Paying farms to not produce food...

An interesting point was brought up this week regarding the policy of paying farms to not produce the crop that they specialize in due to an overabundance of that crop being produced. While I can understand the economic implications of having too much of a product in the marketplace, I cannot believe that this is the most effective approach to the potential problem. The fishing industry has limits on the amount of fish that can be brought in, a limitation which some would argue has damaged the fishing industry, but this limitation is in place to protect from a potential extinction of the fish.

I believe that instead of limiting the farming industry from maximizing their production of crops that the government should instead subsidize those farms that are overproducing crops and use the production to contribute to the fight against world hunger. Although we do not see it everyday in the United States, hunger is a major problem worldwide, and the additional crops produced by the US farming industry could help to combat this.

It seems to me that it is far more wasteful to simply pay farmers to not produce crops, but it would make not only a greater human impact, but also a greater economic impact. When the government pays a farm to not produce, there is no positive economic impact for the workers on the farm, the trucks that transport the crop are not being paid to do their jobs, and we can follow the trail through the entire economy. If however, the farms are paid to produce these additional crops for a world aid purpose, then the price of these items would not be affected locally, the economic impact would be increased as the workers would be earning an income and the industries that complement these farms would have a positive economic impact as well.

Elasticity and the Internet

I am curious as to the effect of the world wide web on the elasticity of everyday items. Specifically the lack of elasticity of gasoline prompted this thought being that we all have to use gasoline. Before the internet we would have been limited to getting our fuel at the most convenient location to our home or work. There are now various websites that will update a consumer with the gas prices from various gas stations so it is possible to plan a route that will pass a station with lower prices. The necessity for this has dropped recently with the lowering of prices but if we are headed back to over $3 per gallon in the future then how is this going to effect the elasticity of gasoline.

The internet effect can be examined further by looking at a variety of industries including travel, we no longer have to rely on a local travel agent when we can be our own on hundreds of websites. Shopping for a car has moved from the dealership around the corner to a search including dealerships within a 200 mile radius. The addition of that amount of inventory must have an effect on the prices that are paid for these items, which I would hypothesize will change the elasticity of the items as well.