From: MEDELMA@cms.cc.wayne.edu (Michael Edelman)
Newsgroups: alt.politics.correct
Subject: Re: Misguided Economics
Date: 13 Aug 92 17:04:56 GMT
Organization: Wayne State University, C&IT

In article <viking.713599039@vincent1.iastate.edu>
viking@iastate.edu (Dan Sorenson) writes:
           [I asked]
>>         : However did the world feed itself before the 1930s? And how is
>>is that there is a continuing supply of the bulk of food items that are
>>not subsidized?
>
>        Go to the Phillipines, and see just what an orange costs you.  The
>world fed itself before the 1930's by individuals paying what they were
>willing to for what food there was.  Remember that the US was isolationist
>at that time, and did not use grain as political leverage in the
>international market.  In addition, we have since come to the ideal that
>the public needs to be given some security from the State.  In the 1920's
>and prior, you starved unless you either had the money or the friend to
>feed yourself.  Today this is not so due to government policy.  In addition,
>we have since come to think of food as a resource that may be exported for
>political reasons.  We didn't sell computers to the USSR, but we sold grain
>even when our military interests would have been best served by letting
>the region starve (a best guess, I'm not on the Joint Chiefs).  These
>two changes make food a strategic resource, and that the demand for food
>is inelastic can be proven if you'll just quit eating and tell us what
>happens to you.  You can probably eat a bit less, but you cannot quit
>consuming this resource and still remain alive.
>
 
The demand for foodstuffs is not as inelastic as Sorenson thinks. There
are subsidized foods and unsubsidized foods, and in terms of providing
for nutrition and survival these foodstuffs are perfect substitutes.
No doubt this conceptual problem can be traced to those intro econ books
in which all the economies have one consumer and only two goods ;-)
 
He also seems to be confusing farm subsidies with welfare and food stamp
programs. Otherwise his staements about starvation during the depression
make no sense. I asked him how the entire human race managed to survive
until the present time, as by his mechanism we should have all starved to
death within a few years of the beginning of agriculture. After all,
according to Sorenson all the farmers should have gone out of business once
the plow was invented. The cost of food production dropped so precipitously
at that point why would farmers have continued to farm without subsidies?
 
I was speculating further about this interesting theory of his, and if
we buy into it, we have proof positive that *no one* should be in any sort
of business at all, since falling prices will eventually make any endevor
unprofitible. In fact, farming should be the last business to go under
since the demand for food is much less elastic than is the demand for, say,
automobiles. Ergo, as long as cars are being made there should be a
sufficent supply of food ;-) (See how much fun economics can be?)
 
An he actually believes that food costs are lowered via the following
mechanism:
 
1. The government collects money from consumers.
 
2. The government uses this money to buy up quantities of food from
producers, insuring an increasing demand that keeps prices above a
certain level.
 
3. The consumers, having already been taxed once for the price supports,
now pay an artificially higher price.
 
Let's see...the public is charged twice, much of the money is used up
in administrative costs, and yet somehow the public is, according to
Sorenson, paying less for food than if this system was not in place?
 
No wonder he doesn't understand our arguments.
 
 
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