Big Government, Capitalism, Corruption, Economy, Energy, Environment, Export-Import Bank, Issues

Government Subsidizes, Government Warps and Distorts – Government Bails Out

9

My favorite joke about government and its inanity goes something like this:

A guy is running late for a meeting. He’s in his car – stuck on a single lane blacktop behind a county government truck. He can’t pass – it’s a double yellow line.

Every fifty yards the county truck stops and two guys jump out of the back. Right beside the road, one guy digs a hole – and the other fills it back up. Then back into the truck they go. Fifty yards later, same thing. Lather, rinse, repeat.  

After about the sixth time, the guy stuck behind the truck is steaming. He checks to see if it’s clear to pass the truck – and it is. So he whips around and up to beside the truck’s driver.

“What the heck are you guys doing?” he asks, infuriated.

“The guy who plants the trees called in sick.”  

This is what government does when it sticks its enormous proboscis into the private sector. Contrary to popular belief, it doesn’t pick winners and losers – it picks losers at the expense of winners. (See: subsidizing non-green, non-energy like solar and wind – by taxing the likes of actual energy companies like oil and coal).

This government money warps and distorts the marketplace – as otherwise productively-directed time and effort is instead spent chasing the government coin. Producers produce not what the marketplace needs – but for what the government pays.

And because the government doesn’t have a clue what its doing – its coin creates unneeded surpluses of the things it subsidizes. So the government then spends more money – bailing out the producers it stupidly subsidized to create the surpluses.

The one government guy who actually has a clue – is on permanent sick leave.

We just saw this in India:

“The nose-dive in global commodity prices has had an unexpected repercussion in India: a giant new subsidy bill as New Delhi spends billions to mop up wheat, rice, sugar and cotton at government-fixed prices.’…

“‘This is a crisis of plenty,’ said Harish Galipelli, a trader at Inditrade Derivatives and Commodities.”…The (government coin) market support…encourages farmers to produce much more of the subsidized commodities than they would have otherwise, exacerbating the global glut.”

Government digs the hole – government fills the hole back in.

And now it looks like we’re just about there in Spain. From Politico Europe:

“Spanish farmers Thursday bewailed their historical – 20 percent above average – crop harvest at a time where prices have already fallen below €160 per ton….(Read it in full [in Spanish]: http://bit.ly/1qL35oJ.)”

Why have prices fallen so low? Because government subsidies created a glut – and the market is flooded. And bizarrely, the European Union (EU) is proud of of its contribution to this mess. So proud, the EU provides a level of transparency for which we can only wish here in the United States. Behold FarmSubsidy.org:

“The European Union spends around €59 billion a year on farm subsidies. This site tells you who receives the money.”

And the boasting doesn’t stop there. The EU has created a Spain-specific fact sheet:

“During the next 7 years, the new CAP is going to invest almost EUR 45 billion in Spain’s farming sector and rural areas.”

Government digging more holes with money. And it’s likely only a matter of time before more government money is thrown into the holes to fill them back in. Just like in India.

(#Brexit, anyone?)

Just about every country that grows just about anything has been stuck in this government money rut for decades. Domestically, it largely explains our age-old Farm Bill ridiculousness.

So here’s a thought – let’s negotiate our way out. Of our mess – and theirs. We go to the EU, India and anyone else growing anything – and trade away our subsidies in exchange for their trading away theirs.

Less subsidies mean less gluts – which mean less bailouts.

Food prices will then be lower – not because of government stupidity, but because of free market rational determinism. And we’ll all be saving per annum hundreds of billions of wasted government dollars.

It’s high time we all learn from each others’ mega-mistakes.

This is a guest post by Seton Motley Founder and President of Less Government

 

  • Robert

    You complain about other countries subsidies and this country is flooded with them, check back on the legislation on who sponsored it when it was introduced, SURPRISE SURPRISE, it was the Republicans that did that deed. Farm subsidies only go to big market farmers the working farmer or little farmer gets not a cent.
    We should get rid of all Corporate Welfare before we condeem other countries for their programs. Most who get subsidies are Corporations not individual farmers.
    HAVE A NICE DAY

    • donald540

      IF there was to be a SUBSIDIES of any kind, then it should go to the SMALL businesses FIRST.
      The HUGE corporations can SELL OFF parts of their HUGE corporation to self bailout themselves and break down their HUGE corporation into a lot of SMALLER businesses, that if they do NOT make the profits, they should then just be shut that small business down and they would then just quit operations.

      • Robert

        donald540
        This country has always favored the rich it started out that way when the country was formed, what arenow states in the East were land grants from the King of England, William Penn was give what is now the whole state of Pennsylvania and Delaware, and when his son got married he gave him the lower three counties which are now Delaware. When the railroad was built west the rail company got $16,000 per mile plus 12,800 acres of land alongside of the tracks per mile.
        The first settlers were not poor after paying ship over they had to outfit a wagon and team plus supplies at the cost of over $1000 and the monthly pay in Europe at the time was only like 5 pounds sterling if you had a very, very good job.
        Our Consttution refers to men you were not a man at the time unless you owned land. those were the only one’s with rights uner our Constitution. It had to have many changes in laws to give the average person some rights and that did not happen until after the Civil War.
        So you see if you took the Corporations and broke them up like they did Ma Bell 1982 all the top executives just opened there own little Bell systems so the same people who ran ma bell were now running baby bells it took 2 to 5 more years before any noticable difference was made.
        If you break up the present Corporations the same thing will happen and the same people will be in control, and you can not sell them off because the people who own them now re the only one’s with enough money to buy them.
        After the depression Franklin D Roosevelt made enough changes in the laws that gave the little guy with an idea a chance to do something and also protect the investor, just 22 months after the last of FDR rules were removed we had the Housing Bubble crash agin caused by the rich wanting to make more.
        I do not think anyone should get any help in a business matter either you kinow how to run a business or you do not it is that simple. Big Corporations are run through connections from college or a former work place and insider trading not by any knowledge thepeople running them might have. The main objective of Corporations is like the Mob back in Probition, get rid of the competition and I can make it all. Hostil Takeover laws made it much easier for the big Corporate Raiders to get your company strip it of al;l its assets and then resell it, most of the time raiding the pension funds that were set up for the employees, and then the Governmnet had to make up for what the corporate raiders took.
        It is a vicious world out there and the rich control it. We have the best Congress that money can buy. Trump will be no different he is all about big business not the small guy, he has never known how the other side lives just his rich family and friends.
        HAVE A NICE DAY

        • donald540

          That STILL does not make it right or change my comment you countered with your RANT..
          that is the only thing I can call it when you go ON and ON with your comment.

          • Robert

            donald540
            I do apologize to you if I offended you, it was not my intentions. I just wished to point ot that the way the laws are written now that it could not happen.
            AGAIN I DO APOLOGIZE FOR UPSETTING YOU.
            HAVE A NICE DAY

          • donald540

            You did NOT offend me but you did go on a bit LONG winded and it does seem to be the unwritten LAW of the land and it SHOULD change to be better for the MASSES of America.

            Those BIG corporations should NOT be bailed.

          • Robert

            donald540
            I totally agree with you but they are so intwined with the Governmnet that it would take part of the Governmnt with it. BP when they had to Gulf Oil Spill if it had went under then all the UK persons would have lost their pensions, not just the BP employees but 82% of all British Citizens, it was the same way with AIG and our Governmnet.
            Sorry I started to go on again, it is a raw place in my craw and I seem to go on and on.
            Yes I am long winded about certain subjects and Corporate Welfare is one of them.
            HAVE A NICE DAY

          • donald540

            I know what you mean and I have gone over board a few times myself.

        • Marie Saqueton

          Can you expand on the land grants given to the freed black slaves at the time of then Republican Pres. Abraham Lincoln who led to abolish of slavery? Again, what party initiated the welfare and public education for all? What President signed the Civil Rights Act? Maybe your research is better than mine, we need to know because a lot of people are products of the biased, paid, mainstream media.

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