Price Controls and Subsidies

In Venezuela, there’s shortages on various staple foods, including pretty much any meat. Going to the store is a laborious process that people can only go on certain days. Everybody takes their turn. So why are there shortages?

Let’s look at history for a bit of context. During the French Revolution, price controls on bread was one of the main demands of protesters in Paris (you know, the ones who stormed the Bastille and forced Parliament to acquiesce to their demands even though Paris is but one city in a large country). So what happened? Well, there was a shortage of grain, but with the price controls, the vendors couldn’t raise their prices, so they had very little incentive to make it work.

There was no money in making bread. And given the price controls, food ran out even faster (although at least it was equitably distributed), which led to more protests for more food, but there wasn’t more food, just more protesters and more political pressure from the Parisians. The only place to buy bread was on the black market. That led to people thinking rich people were hoarding food to sell at a markup later. That was true at first, but after a while, there simply wasn’t any food. There’s only so many years before all the hidden supplies are gone. But the people didn’t accept that there really wasn’t food.

With all the social disruption, the markets weren’t working very well, so it was harder to import food. Then some of the areas of the country that produced the most grain, which were very religious areas, really started to get pissed off that the secular Parisians were hijacking the political process. Some of the more conservative areas started rebelling, which further restricted the food supply (which ended with nearly every one of them being murdered in what is the most overlooked horror of the French Revolution). In other words, things spiraled way out of control and price controls played some part in that.

A somewhat similar thing happened in Rome, except this time, the price of grain was actually subsidized by the government. When I say Rome, I don’t mean the whole thing, I mean the actual city of Rome and only the city of Rome. Well, as you might expect, this caused a massive influx of people at all times. Food was cheap.

It might not come as a surprise that Rome faced a few grain shortages. During those times, the price of grain shot up. Even if the central government could pay the exorbitant prices, that won’t make food magically appear. So what happens? People buy grain, as much as they can, and then wait until it’s worth more. Thus they make bank and further ensure there will be a shortage. With the promise of food and the lack thereof, the masses got very riled up. And guess what? The black market became the only place to buy bread.

What happens, though, when the black market simply has no more bread? What happens when food just, you know, runs out? Well, people riot because they’re starving.

My point is, overall, price controls and subsidies throw commodities out of whack. That leads to social unrest, protests, and just like in Venezuela, the entire government gets voted out (goodbye Chavistas).

So what about situations where it isn’t food? Let’s say, the price of water is subsidized. For instance, in Iran there’s a water subsidy. Guess what? Iran is fucked. Their farms are drying up. The people using outdated techniques that waste mass amounts of water continue to use those techniques.

In one field, a farmer, Ismael Alizadeh, opened an eight-inch water pipe during the middle of the day, under the burning sun, flooding a field of pistachio trees. “We have always done it like this,” he said with a shrug.

Roughly the same thing happened in California, though for different reasons. California has a peculiar system of water rights that boils down to, first come first serve, so the people with the most senior water rights get to use all the water they want. This led to wildly inefficient farming techniques that wasted tons of water, which helped massively deplete the reservoirs (and continues to do so, although as of late, the state seems to have woken up).

Now, back to the food subsidy programs. I’m not saying that all subsidy is wrong. It’s clearly a good thing to make food affordable to people that can barely afford to buy it. For the same reason as I am 100% in support of food kitchens and shelters for the homeless, I also 100% in favor of subsidizing food for the impoverished among us (in the US, that comes in the form of EBT/Snap/food stamps). This is just a basic humanitarian issue. People need to be able to eat.

Subsidies are best when there is no downside to that thing being used more. In fact, subsidies are great when you want it used more. Like, for instance, alternative energy. Subsidies are fantastic for the promotion of solar power or wind.

We just need to keep in mind that price controls don’t really work during shortages and that subsidies are really only good to promote the use of something.

Lacking Accountability, Disclosure, and Progress

Every time a city does something wrong and gets sued, the money from the settlement comes from taxpayers. So when a city employee harasses someone and the city gets sued, that’s taxpayer money. When a cop kills someone and the city pays a settlement, that’s tax dollars at work. Now, this is probably a rather obvious thing. Or at least, it should be.

Yet there continues to be a lack of accountability for such things. Chicago has paid out millions and didn’t do a damn thing to reign in the murder.

In Kansas City, you’ve got over two million paid out and taxpayers aren’t even allowed to know why:

Jackson County has spent more than $2 million since 2011 settling employment discrimination complaints brought by county employees. Yet county taxpayers are never told the specific nature of the allegations or whether corrective actions were taken to lessen the likelihood of future payouts.

That’s the thing about settlements. There’s justice for the wronged, but the city still has to pay for it. Worse, there’s absolutely nothing saying the truth has to be revealed. There’s no mechanism to prevent non-disclosure clauses. Nothing.

Conspiracy vs Propaganda

It’s impossible to tell who is in the right in foreign situations. There’s conspiracy theorists on one side and government propagandists on the other. People blame the government, but at the same time, they don’t have any proof. Maybe it’s true. Maybe the government is targeting them. Maybe it’s more nuanced than that. Without a massive investigation by an impartial body, it’s impossible to tell.

In Pakistan, radical Islamists like to claim the CIA orchestrated 9/11 (sound familiar?) and the CIA also orchestrated the Mumbai bombings and such. In other words, they convince people foreigners did terrible deeds, use that to radicalize other people, then convince them to do terrible deeds. There’s a certain irony to it. That is, if rank hypocrisy can really be ironic.

Back to the original point, it’s impossible to discern which side is telling the truth. Getting an independent voice on the ground is usually damn near impossible. Even if they get to the actual location, get the story, and publish it successfully, how are we to know if they’re even correct?

Without a free media, it’s all guesswork, implications, and partial truths. Even with a free media, there’s often a lot of questions with no good answers.

Mormons and the Mainstream

Relatively recently, Mormons made their stance against gays and lesbians more explicitly unfriendly. However, according to the New York Times:

Mormon leaders have parted company with the leaders of evangelical and other conservative churches by affirming that despite their religious convictions, even people of faith opposed to gay marriage must follow the law.

Mormons have long had different ideology than the mainstream, which inclines them toward their views on external “law of the land”/render-unto-Caesar and then their own internal rules.

Everyday evangelical Christians are opposite. Since they’re in the mainstream and have long been the majority, it’s understood that they’re the ones setting the law. Baptists and their ilk don’t view the law of the land as an external thing, but a thing that was made for them, by them, and they adhere to for that reason.

If you read the news, you’ll find a lot of instances where Mormons do surprising things. I would contend that it’s because they have an inherently different view of the world than your average Christian.

So they’re legislating now?

What’s with this legislation actually happening lately?

We’ve got a budget deal in the works at the moment and it looks like it’ll pass. There’s the debt limit increase that Boehner passed through when he resigned as Speaker. The the highway funding bill that’s actually got some staying power. There’s the bipartisan No Child Left Behind fix.

They’re working on a bill that would give the president more power to end unfair trade practices (among other things, like giving Customs more power to stop counterfeit and illegal goods). Of course, although it looks likely to pass right now, it hasn’t made it past the Senate yet. It does have some very interesting additions like a provision “to permanently bar state and local governments from taxing Internet access.”

I instinctively doubt Paul Ryan is the catalyst for this, but it’s curious that it does come at a time when Ryan took over. Either he’s a much better consensus builder than I gave him credit for, or something very odd is happening in Congress right now.

Using a budget crisis to screw the poor…

In Oklahoma, they’re facing a bit of a budget crisis. Instead of acknowledging that oil booms are indeed part of a boom/bust cycle, they decided that while they were riding high, it was a good time to slash a bunch of taxes and make up for it with oil revenue. Guess what? Bust! Now they’re facing a budget shortfall of somewhere near 10% of their 7.1 billion dollar budget. There’s talk of raising the sales tax.

Roughly the same thing happened in Kansas. Although, giving Oklahoma credit, while Oklahoma did it because their tax burden was offset by taxes on the oil boom, Kansas just did it for the hell of it. They just assumed magic would happen. They seemed to have thought jobs and taxes would appear. No such thing happened. A massive budget gap appeared. They raised the sales taxes.

In both states, they slashed education funding. Of course they did. Republicans don’t like to pay for education unless it’s for their own kids at the local level. Basically, they hate poor people. Worse education funding, higher sales taxes (which as we know, hurts the poorest the most), and then on top of it, a stated desire to cut any and all government spending on Medicare, Medicaid, and health care in general.

I’m starting to think the plan goes something like this: 1) intentionally lower taxes so the government can’t possibly pay for the services it promises. 2) Make a big fuss about the crisis and shift as much tax burden to the poor as possible. 3) Cut services as much as possible.

I’ve never heard this strategy explicitly stated, but I’m really starting to get the idea this is the plan from the start.

On a minor note, in the middle of all the budget shuffling, Kansas changed its school funding mechanism. Kansas used to have (and maybe still does) have excellent schools that they were proud to have. They were so intent on good education, in fact, that Kansas has a constitutional amendment that the schools absolutely must receive sufficient funding. Now the new funding  mechanism (block grants) is going through the courts because the poor districts allege that they don’t have nearly enough money per student.

On this Dec 25th…

sol invictus coin

This Christmas, don’t forget about how Dec 25 was a pagan holiday that the ancient Roman Christians co-opted because they didn’t like the crazy sun cult of Sol Invictus.

On a small side note, every time I look at Sol Invictus imagery I can’t help but think of the Statue of Liberty. And you know what? The followers of Sol Invictus took that particular crown from the imagery of the goddess Liberty. History had no copyright laws.