Why not trying the free market?

“The obstacles to international trade have never been about health and safety. They are about money, to benefit special interests at the expense of others. The solution to feed safety and the food supply chain is simple: free (liberate) everything. If you care about food, eliminate all quotas, taxes and regulations on it. That will solve any supply problem.”

Prof. Gustavo Sosa
Industrial Mechanical Engineer
Licensed Grain Inspector
MBA Project Management
SOSA – Engineering Consultants
ing.gustavo.sosa@gmail.com

People like to think we live in a world ruled by Capitalism, for better or worse. The proponents of Capitalism see everything that is good, and use it as proof of how good it is. The opponents see what is bad in the world, and also use it as a proof.

Truth is, most of the economies are heavily regulated. Even in the US, you need a government permit to sell hot dogs in the street. Food and agriculture are among the most regulated industries in the planet. Open any newspaper or magazine (like this one) and you will find articles about quotas, tariffs, stimuli, taxes, laws, etc.

Our current food supply chains are international. Except for the most basic products, like milk or cooking oil, the raw materials are imported or exported, and so are the final products. The governments get in the middle trying to “adjust” the process, with some absurd results. For example, I can drive 4 hours and go to a buffet restaurant in Brazil (an “espeto corrido”) and eat all kind of meats for a fraction of what it would cost in Uruguay, and I would still be healthy as a horse. But, if I am in Montevideo and want to try some Brazilian pork ribs, then somehow, I would be intoxicated and somebody has to stop it. But, mysteriously, if you add some tax to the price, they are no longer poisonous.

Why are there so many regulations for bakeries that your own aunt won’t follow when preparing her delicious biscuits. Did your aunt ever poison you? Why is the flour you eat in Turkey completely healthy when you are a tourist there, but dangerous if you eat it in Argentina?
The obstacles to international trade have never been about health and safety. They are about money, to benefit special interests at the expense of others. The European Union just signed an agreement with the Mercosur that would open Europe for the agricultural exports of South America, but now the farmers in France are lobbying against it, and the French government is pushing modifications to articles, despite the fact that the general population would be better with cheaper products.

The war of tariffs between Trump and Xi Jinping is also about special interests and lobbies: US farmers against Chinese tech manufacturers. And things escalate, and then egos get in the way, and other lobbies, and the whole issue becomes a mess.

The export tariffs on grain in Argentina were created by Peron to benefit millers. At times, it led to the absurd of the kilogram of flour being cheaper than the kilogram of grain for the export market. Now, the most important source of wealth in Argentina is destroyed. What did they get? Only some temporary benefits for a few local tycoons.

When is Golden Rice going to be commercially available for human consumption? Who is getting in the way of it? This is a grain that could improve the lives of millions, but still, they only let some small farmers cultivate it. The economies of scale of large farming companies could make it available to everyone, but ideology gets in the way of technology and everyone suffers.

The solution to feed safety and the food supply chain is simple: free (liberate) everything.

Do you know what happens when you don’t have freedom? Humanitarian aid trucks burning on bridges, like in Venezuela.

Prices are a miracle. They convey a lot of information in a simple number. A kilogram of flour isn’t worth the same to the farmer if he obtained it by hand or by using modern machinery. Neither is it worth the same for a woman who wants some buns for breakfast that for the father who will bake a cake for his daughter’s “quinceañera” (15 years old birthday). When two persons meet and agree on a price, they are exchanging information as much as goods. One who informs how much effort he had to put on getting the product there. The other on how much he needs it. Combine the exchanges of millions of individuals, and you have the smartest system ever designed to allocate resources. Mess with the prices, and you can only get shortages or waste.

How much is worth a bottle of water in a common city? Maybe one Euro.

How much is it worth in the middle of the desert, for a survivor of a plane crash? Maybe all his belongings.

How much is it worth in the middle of the desert, if there is nobody there? Nothing.

See? It is about the exchange of information, more than the product itself. If there is a catastrophe somewhere, entrepreneurs will flood the area (pun intended) with their products trying to take advantage of the price surges. Block the prices, and you will only depend on humanitarian aid, that many times experiences problems. It is just the same whether it is a government office or an NGO. Prices are the only reliable source of information. You can’t and shouldn’t do away with them.

If you care about food, eliminate all quotas, taxes and regulations on it. That will solve any supply problem.

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