Actually I'd simply say that your assertion that subsidies somehow flow to the consumer is false.
It's a quite well established fact that as land is the limiting resource they flow there whether they flow through the tenant first or not.
In that light it is another reason to stop subsidies. It's like (in the day) when the Fed took away the punchbowl before the party got too crazy- it is good policy to not let bubbles form and even if they do, to pop them immediately so as to minimize harm.
I know that is anathema to RSW to think that the NW statement that he looks at every morning might actually go down but, hey, look on the bright side. It is just that much real cash that you don't have to spend on lawyers and accountants to try to keep the gubmint's greedy hands off it.
As to the big one in the present which is the ethanol mandate, we're not going back from E-10, period (barring back to back catastrophic droughts or some such). The reason for pointing out the obvious flaws in that policy is so that if and when people start showing up with hands out asking for an E-15 mandate they would be immediately horsewhipped.
Nox your first point ------------- The crop insurance subsidy is a great example and it is a very short study to see where that subsidy ends up. The encouraging of productrion is pretty much just a sales pitch to keep the subsidy flowing.
I know some of these concepts are very hard to understand, but try to focus. When you encourage more production via subsidizing high risk production, you end up with more product.
More Product is also called "supply". As 'supply" goes up, the availability goes up, and voila, the price goes down...Basic supply and demand at the freshman college level.
Complicating matters , though, is the other part of the food/fuel equation where we are also subsidizing the demand side of the equation to replace foreign fuel with domestic ethanol. So we get cheaper gas, and not as cheap food with the dual political goals.
Hope this helps.
With ethanol a dollar/gallon cheaper than RBOB the mandate is meaningless. Ethanol will be burned because it is cheaper than gas.
Hey SW, it`s like the Norwegian that dropped a quarter in the toilet, it wasn`t worth getting his hand dirty picking up. So, he threw in another 50¢...then it was worth it 🙂
BA thanks good entry 🙂
Red ------------- I think it would work out the same without the subsidy. Not sure we need any more incentive than greed. Acres will still be planted. Long odds don't seem to slow us down much.
I think it would be hard to find people that are sympathetic to subsidizing a multimillionaire farmer.
In addition if you own the land you have enough incentive to plant it. In fact if you didn't have subsidized crop insurance you may have risked planting late some of those acres with prevented planting. An early bean variety or even some alternative crop.
If the market doesn't make it happen at $1/ acre over the variable cost, what is the purpose of asking taxpayers to make it happen?
This sounds a lot like the sort of econ that the "raging inflation any day now" folks ascribe to.
Which means it is economics if it fits the ideology or self interest of the pontificator.
Kraft, As usual we agree and disagree.
Last statement is great and I totally agree, but Kraft what is the difference between multimillion dollar farmer, a multimillion dollar car builder. a defense contractor, multimillion dollar wind power investor, a rich computer developer, etc etc etc.
The national budget is pretty big --------- why discriminate against the successful, and how do we get anywhere without them if we are going to direct the economy from Washington.
Subsidizing the non productive is better??????
The direction of leadership is arrogantly foolish and they have a blank check to work with ------------ eventually it is going to bounce.
If you are farmer lower risk land it would be in your best interest to not subsidize higher risk land.
It makes yours worth more.
There would be some Econ 201 for you to ponder if you get past underwater basket weaving.
Actually that is probably in the second week of 101, after you dropped it.