Are agricultural subsidies a good thing?

Agricultural subsidies in the United States are currently over $30 billion annually according to the WorldWatch Institute. In the United States primarily give agricultural subsidies to corn, wheat, cotton, sugar, and soybeans producers with corn receiving the largest set of subsidies. While the question of agricultural subsidies has been a pretty stock debate in the past, a case for using subsidies to offset the costs of tariffs between China and the United States has thrown a modern twist on the age-old question.

Historically subsidies have been used to help increase production of crops. It has helped to improve the number of crops produced. Some analysts predict that the world will need nine times the amount of currently farmable land by 2050 to be able to properly sustain an exponentially increasing population. Especially in an era when food security is becoming a larger and larger issue, increased production is increasingly important. These subsidies are able to help farmers due to inherently high costs of farming. Studies cite: 1,000 acres of corn requires a “crop loan” of a half-million dollars.

However, some argue that agriculture production in America does not resolve the problem but rather creates new ones. Specifically: World Resource Institute cites that as a result of overproduction developing countries are harmed. The issue is that farmers have to either lower prices to the point that it is below production cost or they get outcompeted and cannot sell exports. We have seen that agricultural subsidies have wrecked the Mexican corn industry as they just get out produced by America. Developing countries are often uniquely sensitive because they tend to rely on one export and most households tend to rely on that one export. For example in Burkina Faso, 85% of the population depend on cotton production, but as a result of US competition, they saw export earnings drop by 12%. In total, subsidies cost developing countries $24 billion each year.

The issue is that while agricultural subsidies may be extremely helpful to American farmers, it hurts developing countries on a global scale, leading to the question: what do we prioritize? Most would probably say to stop agriculture subsidies as it hurts these developing economies, but unfortunately, that logic probably won’t stop the government.

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Examples of Monopsonies:

Monopsonies are a rare and very abstract term that can be hard to understand if we don't look at examples in real life. To start, we can look at monopolies to understand what a monopsony is. When looking at monopolies, we understand that there is one seller selling to many different buyers, which allows the seller to spike up the price as there is no one else selling. Monopsonies are markets where this are many sellers, however, there is only one buyer. Because of this, the firm can then drive down the price of the product according to the amount of quantity desired.

To further understand monopsonies, it is helpful to look at an example. Most monopsonies occur labor markets, where specialized workers can only work at one specific firm, meaning the firm can drive down wages as they are the only firm that will hire the worker. This often happens in the technology industry, where companies like Cisco and Oracle have been accused of working together to drive down the price. This relates to what we learned about with the NBA and the NFL as the players can get paid less than they believe they are valued. An example of monopsony with products and services is typically found with government products. While there are three different suppliers of fighter jets, the government is the only one who is legally allowed to purchase the fighter jets from the firms, meaning they can drive down the price. This also occurs for many other products the government buys too. Overall, monopsonies are basically just the opposite of monopolies, with one buyer and many sellers, and mostly occurs in labor markets or with government spending.











https://www.investopedia.com/terms/m/monopsony.asp

Opportunity Costs of Senioritis

Recently, I was in English class and I had to make the decision between writing my essay or watching the new diss track that just came out. Obviously, I chose to be productive and watch the diss track, but there were consequences as I won't have as strong a grade and my A will be in jeopardy. In terms of opportunity cost, by choosing to watch the diss track, I had the opportunity cost of not working on my essay and getting a higher grade.

If we take the same scenario and apply it to second semester senior, we can understand why the terrible disease called senioritis occurs. As a second semester senior, the student's opportunity cost of getting a lower grade doesn't affect them as colleges won't care as much about the second semester grades, meaning the student can continuing watching the diss tracks and have a much smaller opportunity cost. This applies to many decisions that will occur during the senior's second semester, and will cause what many of us call senioritis. Overall, it is always important to consider the opportunity costs behind certain decisions, and in the future, I will consider the cost of a lower grade before watching the response to the diss track I was watching in class.

Hypebeasts & Veblen Goods

According to Urban Dictionary, “A hype beast is a kid that collects clothing, shoes, and accessories for the sole purpose of impressing others”. A notable brand that particularly attracts hypebeasts is Supreme. The reason why some millennials spend over $2000 on retailed Supreme, corresponds to the fact that the brand deliberately retains artificial scarcity for their products. In a capitalist society, the production and pricing of goods and services are typically determined by supply and demand. Furthermore, firms usually supply more as demand increases, but that’s not the case for Supreme. The founder, James Jebbia, has openly spoken to the odd practices of the company and his disregard for basic supply and demand considerations to further the exclusivity of his brand.

Nonetheless, Supreme’s business model still fails to explain why kids continue to spend so much on seemingly simple designer items. Norwegian-American economist, Thorstein Veblen, however, can offer insight through his concept of Veblen goods -or goods for which demand increases as their price increases. Veblen also developed the idea of “conspicuous consumption” which defines the purchase of luxury goods and services purely to display one’s wealth and status. Seeing as this definition closely ties to that of a hypebeast, we can clearly correlate the two.

Still, most hypebeasts are not affluent, high-class millionaires who constantly have the funds to feed their wants in the first place. But now with Veblen’s theory in mind, we are able to draw a conclusion. Hypebeasts, usually of lower incomes, spend whatever money they do have on expensive things to imitate the tendencies of the rich who commonly parade their wealth. By attempting to emulate a sense of wealth, hypebeasts counter any perception of lesser status.

Veblen along with his institutional economics are vital in the public’s understanding of consumer behavior. The economy and cultural institutions influence one another in a perpetual feedback loop. All in all, it is essential to account for the general material conditions of society when trying to grasp a middle-class millennial’s outrageous spending habits.

Wastemas?

   Christmas time is generally considered to be a great time of year, by the average person. In some regions, we experience snow. There are lights up all over brightening up cities and bringing joy all around. For many people, it is a chance to see family that we don't always see and people are brought together. However, beneath this joy, there is a hidden side of Christmas that only economists see.
   Christmas time is economically, a very wasteful time. Everyone who celebrates Christmas has experienced the pain of receiving a gift that you do not want. For example, if my grandma were to buy me an ugly sweater I would never wear, there is waste all around. In this scenario, she has wasted her money, and could have spent it on something else that would derive greater utility. Additionally, the resources that went into making the sweater have also been wasted, and could have gone to something more meaningful. Waste is seen in many other areas as well, especially for companies. December is the most shopped time of the year and this causes surpluses in many areas. Workers, resources, and anything needed to produce a good are needed excessively during this time. However, this is only for one month and from an economical standpoint is rather inefficient. Unfortunately, there is no real solution to this problem as many Americans are unwilling to Christmas shop in other times of the year, in a more spread out manner, and it makes sense to not want to do this.
    There is a different side to the increased activity during this time of year. This time of year provides work for many, although limited in time. Additionally, the economy gets a boost during this time of year, which helps everyone. Another reason for this being good is that companies get popularity boosts and sales skyrocket. In the end, whether people decide to support that Christmas time is wasteful, or that Christmas time is good for the economy, there is one thing we can all agree on... no one wants an ugly sweater that their family buys for them and makes the wear.

Freedom of Enterprise in America

Freedom of enterprise.  The idea that firms should be free to obtain and use resources it needs to produce goods of its choosing and sell them to markets of its choosing is an idea fundamental to how Capitalism works.  So is freedom of enterprise everywhere in America?

In the real world, governments often get involved in many markets, and usually for good reasons.  Most people agree that medication and potentially addictive drugs must be regulated by the government to protect consumers from being harmed.  Similarly, guns and weapons sales should also be regulated to avoid having them fall into the wrong hands.  Then there are banks.  Banks should be regulated to make sure protections are in place for people’s life savings in case the bank runs into financial trouble and needs to declare bankruptcy.

So while many products have freedom of enterprise in America, many others don’t, but usually for good reasons.

Opportunity Cost of Writing an Essay

Opportunity cost is an important factor in choosing how we as individuals spend our time each day. As most of you know, opportunity cost is whatever you lost or could have done after choosing a certain option. For example, the opportunity cost of me playing video games is studying for Microeconomics. In some cases, this opportunity cost can be very minimal, such as eating a cookie when I could have eaten a salad. However, in other cases, this opportunity cost can be drastic, such as choosing to social in English class instead of working on an essay.

Recently (as in a couple hours ago), a specific English teacher brought up this important idea of opportunity cost. After reading a long rant written by this teacher, I think it is apparent that many students in my class have been partaking in other activites rather than working on their essays in the given class time. Rather than immediately reacting in a negative way towards my teacher, I thought this could be a good learning experience for not only my classmates, but myself as well.

Opportunity cost never changes, but different individuals react differently to whatever activity they must forgo in order to play video games or socialize with friends. In English class, we were given numerous days to peer edit and write our essays. However, this "free time" was spent different for every student. For those students who believe that that opportunity cost of not writing an essay is very minimal, they are the same students who still have not finished their rough draft (the final essay is due on Friday). Yet, for the students who understand the importance of this grade, and they recognize the generous time given to them by our teacher, they are the same students who have completed essays and numerous peer reviews and will receieve a good grade on their papers.

As our essay process comes to a close, I think it is important to realize that while opportunity cost is a specific value, whether that be monetary or tangible, it has different importances to different people. While I might care a lot about that salad I could have eaten, my friend could easily have no emotional response to devouring that cookie.