ADMN 3400H Lecture Notes - Lecture 4: Price Support, Free Market, Market Power
30 Mar 2020
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Document Summary
Expression of political instincts in economic thinking: traditional views. Text presents traditional views regarding issues and policy ideas. In reality, insulated market with government intervention: ex. Federal price support program for 60 years: agricultural supports, manipulation and protectionism, ex. Tariffs on imported goods, operating marketing boards, paying subsidies, setting output quotas, making payments for letting land lie idle. Free operation of supply and demand is more effective determination of agricultural prices. History: since wwi, increase productivity with modest rise in demand resulting in persistent downward pressure on prices, depression of 1930s have gov. intervention, ex. Tariffs on foreign goods; gov. paid parity price or target price well above market prices, as well as production controls and acreage allotments (to pay farmers not to produce). Result farmers paid less attention to market and relied on gov. bailouts. Inability to sell overseas: 70s russian grain deals emptied supply increases prices but also eliminated dependence on gov, when food and agr.
