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<blockquote data-quote="wkmac" data-source="post: 902401" data-attributes="member: 2189"><p>This is just a general response and not specific to AV. But AV raised valid issues and to those is what I'm addressing. That said....</p><p></p><p>Several years ago I worked with a manager at UPS who was planning his retirement (now retired) and being from Montana (still had family there) he was looking out west for some land. He ended up staying in Georgia go figure! As he was looking, a lot of the land came with a gov't program where the owner was literally paid to not farm that land. I was shocked (and it takes a lot when it comes to gov't doing that) at how many properties would just about pay for themselves over the years just in subsidies to not grow any crops. And most of these properties were not even farms to begin with as many were just raw unimproved land that may have a house on it. I'm talking about the subsidy literally making your monthly mortgage and in some cases even paying the property tax too. Whose to blame here for this?</p><p></p><p>Before we go there, let's just for the moment discuss what IMO is a basic economic principle that we need to consider before we go look for the guilty. I drive in to a given marketplace and I'm the only one with tomatoes and I only have a bushel to sell and lots of customers just watering at the mouth for a good ole' tomato sandwich. Odds are I will get a premium price for those tomatoes. Yeah, yeah basic supply and demand right? What happens to that price if I have 100 bushels or better yet 100 farmers come to the market with their own bushels of juicy tomatoes. Damn, now I want a BLT! <img src="/community/styles/default/xenforo/smilies/FeltTip/happy-very.png" class="smilie" loading="lazy" alt=":happy-very:" title="Happy Very :happy-very:" data-shortname=":happy-very:" /></p><p></p><p>Farm subsidies in many respect came about as an FDR program during the depression as a central planning regime to stabilize farm prices. WRONG! Well partly wrong. I use to believe this myself until I learned about the <a href="http://en.wikipedia.org/wiki/Grain_Futures_Act" target="_blank"><span style="color: #ff0000">1922' Grain Futures Act</span></a> which helped create what we know today as the Farm Commodities Trading business. That's right, commodity trading in farm products as we know it today was in effect started by a gov't action and not a purely market action so just make note of that. And no, I don't believe this was do-gooder liberalism but rather pure market intervention and protectionism at the behest of special interest players who stood to benefit. As bad as the mortgage mess blew up, don't think for one minute that this whole mess wasn't as much industry driven as it was gov't driven because one doesn't exist without the other.</p><p></p><p>OK continuing, now that we have a commodity market that invests money hedging on certain farm commodities in a market place, what happens if you have a whole bunch of little farmers who at any given time can grow or not grow a certain crop which thus effect supply which thus effects.....drum roll please...price. If the farm market is broad, diverse and more important, free to open competition, how hard would it be to hedge a commodity investment to achieve a profitable outcome? Further importance, how can a big agri-bidness put a food product on the consumer market with a price based on a certain profit model and then a handful of dirt farmers have a fresh bumper crop of same and this plummets the retail price? These big agri-bidness concerns could lease these farmers out of the market to achieve the same ends but what does that do to their profit bottomline? That is an unsustainable business model for them. But what impact would it have if they could lobby Congress to take taxpayer dollars and in effect lease those farmers out of the market for them? </p><p>AH-HA!<img src="/community/styles/default/xenforo/smilies/FeltTip/surprised.png" class="smilie" loading="lazy" alt=":surprised:" title="Surprised :surprised:" data-shortname=":surprised:" /></p><p></p><p> If I can't tell at any given minute what the real potential is for the total amount of product to be placed on the market is, how can I assure the risk/reward is not any better than buying a Mega-Millions lottery ticket? Regardless of the fools who buy lottery tickets, trying to part money from a wise investor for such a marketplace seems a bit dicey to say the least. However, if I can account for known total acreage planted in a given season and of what crop, this makes the risk of such investment a lot less riskier and it also makes it possible to grow that investment market as well. What if I'm able to even buy much of that land and still keep the price supports in place to boot, what then? Ever give serious question as to why the number of farmers is shrinking and who has the regulatory power to push the smaller operators over the edge? </p><p></p><p> Now if you can shift the burden of controlling that market from the market itself and onto the backs of taxpayers who absorb the risk costs, you've now achieved the best of both worlds. This in my opinion is pure <a href="http://www.econlib.org/library/Enc/Mercantilism.html" target="_blank"><span style="color: #ff0000">mercantilism </span></a>(a neo-mercantilism at the least with nationstates replaced by multi-national corporations) where the lords and barons in league with the king burden the serfs and pleasants while they (corp. and state) are able to rake off the creme. BTW: If you think NOAA and all those weather satellites were put up just for the local weather forecast, think again. Knowing weather thus reduces the marketplace risks and the taxpayer footed the information bill.</p><p></p><p>This is also another reason that modern American capitalism as opposed to an older laissez-faire tradition of the <a href="http://en.wikipedia.org/wiki/Physiocracy" target="_blank"><span style="color: #ff0000">physiocrats</span></a>, is as much opposed to true free market economics because modern American capitalism is only possible in a big gov't environment. This is another reason when the republicans are in power, gov't still grows. I know many here on both sides of the isle want to take the position that these markets are pure free market operations for ideological manipulation but the facts of history truly IMO distort that view once you really begin to look into it. The many arguments given in defense of free market ideals are correct but what you defend using this is not what you think it really is when you drill down into it.</p><p></p><p>jmo.</p></blockquote><p></p>
[QUOTE="wkmac, post: 902401, member: 2189"] This is just a general response and not specific to AV. But AV raised valid issues and to those is what I'm addressing. That said.... Several years ago I worked with a manager at UPS who was planning his retirement (now retired) and being from Montana (still had family there) he was looking out west for some land. He ended up staying in Georgia go figure! As he was looking, a lot of the land came with a gov't program where the owner was literally paid to not farm that land. I was shocked (and it takes a lot when it comes to gov't doing that) at how many properties would just about pay for themselves over the years just in subsidies to not grow any crops. And most of these properties were not even farms to begin with as many were just raw unimproved land that may have a house on it. I'm talking about the subsidy literally making your monthly mortgage and in some cases even paying the property tax too. Whose to blame here for this? Before we go there, let's just for the moment discuss what IMO is a basic economic principle that we need to consider before we go look for the guilty. I drive in to a given marketplace and I'm the only one with tomatoes and I only have a bushel to sell and lots of customers just watering at the mouth for a good ole' tomato sandwich. Odds are I will get a premium price for those tomatoes. Yeah, yeah basic supply and demand right? What happens to that price if I have 100 bushels or better yet 100 farmers come to the market with their own bushels of juicy tomatoes. Damn, now I want a BLT! :happy-very: Farm subsidies in many respect came about as an FDR program during the depression as a central planning regime to stabilize farm prices. WRONG! Well partly wrong. I use to believe this myself until I learned about the [URL="http://en.wikipedia.org/wiki/Grain_Futures_Act"][COLOR=#ff0000]1922' Grain Futures Act[/COLOR][/URL] which helped create what we know today as the Farm Commodities Trading business. That's right, commodity trading in farm products as we know it today was in effect started by a gov't action and not a purely market action so just make note of that. And no, I don't believe this was do-gooder liberalism but rather pure market intervention and protectionism at the behest of special interest players who stood to benefit. As bad as the mortgage mess blew up, don't think for one minute that this whole mess wasn't as much industry driven as it was gov't driven because one doesn't exist without the other. OK continuing, now that we have a commodity market that invests money hedging on certain farm commodities in a market place, what happens if you have a whole bunch of little farmers who at any given time can grow or not grow a certain crop which thus effect supply which thus effects.....drum roll please...price. If the farm market is broad, diverse and more important, free to open competition, how hard would it be to hedge a commodity investment to achieve a profitable outcome? Further importance, how can a big agri-bidness put a food product on the consumer market with a price based on a certain profit model and then a handful of dirt farmers have a fresh bumper crop of same and this plummets the retail price? These big agri-bidness concerns could lease these farmers out of the market to achieve the same ends but what does that do to their profit bottomline? That is an unsustainable business model for them. But what impact would it have if they could lobby Congress to take taxpayer dollars and in effect lease those farmers out of the market for them? AH-HA!:surprised: If I can't tell at any given minute what the real potential is for the total amount of product to be placed on the market is, how can I assure the risk/reward is not any better than buying a Mega-Millions lottery ticket? Regardless of the fools who buy lottery tickets, trying to part money from a wise investor for such a marketplace seems a bit dicey to say the least. However, if I can account for known total acreage planted in a given season and of what crop, this makes the risk of such investment a lot less riskier and it also makes it possible to grow that investment market as well. What if I'm able to even buy much of that land and still keep the price supports in place to boot, what then? Ever give serious question as to why the number of farmers is shrinking and who has the regulatory power to push the smaller operators over the edge? Now if you can shift the burden of controlling that market from the market itself and onto the backs of taxpayers who absorb the risk costs, you've now achieved the best of both worlds. This in my opinion is pure [URL="http://www.econlib.org/library/Enc/Mercantilism.html"][COLOR=#ff0000]mercantilism [/COLOR][/URL](a neo-mercantilism at the least with nationstates replaced by multi-national corporations) where the lords and barons in league with the king burden the serfs and pleasants while they (corp. and state) are able to rake off the creme. BTW: If you think NOAA and all those weather satellites were put up just for the local weather forecast, think again. Knowing weather thus reduces the marketplace risks and the taxpayer footed the information bill. This is also another reason that modern American capitalism as opposed to an older laissez-faire tradition of the [URL="http://en.wikipedia.org/wiki/Physiocracy"][COLOR=#ff0000]physiocrats[/COLOR][/URL], is as much opposed to true free market economics because modern American capitalism is only possible in a big gov't environment. This is another reason when the republicans are in power, gov't still grows. I know many here on both sides of the isle want to take the position that these markets are pure free market operations for ideological manipulation but the facts of history truly IMO distort that view once you really begin to look into it. The many arguments given in defense of free market ideals are correct but what you defend using this is not what you think it really is when you drill down into it. jmo. [/QUOTE]
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