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Source link: http://archive.mises.org/6157/the-dynamic-of-interventionism/

The dynamic of interventionism

January 19, 2007 by

The U.S. subsidizes ethanol. Corn prices go up. The new prices hit Mexicans hard. The prez slaps on price controls and threatens speculators.

{ 5 comments }

Raging Ranter January 19, 2007 at 10:22 am

A price cap will only lead to shortages and a lucrative black market. The poor will be gouged by criminals, not corn traders. But hey, it’s fun to shoot the messengers. Makes for some great politics too.

I tried explaining to someone a few months ago that it wasn’t the oil traders’ fault that the price of oil was so high, that the speculators were only discovering the price, which actually serves a valuable economic purpose. I may as well have been trying to explain the theory of relativity using finger puppets.

David C January 19, 2007 at 10:37 am

Didn’t some guy offer a million dollars to anyone who could prove psychic powers. Well I want to prove my psychic powers now, my first magic spell will be to ordain the corn spirits to create a severe corn shortage in Mexico.

Seriously, why are they working so hard to guarantee themselves that the Mexican corn farmers will not benefit at all from the rise in corn prices. Why are they working so hard to put all the corn suppliers and distributors into bankruptcy.

I remember several years ago when Mexico watered down their currency, that caused all the food prices to go up. So then they put on price controls and that caused a severe food shortage. So then they blamed it on the “rich” US tourists stealing all the food and started taking food away at gunpoint at the border crossings. So then visits from the “rich” westerners declined severely. So then the (legitimate) border economies collapsed and the (legitimate) unemployment skyrocketed. Also, the border economies hold most of Mexico’s wealth – so the whole country went to hell in a hurry.

But the saddest thing of all to me was that the last time I was down in Mexico, the vendors didn’t even want to look at pesos, they would accept dollars at a premium every time. As if they instinctively knew that their own government was about to screw them over, but were completely oblivious to the notion that the US is about to screw them over too. Knowing how badly so many honest hard working people are about to get ruined really ripped my heart out. Because Mexico also has a policy of exporting their labor base to the US, and their close dependence on the US economy, they are suverely vulnerable. I wish I could have conveyed some understanding while there :(.

Mike Davis January 19, 2007 at 11:05 am

What I find even more ridiculous is the 54 cent a gallon import tax on Brazilian ethanol. Brazilian ethanol is made from sugar cane. It is much more cost effective than producing ethanol from corn.

Raging Ranter January 19, 2007 at 12:33 pm

Ridiculous indeed. The US has always applied absurd import restrictions to any and all things connected to sugar.

Pardon my redundancy. All import restrictions are, by definition, absurd.

Ryan Fuller January 21, 2007 at 11:21 pm

“The U.S. subsidizes ethanol. Corn prices go up. The new prices hit Mexicans hard. The prez slaps on price controls and threatens speculators.”

Those four sentences summarized the whole fiasco quite well. Unfortunately, the people who actually make those decisions probably see no connection between any of those events.

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