I am doing a speech for class on why farmers should recieve higher prices for their crops instead of getting subsidy checks. Can you give me some reasons for this?
2006-12-11 04:46:59 · 5 answers · asked by Anonymous in Social Science ➔ Economics
An attack on subsidies is a good speech, but you are wrong to call for "higher prices" -- they should get whatever prices naturally prevail in the free markets, which might be higher or lower depending on the circumstance. Subsidies distort markets so much it's hard to tell what the end result of nixing subsidies would be, other than that it would be a more efficient and productive result.
Subsidies cause people to overproduce their commodity, and keep producers alive who maybe should exit the market. So, subsidies on carrots result in too many farmers growing too many carrots. The problem is the market (ie, real people with their legitimate wants and needs) may prefer something other than carrots, but the subsidy is intruding on this signal.
This distortion is terribly self-perpetuating. Once you get people conditioned to subsidies, it would be really painful to stop them. Instead of gradually evolving to meet market needs, people become dependent on the subsidies.
In the big picture this is unproductive for the economy. Maybe what society needs is more apples and less carrots. Or less farmers and more computer programmers. The economy with it's markets and pricing signals provide the information, but a subsidy distorts the message to the detriment of the 99% of people who are not receiving that subsidy check.
2006-12-11 05:08:46 · answer #1 · answered by KevinStud99 6 · 0⤊ 1⤋
Actually, they shouldn't get either. Government "Subsidies" pay farmers not to produce and price controls serve as an excise tax.
As much as I really, really hate price controls, I will say that the "subsidies" that farmers receive are not subsidies. Subsidies are suppose to be money that a person receives to produce more of a good thing. However, what we offer is to not produce in exchange for a extra bit of cash. This keeps prices artificially high, while costing society. In a way, Americans pay more for corn to keep farms profitable while also paying the taxes to support farm "subsidies."
If you were to argue for price controls, that would be how to do it. They still result in an inefficient market.
2006-12-11 12:57:37 · answer #2 · answered by kyleholloway 2 · 0⤊ 1⤋
Good topic. Your right they shouldn't get huge subsidies, they have come just to expect them. Why should farmers get subsidies when alot of other industries get nothing. It's not like they need them, farmers are often some of the richest people you meet. Farm subsidies in America and Europe means people in devloping countries can't compete, this leads to famine and death on a huge scale
2006-12-11 12:51:23 · answer #3 · answered by Anonymous · 0⤊ 1⤋
Both are bad ideas; by nature farm products are pretty much homogenous and farmers are "price takers." Subsidies are welfare for the non-competitive. Creating a price floor for farm goods is just as bad as it causes a surplus and wastes of capital resources.
2006-12-11 12:52:52 · answer #4 · answered by Anonymous · 1⤊ 1⤋
It is just the same thing as welfare.. which most farmers are morally opposed to.
It makes them cheaters and lazy.. they don't have to produce as much to make money... they can sit back and wait for a check.
It is a corrupt system.
It does not reward hard work or good stewardship.
and most importantly of all.. just because you are a farmer, you are not entitled to a middle class lifestyle.
2006-12-11 12:52:13 · answer #5 · answered by ? 3 · 0⤊ 1⤋