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Efficiency must be balanced, though. Say that we end the subsidy on agricultural flood plains, which drives up the cost to farmers, who become less competitive
by muraiki 11y ago
Efficiency must be balanced, though. Say that we end the subsidy on agricultural flood plains, which drives up the cost to farmers, who become less competitive vs imported food. They decide to close up shop and do something more profitable, since they can't complete with imports. The end result is an increase in efficiency but a loss of food security.
I'm sure other people have thought this through much better than what I just said. But it seems to me to be a reasonable argument.
- jvm 11y agoIf your goal is people growing more food relative to baseline, you should subsidize food (which we do, intensively). If your goal is people living in flood zones, you should subsidize living in flood zones (e.g. by insuring it, which we also do). We need an answer to the latter question in this case, not the former. And one is readily at hand: the political interest of those who live in flood zones. Maybe there's some other justification, but I'll confess I'm skeptical that this outcome is globally utility maximizing relative to alternative policies.