Price floors and their effects was the topic in today's class. For a classic example of the unintended consequence of interference in free markets, we reach back to the Reagan era program for dealing with surplus cheese.Friday, September 22, 2006
The Effect of Price Floors
Price floors and their effects was the topic in today's class. For a classic example of the unintended consequence of interference in free markets, we reach back to the Reagan era program for dealing with surplus cheese.
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9 comments:
Seriously this article makes you think twice about price floors if our government had over 530 million pounds of moldy American cheese in various warehouses and "limestone caves." (Why are there price floors in still effect after such a surplus of a commodity???) And besides the problem of how to give it away (or spend 40 million annually for storage) you can't even make good fondue out of it. oy. Perhaps lazzeiz faire is the way to go sometimes.
All you have to do is scrape offf some mold...
i think that this article just shows how government just messes things up that they get involved with.
the government messed up in making the price floor in the first place. yes i understand that we have to keep the market there and that helping the farmers have a decent life style is the right thing to do. but this leads to the problem of government waste. we dont need to support the farmers price on milk. if the government took away te floor the prce would most surly fall and lots of people wouldnt be happy but maybe there is only so much room in the world for milk and cheese. or maybe even better farmers should find a cheeper way of feeding their cows so that they have more profit in the bottom line. and that way since they would be making more money for theselves the government could step out of it and let the market take over.
I found this article extremely ironic since this abundance of cheese causes more problems than expected. The most logical thing (to me) is to give the surplus to the poor since the cheese will spoil, yet this would decrease the demand for cheese and therefore demolish a portion of the dairy industry. I also find the storage costs to be rediculous and could be usefully invested elsewhere. Thus, I say provide capital to the farmers to put back in the economy and they could collect unemployment while the gov. sells off the cheese surplus :P
the government reallly screwed up with this one....the farmers need their subsities but obviosly not as much as they are getting...give the extra cheese to the poor people..
EWWWWW, if someone every tried to give me moldy cheese I would throw it in their face regardless of how poor I was. The statement "mold does not produce toxin that is harmful" creeps me out. No one should be eating things that has or once had mold on it. Everything about it is gross.
I think the obvious solution here was to lower the price floor (and certainly NOT increase it within the next four years!)
I agree that it may have been better to give it to the poor than let it go to waste, but at the same time how did that effect the price of cheese? If shelters and soup kitchens no longer had to buy the moldy cheese, but had it given to them, did it further complicate the problem?
Not only did the government spend excessive amounts of money to buy the cheese in the first place, but then they also had to spend excessive amounts of money to store it...maybe they should have just gone with the bring-your-own-wine-and-crackers party idea, or thrown it into the sea.
OMG....the government def. needs to come up with a better way to get rid of surplus cheese....i dont know what they can do but dumping into the sea or handing old cheese out to poor people is not the answer.If i was por and i recieves a "gift" of old cheese from the government i would be very insulted !!
This surplus cheese should show the government that they should lower the price floor. Although their are regulations regarding the distribution of food donations this amount of surplus cheese should be donated to the poor. And if the regulations of american government are too strict regarding the food then im sure the governments of third world countries would accept the food. This price floor is causing the unesscary surplus of food in America when other countries starving people would appreciate the food. Their should be a limit as to not create this excess food as it is a giant waste.
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