saxitoxin wrote:BigBallinStalin wrote:Why don't they remove the subsidies given to the large agribusinesses and decrease the import tariffs and quotas on foreign sugar and corn?
This would save the taxpayers >$60 billion (IIRC), the consumers of foreign sugar, corn, etc., would realize an increase in their real income (due to the lower prices), and would have more income to dedicate to other goods--foreign and domestic. This also helps other countries and their people, which undermines some of the need of top-down planning by the IMF and World Bank.
But the subsidies are tied to US farmers not selling their product for cheap. The US has enough arable land, cheap labor from Mexico and advanced farming technology that it could flood the world food market if didn't have an incentive to avoid producing at capacity.
The resulting plummet in food prices would destroy domestic agriculture in many other countries. What will you tell a Frenchman who now has to eat baguettes baked from U.S. wheat?
The underlined conclusion doesn't follow from the premises. In short, the future is uncertain. Why?
If the subsidies are removed, then less efficient land for the production of food would be much less profitable and may even incur losses. If new ways of generating profit on that land seem too daunting, then that land would be sold, and the buyers would tend to use that land for more valuable purposes--as they see fit. So, who knows what the new structure of production will look like, and who knows how this will affect future prices within the food markets and in non-food markets.
Immigration laws? Currently, they might not be lax enough to lead to your scenario.
What really constraints their production at the moment is that their incentivized to charge higher prices because the tariffs and import quotas make them very impervious to cheaper competition. If anything, the developing countries and their lower priced goods would "wreak havoc" (to use your rhetoric) on the global market, but it depends on the future demand for these goods.
We can't predict the future with exact measurement because there are way too many variables, some of which can't even be quantitatively measured, which undermines my credence in "economic impact" reports. Those reports are kind of like Econometric magic shows.
Here's one example. If the protectionism against foreign sugar is dropped, then IIRC the domestic price of sugar would be 4-8 times less than current prices in the US. Buyers of corn syrup in the US would shift to foreign sugar if the price would be lower (which I imagine it would). This would result in decreased outlays for producing whatever goods which previously used corn syrup.
So, the entire structure of production which shifted from buying corn syrup would experience lower prices in their production process. Any consumer who valued the lower price and sugar over the likely to be higher price corn syrup would buy the products with foreign sugar. This increased demand for sugar-infused products would drive the price up, increase profit margins, thus enticing more producers to increase output.
The consumers realize an increase in their real income, thus enabling them to spend more on other goods. How will this affect these domestic and foreign markets? No one can know from the present. No one knows which markets will tend toward equilibrium (i.e. where supply and demand intersect) and what the equilibrium/market-clearing price might be.
Current production levels are limited by the consumers' demand. Each good categorized as food is still homogenous in the sense EDIT: YARGA YARGAR YARAG, saxitoxin has a nice hat; therefore, your argument is invalid.
