The Free Market
Published by Al Adomite on April 29th, 2008
I hated taking Econ in undergrad. It wasn’t interesting to me then. As long as the free market got my pizza delivered to the dorm in quick manner, all was right with the “economy” back then. Heck, in Columbia, MO, you could even get a sub sandwich delivered to the dorm.
But I am more and more fascinated with the free market these days. I have a few things from Alan Greenspan’s recent book, Age of Turbulence, that I plan to discuss on this blog in the future.
Today, I’m fascinated by the collision of environmentalism and the free market when it comes to food:
The campaign against climate change could be set back by the global food crisis, as foreign populations turn against measures to use foodstuffs as substitutes for fossil fuels. With prices for rice, wheat, and corn soaring, food-related unrest has broken out in places such as Haiti, Indonesia, and Afghanistan. Several countries have blocked the export of grain. There is even talk that governments could fall if they cannot bring food costs down. One factor being blamed for the price hikes is the use of government subsidies to promote the use of corn for ethanol production. An estimated 30% of America’s corn crop now goes to fuel, not food.
Excuse my cynicism for a moment: When the global free market sees a rise in the demand for gas, thus raising the price of gas, the environmental lobby says “drive less”, but when the global free market raises the demand for food crops for other energy purposes, thus cutting the supply of food for meals, the answer is not “eat less”? Imagine my surprise that America’s farmers aren’t being dragged before Congress for a hearing on their soaring profits. (OK, I’ll end the sarcasm here.)
My point is that the invisible hand still is at work in the world. It really does affect the price of gas, the price of groceries, and (scary enough) it affects grandstanding politicians more than the other way around.
I should end my rambling with a dedication to my late-Economics teacher at MU: Walter Johnson. I’ve read the estimation that he taught Econ to more than 40,000 students in his 33 years at MU and they recently named the auditorium at Middlebush Hall after him. His rants on guns and butter, yankees and confederates still makes me laugh sitting here right now. He would literally put his arm up his sleeve to demonstrate Adam Smith’s invisible hand.
Jay Dade, a recent president of the MU Alumni Association described Johnson best, “…[T]he late professor Walter Johnson and his Econ 51 class. You hated his exams, but you understood economics at the end of the semester (or you died; it was that simple).” I must have survived.
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April 30th, 2008 at 9:03 am
Excellent article on the Wall Street Journal online about food prices and huge profits being made by some of the companies. The oil companies are easier targets, because the politicians attacking them probably didn’t take Econ 101 or just like to pander. Look at Senator Durbin yesterday talking about ethonal being part of the food price problem, while he will probably be at the Ethonal center in Edwardsville for a campaign photo op. I’d say Durbin must have slept through much of his econ classes.