Issachar
September 5th, 2007, 03:45 PM
A bit silly? Not really. I hope all of you take a few minutes to read the whole article at the link.
On the free market, consumers drive production, whereas under a system of protectionist corporatism, politicians and bureaucrats guide the market. With free competition, companies best able to satisfy consumer demand are the ones that expand production and stay in business; the consumer is king.
When a government guarantees profits to those large corporations with powerful lobbies, the market loses its natural regulating mechanism. Instead of weeding out the most inefficient companies, the state subverts the consumer and keeps these companies propped up with corporate welfare. This is particularly true with respect to the agricultural industry.
In the absence of tariffs, importation quotas, and subsidies, the natural tendency of the market would be to produce cheap foreign sugar, which soda manufacturers would then import to sweeten their product. Domestic farmers are naturally opposed to this system because they cannot compete with more efficient foreign firms. So, instead of competing for the dollar votes of the millions of individuals who form the free market, these large corporations have the power to lobby a select group of politicians to confer them with special privilege. When a businessman tries to secure his profits not through free competition, but through state privilege, he is not acting as a market entrepreneur, but rather as a political, rent-seeking one.
In this case, the political entrepreneur was Archer Daniels Midland, a company that lobbied Congress to pass draconian quotas on sugar importation. But why would ADM, a corn producer, want to artificially raise the price of foreign sugar? A basic lesson of economics is this: when the price of a good is raised, all other things being equal, people cut back on their consumption, and (depending on the elasticity of demand) they look for substitutes.
High fructose corn syrup, which is made from cornstarch, which ADM grows, is such a substitute. http://www.mises.org/story/2678
Sadly, this is what is going on across the board. It is hardly limited to Jones Soda. Did ya'll notice the current place in life of the author of this article? No cheating ...... read it all to get to the end. :)
Issachar
On the free market, consumers drive production, whereas under a system of protectionist corporatism, politicians and bureaucrats guide the market. With free competition, companies best able to satisfy consumer demand are the ones that expand production and stay in business; the consumer is king.
When a government guarantees profits to those large corporations with powerful lobbies, the market loses its natural regulating mechanism. Instead of weeding out the most inefficient companies, the state subverts the consumer and keeps these companies propped up with corporate welfare. This is particularly true with respect to the agricultural industry.
In the absence of tariffs, importation quotas, and subsidies, the natural tendency of the market would be to produce cheap foreign sugar, which soda manufacturers would then import to sweeten their product. Domestic farmers are naturally opposed to this system because they cannot compete with more efficient foreign firms. So, instead of competing for the dollar votes of the millions of individuals who form the free market, these large corporations have the power to lobby a select group of politicians to confer them with special privilege. When a businessman tries to secure his profits not through free competition, but through state privilege, he is not acting as a market entrepreneur, but rather as a political, rent-seeking one.
In this case, the political entrepreneur was Archer Daniels Midland, a company that lobbied Congress to pass draconian quotas on sugar importation. But why would ADM, a corn producer, want to artificially raise the price of foreign sugar? A basic lesson of economics is this: when the price of a good is raised, all other things being equal, people cut back on their consumption, and (depending on the elasticity of demand) they look for substitutes.
High fructose corn syrup, which is made from cornstarch, which ADM grows, is such a substitute. http://www.mises.org/story/2678
Sadly, this is what is going on across the board. It is hardly limited to Jones Soda. Did ya'll notice the current place in life of the author of this article? No cheating ...... read it all to get to the end. :)
Issachar