Saturday, October 1, 2011

EWOT Goggles #4

http://buzzpunching.blogspot.com/2011/07.html

The problems surrounding corn subsidies in America are strikingly similar to the grain price issues that plagued England around the late 18th and early 19th centuries. As a result of the price of British grain quadrupling, foreign grain was brought into England because it was far less expensive. The government attempted to rectify the situation by imposing "corn laws" to protect English land owners. America is currently facing the same issue, except now many would argue that corn prices are too low. 

American corn farmers can no longer eat what they grow. This is quite the agricultural phenomena. Ignoring the whole other can of worms containing GMO debates, today's corn is a raw product that is basically inconsumable in its unprocessed state. The government has caused a series of unintended consequences by subsidizing corn to the extent at which it has. For one, things containing high fructose corn syrup are usually wildly unhealthy. Because corn is so heavily subsidized, these products are much cheaper than nutritious alternatives like raw fruits and vegetables. The low prices incentivize people to purchase these unwholesome items. Nutritional value in soda and candy is basically non-existentent, and people who regularly consume such products gain significant amounts of weight. Therefore, one could make the assertion that the corn subsidies in the United States are a driving force behind obesity in Americans. If you further extended this idea, you could probably prove that corn subsidies also contribute to a lot of the healthcare budget issues as well. Sometimes the interconnectedness of such processes are staggering.

Along with contributing to obesity, the corn subsidies also dis-incentivize farmers from growing other crops. Corn is "safe" because they know it will bring in a steady paycheck since the fluctuation of the price doesn't directly affect them. Crop rotation has been completely taken out of the equation because of technological developments that allow corn to be effectively grown on the same land year after year. This has actually caused such an influx in corn that there is so much that we have to find more and more uses for it. Cows, chicken, and even fish are being fed corn. None of the aforementioned animals are biologically compatible with corn consumption, but the product is cheap and plentiful. The bottom line is that as long as there is so much corn floating around, people will find ways to utilize it because they are incentivized by its cheapness.

1 comment:

  1. Great economic thinking! See the below links for some economic publications on this:

    http://cboblog.cbo.gov/?p=1161
    http://www.nytimes.com/2011/06/25/opinion/25Rattner.html
    http://theunbrokenwindow.com/2011/01/14/in-the-belly-of-the-heifer/
    http://theunbrokenwindow.com/2010/07/25/good-gubmint-rithmitick/

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