Food can be considered an exception, though. You don’t want people going hungry for a few months, and as a society, we don’t really think letting people starve is tolerable (if you do, no worries, but its more or less an indefensible policy position). No matter which way you cut it, if prices rise (for any reason) enough to exclude ANY portion of the population, it’s likely government intervention will step in to feed them.

This isn’t wholly bad. Non-hungry people is something that we can generally agree is good. You COULD say that the government should let the market do it’s thing and then swing into action when there is a real need, but as you’ve all agreed…they suck at that! What they ARE good at is distorting the market to create cheaper food for its citizens.

Of course it won’t happen. Can you identify any consumer commodities in a free market that illustrate this “boom-and-bust cycle” you imagine? Is there ever a scarcity of toothpaste? Computers? Non-subsidized crops (hint: most agricultural products are not part of the farm subsidy program)? Cordless screwdrivers? Cell phones? Sports Illustrateds? Bottled water?

In microeconomics, the market is theoretical, in that all participants are permitted without any barriers to entry, such participants act rationally based on complete transparency and perfect information, and no externalities are ignored, because these are factored into the buying and selling decisions. In fact, this theoretical market is designed and conceived to be perfectly efficient.

I hope that Mr. Balko, commentors and the rest of us would recognize that no such market exists in reality. There are barriers to entry. Participants act irrationally and/or based on imperfect information. Externalities, such as environmental or social impacts, are not priced into many commodities. More importantly, no such “perfect” market can or will ever exist. To believe otherwise is to simply ignore reality.

For example, how can you defeat barriers to entry created by market participants without some body to regulate the market? How could you possibly force participants to act rationally, rather than emotionally?

Because of these obvious imperfections in the real market, inefficient government regulation becomes a necessary evil. This is where the libertarian argument falls apart. And I admit this as a libertarian myself. Unfortunately, our problems cannot be solved by relying on a theoretical model that can never be implemented. Let’s try and be realistic and pragmatic, and leave the dogma at the door.

F– for you

If only 1995-97 had been a period of no government “agribusiness” subsidies you would have had a well made point. Try again.

“There is not much harm in having a perpetual oversupply of food than otherwise would have happened in a free market, but the consequences of the inevitable shortages created by a market economy are pretty grave. It’s one thing if there are too few cars made to meet the demand, but a food supply shortage is too gruesome.

“In a free market, when an oversupply occurs, the price of the commodity collapses and causes some suppliers to quit, which then usually leads to a period of scarcity. Are you ok with occasional periods of scarce food or do you not believe that would happen?”

I’m definitely NOT okay with it. My entire family starved to death in the Great Illinois Famine of 1995-97, and it burns me up inside to know that if only the government had directed more taxpayer dollars to giant rent-seeking agribusiness interests, they would still be alive today.

Les: Ok, I’ll take food grown/subsidized in the States. You can rely on food grown in the ever so democratically stable Congo and the libertarian utopia of Somalia! Deal?

You get an F- in economics too, Goodgrain.

The actual wager is:

1. You get your mercantilist economy.
2. Les gets an open economy and can, if necessary, buy grain from anywhere he wants, not some countries you cherry pick.

No, do you favor such a deal?

Assertion 1: A Free market, while the best economic system, are still imperfect(for a lot of reasons) and result in boom and bust cycles.

I think you need to clarify your terminology a bit here. If by boom and bust you mean a recession that is fine. But under supply over supply in a specific market is a micro economic concept and not a macroeconomic one like recession. In other wrods, one thing is not like another.

F-, for you .

======================================

Please, do tell how a boom or bust is “imperfect”? By all means feel free to use “a lot of reasons”.

I am. For all comodities. Stabilization IS chaos (spend some time with Mises). If there happens to ever be any scarcity of food (or any good/service), the free market (via demand) is the quickest way to mobilize food to an effected area. Of course you’d have to believe food is prone to such shortages and this isn’t just the latest (in a long line) of statist attempts to further subsidize a few politically connected with the politics of fear/paranoia.

The Free Market does not guarantee all things for everyone at all times. For example it doesn’t guarantee that you will get a Ferrari for $5,000 in powder blue–even though you REALLY want it and believe you morally are entitled to it. It does guarantee to be the most efficient allocator of resources; and, ALL resources are scarce and should be allocated efficiently.

But maybe I’m wrong. Let’s put the next Illinois governor in charge and see what happens. The last one was very popular until this week.

Assertion 1: A Free market, while the best economic system, are still imperfect(for a lot of reasons) and result in boom and bust cycles.

Assertion 2: Therefore, if you want to smooth out the busts, some perversion must be undertaken.

Assertion 3: This perversion will likely result in suboptimal allocation of resources(too much food, lower efficiency, higher cost). In certain cases, that might be preferable to enduring the bust cycle(too little food).

You get an ‘F’ in economics along with Z for that post.

Goodgrain,

yea….let’s rely on Africa for our food supply! Relying on shitty third world countries for our food supply = great idea!

Maybe that is part of Africa’s problem. They can’t farm because of the subsidies here in the U.S. that promote intensive farming, higher use of pesticides, and greater soil depletion hence higher usage of fertilizers, irrigation, and so forth (as well as higher domestic prices). And at the same time a country that could supply said products at a lower price now can’t and potentially significant part of its labor force is now looking for work in areas that the local economy has a hard time absorbing. Lets face it, places like Chad aren’t known for their manufacturing industry, their high tech industries, or their medical industry. They might have some industry in supplying raw materials, but also allowing them to do the farming would be good for their economy, good for our enivironment and economy (remember those higher prices), and maybe…maybe help to turn Africa around.

And lets not forget that food prices have gone by a huge amount. Why? Biofuels. As such barriers to trade really are hurting both American consumers, our trading partners, and enriching a few giant agricultural firms. Its actually pretty amazing when you consider all the caterwauling on the Left and even the Right about Big Oil and their profits all the while ADM and companies are seeing similar growth in revenues and profits.

Mercantilism sucks. Something that most people who have even a whiff of economic understanding figured out about 150 years ago or so.

Today’s market is not like the markets back 100 or more years ago. Nowadays we have futures markets, firms that are large enough to risk neutral, and are smart enough to be forward looking and take into account other market participants behavior. Hence the old “cobweb” models of over supply and under supply are not really all that accurate or helpful. If we took away farm subsidies will agro-corporations suddenly base their planting decisions on just last years prices? Will they ignore what their competitors are going to be planting? Will they not look at the futures market? If the answer is No, no and no, then there is little reason to be concerned about agricultural production oscillating between booms and busts.

This is why Z’s fears are unreasonable.

I’ll also not that it is fear that motivates growing government. Robert Higgs has amply described and detailed this phenomenon. So grow some balls and stop being so damn wimpy.

but the consequences of the inevitable shortages created by a market economy are pretty grave

Inevitable? Are we talking about a constriction of supply (meaning, apples are in short supply so you eat oranges instead) or actual famine?

Can anyone point to any famine in the last 100 years that wasn’t a result of government interference? Especially in the first world? I would hardly call famine inevitable.