Adumbration

[5/16/2013 - fixed the description of the cotton wars]

I have to give the gang at Planet Money the credit to be still at it after what is approaching five years of podcasts, and longer with the blog, even with a few changes along the way.  This note covers three recent episodes: The Lollipop War, the one that returns to their tee-shirt project, and the reprise of the cotton wars. 

The war over lollipops recounts part of a story that I have understood for years - that of the huge government subsidy to sugar farmers in the United States, sustained by price supports that approximately quadruple the cost of sugar here in the US as compared to what people pay for sugar in other countries around the world.  These subsidies have a few people and communities that are huge beneficiaries, typified by sugar beet farmers in Minnesota and elsewhere.  Not surprisingly, there are other communities and businesses that pay the price for those supports - exemplified in this story by candy makers in Ohio.  The PM team focuses on these interests as played out in the politics of price supports mandated by legislation and congress, but they miss a huge population who are also harmed by this interference in the market - the people here in the US who consume sugar in one form or another (i.e. everyone else).    Of course all of those people are only harmed a small amount individually, while the beet growers have a very concentrated motivation, so we should not be surprised by the outcome, which amounts to another case of "public choice".

The second story explains why it has taken the PM team so long to make their own t-shirt, which they admit the cause to be their complete naivete as to what it actually takes to make a t-shirt.  And this should not be a surprise - our modern world is marked by a huge and incomprehensible network of interactions and specialties that people engage in their day-to-day lives ,the result of which is the vast and varied production of so many kinds of goods and services that make our lives so comfortable, that allow many of us to specialize in purely artistic endeavors that we can enjoy for purely enjoyments sake.  And all that comes about without any overarching direction or control, and most people don't even realize what a wonderment is is to be able to choose between a variety of grocery stores, and select from a huge assortment of foods and sundries, suiting tastes and fashion and caprice and daring, as the mood may take us on a trip to the store.  Even the poorest among us have alternatives that were inconceivable to people only 50 years past, let alone in prior centuries, where even kings and pontiffs could not obtain what we find as so routine as to be mundane.  For a good explication of this, I recommend Leonard Reed's "I, Pencil".  Could it be more clear why it is that central planning is a disaster?

The third story connects the other two, because it finds a link in that chain of creating a t-shirt where government interference in the market manipulates the otherwise free exchange of cotton.  In this case, the market interference takes the form of subsidies provided to cotton growers in the United States, subsidies which derive from tax dollars extracted from the remainder of the US population.  I dare say that almost all of those people use cotton clothing or other cotton good every day of their lives, so why should they be penalized to increase the profits of cotton farmers in Texas and elsewhere?  This episode further explains how we are not just subsidizing US cotton farmers, but international ones as well, in a scheme that is very well described as byzantine.

As a final observation, I note that the "war" references in both stories about government interference in the market is an apt characterization.  War is destructive and pits mostly peaceful people against one another in the name of typically monied special interests, and is the ultimate outcome of the political process - trying to compel people to behave in ways they would not voluntarily choose to do.