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Failings of Government NOT Capitalism

by on May 16, 2012

Food shortage in India is may be government’s fault but more government does not treat the illness.

Monday’s Metro comments sections focused on the ridiculous situation of a bumper crop of grain rotting away in India due to insufficient dry storage to keep in dry whiles millions are dying due to malnutrition. There was a general consensus that this was a situation that should never occur, all solutions though also seemed a bit contradictory. Government should work differently or do more. No – the whole situation has occurred in the first place because government has done too much.

Government and not capitalism decided that it was too expensive to lower the grain prices. The fiscal deficit apparently was to blame for not having subsidies. Surely this case does not require subsidies but merely the removal of bureaucracy and corruption. If government was not involved then the abundance of grain would have filtered through to record low prices for all (especially in the short run in which the wet grain needs to be consumed).

Government and not capitalism decided to allocate money away from building sufficient storage to feed the whole population at the right price to other priorities. If the market was working properly entrepreneurs would have built more storage to keep the grain dry and given that there is more demand (people going hungry) than supply they would have found ways to generate more food.

The solutions of getting government to build more storage / to stop the space program / to stop giving aid to India / subsidise grain are not the solutions. The solution is letting people do with the grain what ever they want. It makes more sense to give the grain at transport costs to any consumer than to pay for the disposal of stinking, rotting waste. Give individuals freedom  and they will find a way of making the most of this opportunity.

Metro, Monday May 14, p.14

Photo by Prabhjot Singh Gill

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