For week ending 9/17/10.
Should the government interfere in the free market trade of wheat? What can the government do to assure that wheat prices do not climb??
Friday, September 10, 2010
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Welcome. This is a blog dedicated to the students enrolled in the CSHS AP Economics classes. Click on the title of the article, read, and click comment.
Well, if the trade of wheat is to stay free, then I'd rather the government not interfere. The wheat market operates smoothly without government interference and responds naturally to shortages and surpluses of wheat, which I see as a good thing. Maybe governments, though, could perhaps subsidize crop protection (i.e. locust attack prevention and other such things) to help prevent shortages like the current one in Russia.
ReplyDeleteI think the government should interfere with the free market trade of wheat. With the shortage of wheat, many wheat importers will start buying more at whatever price and that would raise the price sky high. The Russian government was right to ban exporting because the Russian people would have to pay a high price for wheat that are being produced in their own country and that's just really unpleasant.
ReplyDeleteThe government should issue a price ceiling. That would prevent the price to go overboard but that is just a temporary solution. The government should promote more programs/solutions that could prevent future hazards from doing too much damages on the crops and they should keep a steady amount in their own warehouse in case shortage like this do happen again.
I don't think the government should interfere with the free market trade of wheat because the market already balances itself out when the supply fluctuates. The article says that the supplies are still ample and as long as that is true then there is no need for the government to step in. Now if for some reason the supply did change drastically, and supplies were no longer suitable, then that is the point where government should step in because the market failed at balancing out and needs some regulations.
ReplyDeleteAs of now, I think the government should not interfere in the free market trade of wheat because the situation is not terribly unstable. The price of wheat is simply fluctuating due to shortages and bans, but there is still plenty of wheat to go around. The article stated that the the successful harvests in America and Canada have resulted in the third-highest world wheat production. The wheat importers just need to relax and not buy wheat at inflated prices which would only cause the market price to rise.
ReplyDeletePerhaps the only thing the government can do without interfering is to reassure everyone that there is an abundant supply of wheat despite the Russian ban.
I think the government should not interfere with the free market trade of grain because the statistics say the production of wheat is still strong in countries such as America, Canada, and Australia. Also, the article says farmers are still producing an abundant amount of wheat, and they know to produce more wheat the following year. Therefore, the government does not have step in and control the wheat market. To prevent wheat prices from inflating, the government can encourage farmers to produce more wheat.
ReplyDeleteIf the Russian government's main reason for banning to exportation is in benefit to the people of their country then all the power to them. A government has the responsibility of taking care of its citizens which includes providing a sufficient supply of food. If there is already a shortage of wheat and the country decides to export all of its wheat being produced it would leave no wheat left for the Russians. Similar to what Tuyet said, exporting all their wheat would result in Russians having to pay higher prices for an imported wheat product that is already being produced within their own country. A ban on wheat is a good thing for its citizens as it avoids rising prices. However, it could affect the economy as there will be no more of an income from exporting wheat. The government could avoid prices from rising by simply limiting the amount of wheat exported during the shortage rather then a complete ban.
ReplyDeleteI do not think that the government should interfere with the free market. The supply on a completely free market is plentiful enough that the market will balance the price out to the best possible rate. It also seems that Russia is only hurting their economy because they have either lost or must pay a different price for whatever it was that was bought from the trade of wheat and from the profits the farmers do not now have to spend. It seems that Russia is creating a shortage more than they are dealing with one, showing that in most cases, supply and price levels are best left to the free market.
ReplyDeleteI don't think that the government should interfere because, as stated before already, the market fluctuates and balances itself out.The article also states that supplies are strong and wheat productions from certain countries next year are looking positive. Also, I feel that if the government interferes, it may increase the panicky behavior. I think that the government should aid the farmers with the droughts and fires and interfere that way.
ReplyDeleteThe Russian Government should not interfere with the price of wheat for several reasons. The first being the obvious consequences. The price of wheat will rise. Now paying a little extra for cereal and bread wont exactly break my budget but it is not exactly the worst inflation in the world. Other immediate consequences are the hunger this will cause. In poorer countries such as Egypt, Haiti, and Bolivia many people will not be able to afford food. Now to the long term consequences. The lack of food in those third world countries creates civil unrest. Citizens begin looting stores and homes to find food. The lower class pool expands because of this while the upper class pool grows because of the cheap price of labor. More of the countries resources are diverted to stop the unrest putting the country into debt. The countries financial position is very weak so they get a loan from the IMF. Countries around the world contribute to the IMF causing raised taxes and less benefits to society as a whole. This is what happens at a more discrete level when Russia puts up trade barrier to the rest of the world. As you can see even something like a small increase in the price of wheat can impact the US indirectly using several different vehicles. In another scenario a country could fail altogether prompting the us to deploy troops to secure the country. That is one reason why trade barriers are detrimental to the economy. --Zachary Lee
ReplyDeleteNo, the government should not interfere with the wheat market due to the facts that there is a steady supply of wheat and the prices are still steady. If the governments start to interfere with the market it will cause the prices to rise even higher, instead they can aid the farmers in the process.
ReplyDeleteMost of the arguments supporting intervention are based on the flawed notion that there is even a problem. Competitive markets fluctuate, but demand will always be met. In fact, the market has not even fluctuated very much: the wheat prices are barely above where they were in January. Long term economic policy decisions should not be made in a swift, reactionary manner. They should be carefully considered and opened to extensive debate before any decision is made.
ReplyDeleteWhat's more, it is not clear who exactly would be enacted this new policy to control the wheat market. The WTO? The UN? Or, contrary to it's own agenda, NAFTA? I see no way for any such controls to be viable or effective.
The government should not interfere with the wheat market because the wheat market will naturally rebound, especially considering the supply of the combined world's wheat is still high. Therefore, the government is not needed at this point and should only take action if the general supply runs low.
ReplyDeleteIt is my belief that the government should not interfere with the wheat market because it isn't necessary. the market isn't fluctuating that badly and such a haste decision should not be made, it should be discussed. the wheat market has been around for hundreds of years and they have obviously done a pretty good job of self regulating.
ReplyDeletethe government could institute subsidizes in order to ensure that wheat prices did not climb as well.
I agree with the idea that the government should not interfere in the wheat market. Over time, the situation will correct itself and all will be right in the wheat industry. The goverment could put price limits on how high the prices of wheat could be sold for, but I'm pretty confident that the businesses that make profit from buying and selling wheat would not like this idea at all.
ReplyDeleteI believe that the government should not interfere in the wheat market because the wheat market is capable of fixing itself when the supply fluctuates. There is still a sufficient supply of wheat at the moment but if it comes to a point when there is tremendous change in the supply then the government should step in to regulate.
ReplyDeleteI think if the government were to interfere now it would be jumping the gun. The article qualified its statements of countries getting nervous, over buying on wheat, and a possible hike of wheat prices with the fact with the higher stocks on wheat it is unlikely to happen and that prices now aren't that much higher than in January. I can't recall a wheat famine or price boycott then so I believe consumers just bought the wheat without a temper tantrum and the government should just hope the invible hand guides this free market of wheat into the same situation again where demand and supply eventually will reach equilibrium again without any chaos.
ReplyDeleteI feel this is just another scare to the common people that really has no significance in the big picture, at least not at this point. Russia is having trouble with their crops right now, so their government did what they feel is best for the people. When it comes to the united states, there isn't much of an impact. Wheat prices are not sky-rocketing in the least bit, and they aren't the only suppliers we have. This is a tiny blip in the charts, and will soon be forgotten. So for the government to create a long-term policy would be foolish, because it will do more harm than good. The prices do not need regulating nor does the wheat trade as a whole. It is a self-regulating commodity that shouldn't be interfered with. If the government feels the need to do something, I guess they could aid domestic farmers, but anything else is really unnecessary.
ReplyDeleteI don't believe the government should regulate the price of wheat. This is because there are plenty of wheat suppliers around the world and Russia is only one of the many countries being affected. The supply is definitely plentiful for the demand of the market. It is natural for prices to experience changes. Since Russia is not the only supplier, no government policy needs to be implemented at the moment. However, if extreme conditions come about, such as famines in other countries, then it would be time for the government to step in. For now, though, the market itself is in charge of balancing things out.
ReplyDeleteThe government should not interfere. It is unnecessary and, if anything, it will cause more panic and haste to get wheat while it's still available. It would cause people to think there is more of a shortage than there actually is. Furthermore, this article makes it clear that, on a large scale, there is no actual shortage. There is only temporary panic which was initiated by Russia. I think it would be best for everyone if Russia were to decide to simply limit exports rather than completely ban it. Either way though, the wheat market will stabilize itself soon enough.
ReplyDeleteThe government regulation of wheat prices will just cause panic in the general population. As said in the article, the supply of wheat on a large scale is strong, only in Russia has their supply been depleted. The government interfering in the prices of wheat will cause a chain of confusion. Their involvement will make people believe that this issue is more serious than it truly is, causing panic among people. Farmers will plant lots of wheat for next years harvest to make up for the lack of supplies now, without really thinking. I believe that with or without government regulation the wheat market will soon be stabilized.
ReplyDelete