[extropy-chat] Redistribution of wealth

[Matthew Gingell]

On Tue, 28 Sep 2004, Mike Lorrey wrote:
>
> Okay, here goes: the US has such vast agricultural capacity that were
> it all let loose, food would be grown at such little profit that nobody
> would make any money at it, and consequently the government would earn
> no tax revinues from the activity.

This is a silly premise, and fails to motivate the argument that proceeds
from it.

Look at the analogy to other goods: The US has such a vast industrial
capacity that, were we to devote it all to manufacturing paperclips,
nobody would make any money selling paperclips. We have such a vast
service capacity that, were we to devote it all to producing haircuts,
nobody would make any money selling haircuts. Does that mean we ought to
be restricting the supply of those goods by government action, or that we
ought to guarantee the return on capital that insists on allocating itself
to produce them? Would we expect doing so to increase tax revenues?

In every sector there's an equilibrium between supply and demand, and for
every commodity there's a point at which it stops being worthwhile for the
next marginal producer to enter the market. To "let loose" our entire
agricultural capacity would mean devoting labor and capital resources to
producing agricultural goods that nobody wants. The fact you can't
make a decent living doing something is the markets way of telling you to
do something else.

I'm not arguing that agricultural subsidies are all always and everywhere
bad policy, I think there's a legitimate role for government action to
minimize the displacement and human suffering caused by the transition
from low to high productivity land and labor use, but they have nothing to
do with supply side economics or revenue maximization.

Matt