An article by Celia W. Dugger and featured in many media sources yesterday outlines the story of fertilizer subsidies in the country of Malawi, how they've helped alleviate hunger and poverty. Malawi instituted these subsidies despite outside pressureto open up the market.
Is it possible that subsidies can work in some cases, that some reasonable but limited managing of and intervention in the market provides the best results?
For starters, they have no chance at benefitting from competition which might possibly bring them the same product for less in the first place. Furthermore, they still had to take the money from somewhere. Yes, food prices went down, but did taxes go up? If so, is the people's condition truly improved? Or is it much the same, the food is just cheaper? Or, did the government just increase the money supply (inflation) to do so, making people's money less valuable and therefore, in the long run, hurting the condition of the people in the long run anyway? Furthermore, going off of studies done by the US and British governments. Yeah...that's really unbiased.
AFAIK, most of the money came from foreig governments.
And how did they "have no chance at benefitting from competition"?
If foreign governments are subsidizing them, then yes the people receiving the subsidy benefit. If you look at the world economy as a whole, the subsidies are not beneficial because of hidden costs and inefficiencies, not to mention the fact that the money was taken by force from someone somewhere.
actually reading the ny times article, it seems a bit of a leap to be claiming the subsidy a success. first, the results were only one harvest, second, the rains were good, third, results were compared to previous years' revenues which were lost to fraud. i think the most telling lines in the article were ignored, ie the plot sizes were miniscule at best only allowed subsistence. perhaps without the subsidies, some of the small plots would be consolidated by efficient farmers, who would then no doubt employ many of the erstwhile plot-holders as labourers. sounds like there are structural flaws in the agricultural model?? sachs would have us believe that africa's rescue is just a chequebook away, and he's got plenty of company! take a bow bob geldoff, bono et al.
A successful subsidy?
Bottom line: subsidies are coerced transfers of wealth. Malawi won. Somebody else lost.
Successful? Not for the loser. Not for the whole.
"Melody is a form of remembrance. It must have a quality of inevitability in our ears." - Gian Carlo Menotti
All subsidies are successful: they succed in forcibly transfering wealth from A to B. Of course when they can be clad in the usual mantle of "fighting hunger, poverty etc" they are doubly succesful because they seem to have some kind of moral superiority.
Who wouldn't buy goods at below their market price or, even better, have them for free?
In France (home of wealth transfer) there's an old saying which roughly goes as this "I had two cows but the State forced me to sell them to pay higher taxes so they could buy a single cow for a starving man in Africa. Now I am starving so I am asking the State to give a cow so I can feed my family: they gave one to an African man, why should they deny it to me?".
tyrantsmelody: Is it possible that subsidies can work in some cases, that some reasonable but limited managing of and intervention in the market provides the best results?
Malawi needs to free its economy so it would import cheap food. Some countries have no farmland but are rich.
A subsidy is a form of wealth re distribution from the corrupt rich to the poor. The rich are corrupt, that's why it work. It would have the same effect if it subsidized food instead of fertilizer.