Professor Mark J. Perry's Blog for Economics and Finance
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"The mission of the Maine Dairy Promotion Board is to boost sales and consumption. It wants to slow the decline of dairy farms in Maine -- the number is down from 330 farms a year ago to 310 today."The Maine Dairy Promotion Board is apparantly aborting their mission. The price paid by the store for the milk would probably rise due to increased demand created by the promotion. The decline of farms will probably continue thanks to the Promotion Board.
FDR tried to support farmers' incomes in the 30s by having milk and other ag products destroyed to limit supplies and drive up prices. That doesn't work when people have no money.One consequence hit a few years later when many WWII draftees were rejected for service because of medical problems caused by chronic malnutrition.There is always the seen and the unseen. The mother who buys overpriced milk is choosing to not buy something else from another business.
No surprise that anything regulated by the government is messed up. Have you ever met any of these regulators? Largely people that couldn't make it in the private sector. Why does anyone think some bureaucrat can do a better job of boosting sales and consumption than people in the dairy business, or the people they hire in the marketing business, or commodities brokers?
Oh price controls, you're always the right answer...
Those of you who hoot about the Constitution and states' rights should consider this story. It is repeated in a hundred different ways in all 50 states. Agriculture is the worst abuser, but law, medicine, trades, liquor all vie for the most protected and regulated industries--with industry approval. Try selling liquor directly to consumers across state borders. You will cry for national standards.
Quote from Benjamin: "It is repeated in a hundred different ways in all 50 states."The problem isn't the Constitution, it's the complete lack of economic knowledge. Cost does not determine price. Price determines cost. Cost determines profit (or loss). So the State of Maine has decided it must insure that all of it's dairies make a profit. This may be fine with all the people of Maine, but it doesn't make it any less economically stupid.
Geoih--True, but can you imagine 50 little republics each with their own rules, protected industries, grandfathered exceptions etc.In smaller units of government, sway by special interests, corrupt or otherwise, is more easily done. No doubt the dairy farmers have corrupted Maine's state government. Free enterprise? The most Republican county in California is probably Orange County, and Newport Beach possibly the most R of that county. Try building a condo tower there. You can't do it--Newport Beach has ruled that any structure of more than 150,000 sf must be approved by city voters. So much for property rights in Newport Beach. They mean nothing.There is no proving we are better off with nationally regulated commerce, but I think a look at locally regulated industries will quickly dispell any notion that state's rights would be anything but an endless quagmire. Right now, the R-Party is tied into knots as it wails about state's rights, but talks about national private health insurance lowering costs. Except we can't have national private health insurance--it is an industry regulated state by state.
Ben,No one seems to be aware of smart growth policies and how they destroy afford-ability. I believe it is a state level thing in both California and Oregon(goal 10?). There was a threatened relocation at work and everyone assumed that property cost a fortune in the new location, when in fact it was about half the cost for a house. Randall O'Toole rants about it endlessly at www.ti.org.
"Right now, the R-Party is tied into knots as it wails about state's rights, but talks about national private health insurance lowering costs"...What planet is this happening on?
Trying to "boost sales and consumption" by keeping the price artificially high is like trying to promote safe driving by giving your 17-year-old a bottle of whiskey and the keys to your car and saying, "Have a good time, son."
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Dr. Mark J. Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan.
Perry holds two graduate degrees in economics (M.A. and Ph.D.) from George Mason University near Washington, D.C. In addition, he holds an MBA degree in finance from the Curtis L. Carlson School of Management at the University of Minnesota. In addition to a faculty appointment at the University of Michigan-Flint, Perry is also a visiting scholar at The American Enterprise Institute in Washington, D.C.
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