On a trip
to see the In-Laws in Ohio, I noticed milk prices at half ($1.99 for a gallon) the
rate available at home. Pennsylvania law establishes a price floor ostensibly
to promote family farms and a “fair” price.
In application, so-called price supports prevent grocery stores from
using milk prices as a lost leader.
Additionally, a $4 price point suppresses demand as the same time oversupply
has pushed wholesale prices to record lows.
Meanwhile, intermediaries in Pa. make out like bandits exploiting the
wide gap between the wholesale market price and the floor price paid by retail consumers.
Price
supports probably never made sense, but they hurt family farms now. Of course, sponsored researchers and p.r.
firms tout the non-existent benefits to the small farmer. What’s $2 a gallon if
it helps sustain small farms?
The better
question: Why pay $2 more when not one dime flows downstream to the small
farmer?
The lesson
here lies in the manipulation of emotions and good intentions, by stakeholders
able to capture all the financial benefits.
This kind of “rent seeking” occurs all the time at the FCC. Just now, the prospect of Huawei rigging its
5G wireless equipment for espionage warrants an absolute bar on the use of $8.5
billion in annual universal service funds available to subsidize rural access
to wired and wireless telecommunication technology. No one has offered clear evidence that Huawei
equipment provides China a spying opportunity.
Forcing Huawei
out of the marketplace will raise the cost of 5G and other telecommunications
equipment, particularly for price sensitive rural carriers. U.S.
telecommunications consumers end up subsidizing “national heroes” even if these
manufacturers sell more expensive and inferior equipment.
Clever.
