> Why had the Japanese government embarked on a policy to limit rice production, effectively paying some farmers to keep their paddy fields idle?
Ah, the classic question asked of every overbearing economically-intervening government.
Ah, the classic question asked of every overbearing economically-intervening government.
STORY TIME!
So I come from Slovenia, the land of wine that you've never heard of. One of our things is that everyone with even a little bit of land grows vines and sometimes makes wine. There's at least a few vines growing in people's backyards even if they just eat the grapes.
People with slightly more land have vineyards and sidehustle making wine and selling it. This has two effects, 1) there's a lot of very very crappy wine out there, 2) crappy wine still gets you drunk so people keep buying it. As a result a liter of wine cost about 30 euro cents at one point.
So the government stepped in and put a stop to it. Gotta avoid crashing one of the bigger industries in the country right?
How do you do it? You pay people to cut down their vineyards. Cut it down and we'll give you X0,000 euro.
Now people have a choice, if they're making less than that much by selling their wine, they can take the government subsidy, cut down their vines, and go do something else with their life. This is a lucrative opportunity for all small-time wineries. Many people took it.
As a result, people who were making more than the amount of the subsidy, didn't cut down their vineyards AND they can now sell their wine for more than they could before. Very lucrative situation for them as well.
We now have a stronger wine industry, less crappy wine, and fewer pesticides and stuff making it into nature. Hobby vineyards tend to overspray because they really really really care about every little vine.
We still drink most of the wine ourselves though, so you are not likely to ever hear about Slovenian wine outside our country. My French girlfriend says it's the best she's ever had.
Sounds like an opportunity to market an entire country's wine culture. Once you get some recognition internationally, vineyard tours, bed and breakfasts, restaurants, etc with wine tourism.
And she had to say she likes grandpa’s wine. No other option there.
You'll scare the libertarians!
It probably would have been better to build some distilleries to buy up all the cheap, crappy wine and turn it into blended fortified wines. That would at least be easier to export.
Is it really broken windows if you encourage people to avoid producing negative economic output? Making wine is a veeery labor and chemical intensive process.
If you can't sell someone a €2 bottle of wine because they make their own, which costs them €10 a bottle but could probably only sell on the market for €1, that just means they are deriving at least €9 per bottle of entertainment value from participating in the act of winemaking. That wine tastes better to them, because they made it. And that €10 is still going to the producers of winemaking equipment and support services, rather than to other makers of wine.
The economist may say, "That bottle is negative output, because that €8 difference between making your own and buying at market is €8 that could be spent elsewhere!" But that person didn't want to spend it elsewhere. They were perfectly happy burning that €8 on their hobby, just like someone else might pay €8 to see a movie in a theater. Rational actors don't make themselves more miserable so that someone else can make another buck. And you can't say that €8 is wasted because the owner of it didn't spend it on what you wanted them to spend it on.
Burning down your vinyard is actual negative output. The productive resource is gone. There are no grapes. There is no wine. There is no money paid to maintain the vines. There is no money paid for bottles or corks. There is no entertainment value from DIY winemaking. All that remains is the desire to drink wine, which can be fulfilled by someone else, whose wine is now worth relatively more only because it represents a larger slice of a smaller pie.
When the normal culture in vast regions of the country is to drink 6 liters of wine per day (yes one person) you have a problem. One way to fix it is to incentivize people to stop hoarding hectoliters of wine in their basements.
My grandpa stopped making wine 5 or os years ago and still has about 1,000 liters of inventory. Now that he drinks less it’s almost def gonna last him for as long as he stays kicking.
How’s that for broken window?
Bait and switch, motte and bailey
Can you hear the sloshing as people walk? Do you have to salt the wine to avoid a nationwide epidemic of hyponatremia? Do people actually eat food, or do they just get all their dietary calories from sweeter wines?
Six liters? What the hell? I might have had 750mL of wine total so far this year. How do you even... What do you... No, I literally cannot fathom the depths of this aspect of Slovenian culture.
This has to be an exaggeration, so let's check.... "Slovenians drink on average almost 100L of beer per year." "Economic improvement in Slovenia leads to increased sales of alcoholic beverages." "Slovenia ranks 5th in alcohol consumption in EU." "...between 10.3 and 13.5L of pure alcohol per year." "Slovenia: Could a Country Be Addicted to Alcohol?" "According to official data, every fifth man and every 25th woman in the country is an alcoholic."
The alcoholism rate in the US is maybe 5% to 5.5%. I think it's safe to say I don't understand the problem. At least you're not Estonia, I guess.
It's a tale as old as agriculture...
Damned if you do...
I just read an article which showed how one of the great side effects of the last half century of US estate taxation (where the government takes ~30-50% of the estates wealth after the original owners dies) resulted is a massive centralization of farms to a few large companies.
Basically farming in the US used to be 90% small/medium sized and largely family owned. Most farmers worked on their farms until they died and they left a decent business for their kids, not a wealthy one, but one that was sustainable to support a medium-large sized family - but also significant enough to cross the estate taxation barrier.
When they die their various children are left with the choice of a) giving 50% of the estate to the government, selling half the farms assets to do so, and working hard on this smaller farm for the rest of their lives (and then to give their kids the same choice) or b) selling it all off to the highest bidder (aka one of the mega-farms), paying off the government tax, and moving to the city.
They ALL pretty much chose b) (or sold half in a) to the big farms) and over enough generations we now have a massive oligopoly of a few companies owning all the farms. And this was in the name of making the rich 'pay their fair share'. While the mega-farm owners pay the same estate tax their estate tax doesn't translate into them giving up their mega farms which are controlled by a broad group of wealthy owners, likely engaging in your typical offshore tax evasion schemes to avoid paying their own.
I also know within a few years of Venezuela centralizing food production it caused massive shortages in order to keep prices lower - well before the drop in oil prices pushed their economy into crisis.
Otherwise I don't know enough about the farming industry to comment.
https://www.cbpp.org/blog/the-myth-that-the-estate-tax-threa...
https://www.cbpp.org/research/federal-tax/ten-facts-you-shou...
You have to basically be very wealthy to pay the estate tax. Only one in 700 estates pay federal estate taxes today, and while the top rate is 40%, the average rate paid is 17% (https://americansfortaxfairness.org/tax-fairness-briefing-bo... ). Currently, a married couple needs to have an estate over $11 million before that pay any estate tax. I always thought liberals had very poor marketing with the estate tax: conservatives were very successful framing it as the "death tax" (a lot of people thought everyone had to pay it), while I always thought it should have been called the "aristocracy prevention tax".
It's seems much more likely that smaller family farms wanted to cash out and move to the city because farming is pretty grueling work, a similar reason for urbanization all over the world.
See: The Dust Bowl.
Reading the Wikipedia on the "Dust Bowl" seems to indicate it was solved by financing soil conservation techniques such as tree planting combined with researching and educating business owners on better practices called "Dryland farming" - which the early farmers seem to have been unfamiliar with in <1930s America. Basically farming evolved to take into consideration the unique environment they were operating in which every business and property owner would naturally be incentivized to follow (something that is not always the case for environment related externalities)... I don't see how farm centralization played any role in solving this problem.
Yes. And how is farm centralization the same as paying farmers to not plant?
As prices for a good fall, the producers try to make up for it on volume. This is a feature of capitalism. Everyone acting in their own interest leads to a downward spiral. As a result, there is an exacerbation of harm to an ecosystem.
If you don't believe me, model it on a computer. It's the tragedy of the unmanaged commons. And Capitalism also has this effect under normal circumstances. Look at how much deforestation and desertificaton and extinction of species has happened in the last 50 years.
Half of all deforestation in the last 10,000 years happened during the last 50 years.
https://www.google.com/amp/s/amp.livescience.com/27692-defor...
A quarter of all farmland has now been affected by desertification.
https://desertification.wordpress.com/2010/08/30/desertifica...
It's not just the bees - the rate of extinction of species has increased massively in the last 100 years and biodiversity is plummeting around the world. We are turning our ecosystems into farms.
http://wwf.panda.org/about_our_earth/biodiversity/biodiversi...
The largest concentrations of CO2 in millions of years are in the last 50 years, and increasing.
This is not scary to many ideological conservatives in love with Capitalism. They wave it off and believe in human ingenuity of the future.
Navel gazing at the nice things Capitalism produces doesn't mean that there are no negative externalities. Everyone is incetivized to sell more and more stuff at the expense of natural ecosystems, third world countries and future generations. Look at lake Baikal as a random but serious example.
Perhaps letting the land lie fallow every 7 years was an awesome strategy!