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I'm not distrusting the free market. I'm counting on it. Subsidy does not shift supply and demand. It moves the price/quantity equilibrium point and introduc
by logfromblammo 10y ago
I'm not distrusting the free market. I'm counting on it.
Subsidy does not shift supply and demand. It moves the price/quantity equilibrium point and introduces a deadweight loss.
Every time consumers can pay more, suppliers will charge more. The more competitive an industry is, the less value suppliers will be able to capture by doing so. The less competitive it is, the more value suppliers can extract from any change in equilibrium.
Cash subsidy does not change the increasing consolidation and pricing power of companies like Monsanto, BASF, Bayer, Dow, Dupont, and Syngenta; Deere, CNH, Kubota, AGCO, CLAAS, and Deutz-Fahr; Tyson, JBS, Cargill, and Leucadia National; ADM, Bunge, Cargill (again), Glencore, and Dreyfus; Nestle, Coca-Cola, General Mills, Pepsi, Unilever, Mondelez (Kraft), Danone, Kellogg's, ABF, and Mars.
The world is a big place. Only ten companies stock the majority of its grocery shelves. A handful of companies dominate grains and meats. Only a few rule over agricultural equipment. A tiny number controls pesticides, herbicides, fertilizers, and specialty seeds. 7 billion people need to eat.
If you give every one of them $5 to buy a sandwich, you can be damned sure that the local spot price of a formerly $5 sandwich is going to rise somewhere between $0.01 and $5. If you're standing between Subway, Jimmy John's, Quizno's, Blimpie's, McDonald's, Burger King, Arbys, and a dozen other sandwich-sellers, that price won't jump by much. But if you're eating at The Only Game In Town Deli, enjoy your $9.49 pastrami.
Nobody works for free. We have been able to over-produce without limit for decades, but we haven't, because we ration resources with the price system. Someone only produces something if you can prove that you want it badly enough, by sacrificing some of your own market alternatives. At some point, someone will turn off their robot rather than give a pair of boots to a person who isn't even going to do so much as to bend over and kiss their ass in exchange. And that's when you have to pick up the rifle, and say, "you turn that machine back on, because we don't want to live in a world that runs on dominance and humiliation." If you want to provide everyone with necessities, you must be prepared to use force to encourage that excess production.