hungry as they face a Midwestern winter, in real life if means that the poor of the world go hungry.

Image result for image of new zealand farming

For example, in the EU, agricultural protectionism has resulted in European consumers paying as much as 17% more on agricultural goods than the rest of the world. The distortion caused by protectionism are also evidence in the US. In both cases, it really hurts the poor.

 

We all purchase and consume food. Rich or poor, we all have to eat. How we spend our food budget is impacted by our income.

Low-income folks statistically spend around 4% more of their incomes on food than do the wealthy. A $100 food budget represents a greater amount to a person with $1,000 than to someone with $10,000, even if they’re consuming the same amount of calories. While richer families are able to spend the bulk of their income on luxury goods or on savings, every penny counts when half of your income goes on food. Thus, the poor are hit especially hard by increasing food costs. An increase in the cost of bread can be devastating when your budget is tight, even if it’s only by a small amount.

So, it would seem like the major question is “how do we keep food prices down?” The most selected answer in the US and EU is “government programs.” But these programs actually drive up food prices, so are not effective anti-poverty programs.

As with most other goods and services, when left alone, market forces allow for the agriculture and food sector to diversify and flourish. This would result in readily available, cost-effective food for all … except the government got involved.

 

Agricultural protectionism itself comes in various forms. Farm subsidies are pretty common and are designed to guarantee farmers a fair wage. What they usually result in is overproduction and waste.

 

Tariff and nontariff barriers to foreign entry are also common and aim to prevent farmers from foreign countries from providing cheaper products and undercutting local producers (ironically almost exactly what subsidized farmers do after overproducing).

Blocking foreign competition results in higher prices for agricultural goods due to a lack of competition. As a result, consumers in protected economies usually wind up paying more for foodstuffs than if the market were free.

Image result for image of new zealand farming

There’s even evidence that subsidies contribute to obesity. In the United States, the majority of farm subsidies go to crops like corn, wheat, and soy — primarily used as food for livestock and as sweeteners — whereas subsidies for fruit fall far shorter. As a result, unhealthy foods have their prices artificially lowered while the healthy stuff stays expensive. Thus, poorer members of society are not only made to pay a greater percentage of their income, but they often have to forgo a healthy diet to do so.

Meanwhile, farmers and consumers south of the equator have a much better time of it.

In New Zealand, farms were liberated from state interference following an agricultural crisis back in the 1980s. Farmers were left without subsidies after the market reforms, ultimately resulting in Kiwi agriculture booming into one of the most diverse and efficient markets in the world.

Not only were prices decreased, but previously ignored sectors popped up as well — including the now-booming New Zealand wine industry.

Like New Zealand, Australian farmers are among the world’s least subsidizedwhile its agricultural economy is diverse and efficient, resulting in the gross value of production in that sector reaching record levels this year at AU$62.8 billion.

Seeing how unsubsidized farmers flourish down south, one is forced to question why we stick with protectionism in Europe and the US.

Most American politicians and certainly most regulators believe they’re doing the working man, including the farmer, a favor. The road to hell is paved with good intentions.

Implementing protectionist principles in the agricultural sector raises prices for consumers, promotes overproduction, damages developing economies, and lowers efficiency and innovation. Conversely, unregulated farming results in diversification, growth, and efficiency. Consumers pay less for better products, and healthier foods are more readily available. Diversification also leads to new markets and sectors, resulting in a higher availability of jobs.

Let’s stop pretending that agricultural protectionism helps anybody — especially the poor and working class and most especially the farmer. Europe and the US need to follow in our Southern Hemisphere cousins’ footsteps: Free the farms, and feed the poor.

Posted December 19, 2017 by aurorawatcherak in Common sense

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Do Republicans Want to Be Blamed?   Leave a comment

There’s no question that the unAffordable Care Act needs to be replaced. It is an example of why government interventions into the marketplace are not a good thing. Government starts out trying to fix something, but their very intervention necessitates following interventions to fix the problems created by their attempt for fix what they perceived as a problem.

Image result for image of gop blamed for ACA failurePretty much every analyst agrees that the insurance market under the ACA has entered a death spiral. Something must be done. And, the GOP in the House attempted to do just that with the American Health Care Act. The problem is that it was inadequate to the task assigned to it.

The ACA’s provisions are all intertwined. You cannot just tweak one or two and “fix the problem.” To avoid an even larger disaster, all of the provisions must be repealed at once. By the way, this was a known problem with the bill before it was passed.  You were warned, folks. You refused to listen. For highly political and chicken-livered reasons, the Republican establishment chose a compromise bill which keeps the requirements for pre-existing conditions coverage at community ratings, but does away with the individual mandate … sort of … replacing it with a mandatory 30% surcharge, payable to insurance companies, for those who go without coverage for longer than 60 days and then choose to purchase another plan.

Basically, the AHCA removes Obamacare’s funding mechanism while keeping the requirements that made the individual mandate necessary in the first place. Those requirements are what is now driving up the costs of medical insurance to a point where people are dumping insurance altogether. That wasn’t an unexpected outcome of the ACA, either. You were warned. You did not listen. Or, Democrats listened, but only enough to decide to create the individual mandate to punish people for not purchasing insurance … which works only so long as premiums remain less than the tax penalty for not purchasing insurance. We passed that exit some time ago.

Oddly, the surcharge will punish people who decide they now want to buy insurance. That doesn’t provide a lot of incentive for people to continuing paying huge premiums while they’re healthy, which leaves insurance providers unable to remain solvent in a massively distorted market, which will hasten the death spiral.

So, my question to the GOP is … do you WANT to be blamed for this mess?

I ask because … well,  you would have been if you’d passed the AHCA in its current form. The insurance market would have collapsed even more rapidly than it is going to under the ACA and the blowback would be pointed at your face, not the Democrats who caused this mess in the first place. The progressives who were so enthused about the ACA would insist that the chaos that followed was the fault of deregulation and the free market rather than what actually caused the problem — Obamacare.

Grow a spine, GOP! Either repeal it (I don’t care if you replace it) or stand back with your hands in the air and let the ACA fail and let the Democrats be blamed for what they caused. That is likely to happen this fall, when you can make a perfect argument for going back to more free market systems.

The Republicans promised the American people that it would repeal every word of Obamacare. You’ve passed two bills that did that, knowing that Obama would veto them. Now you have a President who has said he wants to repeal the ACA, so dust off one of those full repeal bills and send it to him. DO IT!

A real, full repeal is only the first step in repairing health care. A repeal needs to be followed by true free market reforms, with the goal of a complete separation of the health care industry and government. In the interim, the reforms recently proposed by Senator Rand Paul are a long step in the right direction. Only free markets can provide the cheapest and highest quality medical care to the largest amount of people.

Why Venezuelan Cheese Costs More than American Hi-Tech Headphones | Joe Coco   Leave a comment

It is ironic to see so many people using smartphones that are made in China, using technology from the United States, and materials mined in Africa, to communicate on social media that they prefer an economy that more closely resembles Venezuela’s food distribution system to that which produced their phones.

Source: Why Venezuelan Cheese Costs More than American Hi-Tech Headphones | Joe Coco

Posted June 16, 2016 by aurorawatcherak in economics

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Capitalist Theory Is Better Than Socialist Reality | Sandy Ikeda   Leave a comment

Are advocates of the free market playing a hypocritical game in the debate with anti-capitalists, or do we have economic theory on our side?

Source: Capitalist Theory Is Better Than Socialist Reality | Sandy Ikeda

Posted June 14, 2016 by aurorawatcherak in economics

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