Sunday, May 18, 2008

The madness of government intervention in the food business

Yet another appalling example

The United States and Japan are poised to strike a deal that will remove one of the most widely reviled distortions in global rice markets and could send prices plummeting in the coming weeks. The move, which will flood the market with an estimated 1.5 million tonnes of high-grade American rice that is sitting in Japanese silos, comes amid continuing rice export restrictions by some of the world's biggest suppliers and rioting in countries where the population cannot afford the price increases.

Senior government sources in Tokyo told The Times that Japan had received permission from Washington to begin exports from its giant, but largely hidden, mountain of unwanted American rice to countries that need it most. The exposure of the vast Japanese rice surplus has emerged as one of the chief imbalances of world rice markets and an effect of the complex and wasteful lattice of rules, subsidies and pacts that have knocked global agriculture markets so badly out of kilter.

Rice experts say that the move could defuse temporarily one of the principal catalysts of the food-price crisis - the perception that the world is running out of rice - and the panic and hoarding that has accompanied it. With commodities traders sniffing that a US-Japan deal was imminent, rice futures ended the Asian trading week in a dramatic nosedive as the prospect of a sudden supply surge and bullish harvest forecasts routed speculative money from the market.

The collapse came as think-tanks and food experts called on Japan and the US to urgently unwind one of the biggest "invisible" distortions in global rice markets: a quirk of World Trade Organisation (WTO) rules that obliges Tokyo to buy rice it does not need and that eventually rots in storage. The WTO rule, its many critics say, effectively turns millions of tonnes of high-grade American produce into feed for Japanese hogs and chickens.

Researchers at the Washington-based Centre for Global Development (CGD) said that if that distortion were removed, and the 1.5 million tonnes of unwanted US rice were released from Japan's storage silos, the crisis that has sent the price of the crop that feeds half the world surging up would be solved instantly. The centre has suggested that rice prices could halve by the end of the month.

Standing in the way of that, however, has been a rule that prevents Japan from re-exporting its reserves of US rice without permission from Washington, which has not been forthcoming until now because of the fear of domestic political repercussions from the US rice industry.



The Rust Belt Should Be Bitter

And better, for that matter

In the firestorm touched off by Barack Obama's comments about those who "cling to" guns and religion out of economic resentment, most analysis missed a crucial point: The "bitterness" felt in the so-called Rust Belt is mainly a product of high-tax, highly unionized states.

While there are pockets of prosperity in Pennsylvania, upstate New York, Ohio and Michigan, a good deal of this area is economically depressed. That's not because of Washington's policies (or lack thereof). These policies aren't killing Texas, North Carolina, Georgia, Arizona, Nevada and Florida.

While southern states do have problems, their governments generally don't smother economic growth by layering on ever-rising taxation, regulation and expenses. They don't permit workers to be forced to join closed-shop unions. No one in D.C. - Obama, Clinton, McCain or Superman - can fix the Rust Belt's self-inflicted wounds.

Western New York offers a prime example. Despite proximity to major markets, a long international border with a major trading partner, a well-developed transport system, untold natural splendors and a well-educated workforce, the Buffalo area's population shrinks every year. Why? High taxes, high government costs and forced unionization are major factors.

New York state is run by and for its public-employee unions, particularly teachers, but several others as well. The unions collect dues and then recycle a significant amount of what they collect into politicians' campaign funds. These contributions (plus state electoral law, which seems designed to protect incumbents and hobble challengers) produce tax-and-expense structures that drive employers away. To varying degrees, the same is true for much of the Rust Belt.

Mr. Obama referred to the ire of poor folks who've been given false promises in the past by national politicians. The real falsehood is the notion that federal programs or subsidies can overcome a state's own ruinous policies.




There is an interesting new site called Climate Data Due Diligence which looks critically at Warmist "science". Click on "Reports" to see their latest.

UK: Call for sell-off of Royal Mail: "The postal regulator has called for Royal Mail to be partly privatised to safeguard the quality of the UK's mail delivery service. Postcomm warned that Royal Mail's financial difficulties would worsen unless bold action was taken. Nigel Stapleton, Postcomm's chairman, told the BBC that without private sector involvement, Royal Mail may require a government subsidy." [Privatizing the post-office! An excellent idea!]

Oil in England's green and pleasant land? "More than 200 communities in the English countryside may be sitting on billions of pounds of undiscovered oil, according to prospectors. Scores of greenfield sites across southern and eastern England are being mapped for viability as world oil prices soar. The Government has received 60 applications from 54 companies to explore 182 plots, but is keeping the details confidential because they are commercially sensitive. Villages, hamlets or new estates will learn about a prospector's interest only if permission is sought to drill or extract oil. The Times has learnt that rural locations from the South Downs to the Lincolnshire Wolds have been designated potential oilfields. There is a 70-mile stretch of small oil deposits in limestone and sandstone from Poole in Dorset, through Hampshire to West Sussex, and pockets in Surrey, the East Midlands and South Wales".


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The Big Lie of the late 20th century was that Nazism was Rightist. It was in fact typical of the Leftism of its day. It was only to the Right of Stalin's Communism. The very word "Nazi" is a German abbreviation for "National Socialist" (Nationalsozialist) and the full name of Hitler's political party (translated) was "The National Socialist German Workers' Party" (In German: Nationalsozialistische Deutsche Arbeiterpartei)


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