Economics and the mid-life crisis have much in common: Both dwell on foregone opportunities

C'est la vie; c'est la guerre; c'est la pomme de terre . . . . . . . . . . . . . email: jpalmer at uwo dot ca

. . . . . . . . . . .Richard Posner should be awarded the next Nobel Prize in Economics . . . . . . . . . . . .

Wednesday, August 10, 2005

Supply Curves Slope Upward;
People Respond to Incentives

Most introductory economics students have been able to predict this. The U.S. gubmnt guaranteed an above-equilibrium price for peanuts and eliminated acreage restrictions with the result that .... surprise!.... people raised more peanuts.
Despite recent growth in peanut consumption, Americans use only about 1.6 million tons a year and another 300,000 to 400,000 tons are exported.

That leaves a surplus of about 485,000 tons.

Farmers won't lose because their government crop program guarantees them $355 per ton. The losers could be federal taxpayers who pay the difference between the guaranteed price and the actual market value of the peanuts.

... Peanut acreage has increased after the elimination of the old Depression-era peanut program in 2002. That opened the door for peanut farming in new areas.

This year, more farmers opted to grow peanuts because it seemed to have the best economic potential when compared with cotton, corn and soybeans...
Meanwhile, of course, the bureaucrats are trying to figure out what to do with the excess quantity supplied. I have a suggestion: get rid of the price guarantee.

Doesn't anyone ever teach these folks anything about economics???? groan....

[h/t to Jack]
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