OPINION: Sammy Cartagena - How Agriculture Bureaucrats Are Manipulating Food Prices—and Our Diets

  • Printer friendly view
 Sunday, July 31, 2022 - 06:25

With inflation at a forty-year high, it is the topic on everyone’s mind. US core inflation has reached 7.5 percent year over year, and the prices of certain goods, such as used cars and steak, are up as much as 50 percent over the past year. This is a major threat to the current administration, with a recent poll showing that 70 percent of Americans disapprove of Joe Biden’s handling of inflation. Inflation is incredibly unpopular with voters, and there is a strong political incentive to ease the public’s perception of rising prices, either through policies or through modifying the inflation statistics themselves.

One method government has historically used for easing the perception of inflation is to push for the consumption of low-cost goods through government recommendations and subsidies. This strategy has been used especially frequently in the agriculture industry, since food comprises a major variable expense in people’s everyday budgets. In the 1970s, during a period of high inflation, Secretary of Agriculture Earl Butz pushed for policies that would encourage the mass production of low-cost monocrops such as corn and soy. He famously told farmers to “get big or get out” and urged farmers to plant commodity crops “from fencerow to fencerow.”

Getting consumers to substitute lower-cost goods in their consumption can have a masking effect on Consumer Price Index inflation, since a change to the consumption of lower-cost goods offsets the general rise in price level. As Saifedean Ammous writes in The Fiat Standard: “By subsidizing the production of the cheapest foods and recommending them to Americans as the optimal components of their diet, the extent of price increases and currency debasement is less obvious."

Read more at Mises Wire. 

 

Cartagena is an undergraduate student attending Rutgers Business School studying finance.