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Archive for the ‘Food Prices’ Category

Obamacare to Lead to Raise Pizza Prices and More

Posted by Steve Markowitz on August 8, 2012

The Huffington Post posted an article discussing one of the nasty side effects of Obamacare; increased prices for goods and services.  The Post article focused on the fast food industry.

Papa John’s Pizza CEO John Schnatter has indicated that Obamacare will increase the cost per pizza of between 11 and 14 cents.  The reason is simple economics.  Obamacare will force health care coverage or government fines for its 16,500 employees.  Obvious to anyone but the knuckleheads in Washington, the increased cost will be passed on to consumers.  Given this inevitable reality, The Huffington Post joked that Papa John’s Pizza may have to change its slogan from “Better ingredients. Better Pizza,” to, “Better health care.  Pricier pizza.”

Under Obamacare, companies with more than 50 employees must provide affordable health insurance or pay government fines.  BusinessWeek reported that in the case of McDonald’s, this will cost each of its 14,000 franchises an average of $20,000 annually.  For McDonald’s alone that comes to a staggering $280 million that will be passed on to consumers. The alternative, McDonald’s will have to cut costs, which will mean less people employed.

President Obama is fond of playing class warfare.  On an almost daily basis he calls for increasing taxes on the wealthy for the benefit of those with less.  However, his policies include many hidden taxes that affect the less wealthy.  In addition, his Progressive policies mandate programs, benefits and entitlements that substantially increase costs to those who can least afford them.  While the increasing costs of fast food may not be problematic for society, in total the cost increases caused by government interference in the economy will be catastrophic and damage those the Leftists claim to want to assist.

While we do not know what courses Barack Obama took while in college since his transcripts remain sealed, we know one he did not take: Economics 101.


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Senate Refuses to End Ethanol Subsidies

Posted by Steve Markowitz on June 15, 2011

The U.S. Senate once again proved to be spineless, placing special interests and political expediency above the national good.  On Tuesday, the Senate rejected eliminating subsidies for ethanol in a 60 to 40 vote.

The measure to cut the subsidies was introduced by Oklahoma Senator Tom Coburn.  It would have eliminated the subsidy to oil refiners equaling $.45 per gallon.  It would have also eliminated the tariff on imported ethanol.  Eliminating the subsidy would amount to an estimated $5 annual billion savings for the government.

Ethanol subsidies not only cost billions annually, but have led to a significant increase in worldwide food prices.  With the subsidy, farmers find it more profitable to grow corn for ethanol production rather than food crops.  The resulting food price increases have led to unrest in some countries including in the Middle East.  Additional starvation will also be the result from American ethanol policies.

Ethanol subsidies are a gift given to those that make money in the ethanol business;  i.e. farmers and refiners, at the expense of those not in that business; i.e. most Americans.  Taking from one group of taxpayers and giving to others is the main attribute of government spending.  In addition, when a subsidy begins, it is nearly impossible to remove.  In the case of ethanol, special-interest groups have given $22 million to the politicians to ensure this handout continues.

As long as government can redistribute income, it will do so.  Through this ability that is not granted under the Constitution, professional politicians maintain power and get re-elected.  This power is corruptive and must be taken from the politicians.

While Senator Coburn was unsuccessful in removing ethanol handouts this time, he forced 60 senators to go on record with a vote against the good f the Country.  The black mark will follow them into future elections.

Posted in Energy, Food Prices | Tagged: , , , , , , | 2 Comments »

Soaring Food Prices Show Consequence of Governmental Meddling in Markets

Posted by Steve Markowitz on March 20, 2011

USA Today published some troubling figures relating to worldwide food prices that included:

  • Corn prices up 52% in the past 12 months.
  • Sugar prices up 60%.
  • Soybean prices up 41%.
  • Wheat prices up more than 24% in 12 months

While Americans have not yet felt these huge food price increases since commodities are often traded in depreciating U.S. dollars, less developed countries have.  This has led to instability in some countries, as well as hunger.  The World Bank estimates that 44 million people worldwide will descend into extreme poverty and hunger because of soaring food prices.  Given that in less dev eloped countries 50% of a family’s budget is spent on food, it doesn’t take much of an increase in prices to create a lot of pain.

There are various reasons for the rapidly increasing cost of food.  Some are difficult to control such as increasing population and affluence that lead to higher demand for food.  However, much of the current food price increases are the result of governmental interventions in markets with examples including:

  • Aggressive Monetary Policies – Western governments including the United States have attempted to forestall the aftershocks of the 2008 financial meltdown through aggressive monetary policies that include artificially low interest rates and the printing of money.  This has led to still other bubbles being created that include speculators running up prices on agricultural products.  It has also caused inflation by pushing down the value of the U.S. dollar for which many commodities are traded.
  • Distorted Energy Policies – United States energy policies have been grotesque.  While worldwide demand increases, America, the largest energy consumer, has stifled development of its vast energy resources.  In addition, Washington has promoted and subsidized the use of ethanol that is nothing more than a subsidy for American farmers.  While it has not increased energy supplies appreciably, Ethanol subsidies have been an incentive to American farmers to concentrate production for energy usage at the expense of food production, driving up food prices.  Making matters worse, as energy prices increase, even more farming efforts are moved to energy production with the World Bank estimating that the U.S. corn crop going to ethanol has increased from 31% in 2008 to 40% this year.

This story of increasing food prices and its growing problematic tentacles is a microcosm of the dangers of governmental intervention into markets.  When a crisis or supposed one occurs, Progressives inevitably claim that without radical governmental intervention the consequences to society will be worse.  With the world jumping from one crisis to another at increasing frequency since the 2008 financial collapse, it is becoming apparent that this logic is fallacious.

While the free market is an imperfect mechanism, it is superior to the Progressive view of governmental  market manipulation because it is cold, continually dynamic and self-regulating.  It does not favor one class or political view over others and it almost instantaneously responds to the changing needs of the market via the unbending rules of supply and demand.  Unfortunately, it will likely take more and increasingly worse crises for the Progressives that manage most economies to except this inevitable reality.


Posted in Food Prices | Tagged: , , , , , , , , , , , , , | 4 Comments »