Stabilization of Commodities

There have been endless efforts made by various pressure groups for the purpose of keeping the price of different commodities at a position higher than the authenticated market price. However, these groups have failed terribly. These refined groups have in essence tried to cover for their actions by stating that they in fact trying hard to stabilize the price of the aforementioned commodities. The fact that they want to protect the producers from vulnerability does not necessary mean that they are aspiring to make consumers suffer by indicting higher prices to the same consumer. These refined groups have in turn come up with proposals to support the stabilization of commodity prices. First, they have indicated that it will be better for the government to provide loans to farmers so that they can keep their products off the market. This is because farmers face exploitation during the harvest time in the sense that opportunists wait to buy the produce at a relatively low price and go ahead to hoard the commodity until it becomes scarce again, hence reflecting higher prices which translate to higher profits for these opportunists while farmers take home peanuts. There although has never been a theory defend this kind of exploitation since it’s quite clear that they always act on their own interests: they possess the ability to predict higher future prices (Hazlitt 101–102).

A further insight into this discussion depicts that farmers should stop shifting blames since these are the same opportunists that help farmers to realize their profits. They have continued since time immemorial to take risks that farmers fear. These are the same opportunists that have devised ways for protecting themselves against fluctuating marketing conditions. Contrary to what farmers think: that wheat price rises gradually in subsequent months following harvesting, is actually an unproven fact since statistics indicates that in the subsequent months, wheat price remains almost the same and the slight changes that accrue are exhibited by storage and insurance fees and in some cases the raise fails to take care of these storage facilities obligating this aforementioned opportunists vulnerable: it becomes a risky game altogether since there may be profits or losses. Efforts made by the government to protect farmers are politically based in the sense that the loans offered by the government to farmers hold their wheat ward off the buyers’ interests and the “ever-normal granary turns to an “ever-abnormal granary”.

The support granted to farmers by the state to enable them to hold commodities in their granaries at all times leads to an artificial scarcity state in the same year but then the following years are filled with an excess of the surplus as the produce of the current year gets accumulated to the already stocked granaries. An real example, provided in the chapter explains the condition facing the American cotton market, depicts the failure to act according to the then existing normal marketing conditions in the sense that by the farmers holding cotton thinking that they will wreck an even higher profit was in fact the preliminary launch of their down fall (Hazlitt 102).

The acceptance of loans by farmers usually is supported by a policy that advocates for a minimal level of production that in turn leads to an economy of scarcity. The government is purported to have made a decision that favors producers’ interests so that they are advised by this very government to put measures forth: measures to control production. On international point of view, the restriction is an evident variable that denies international consumers to enjoy the benefits that they once enjoyed and, hence leave them with no alternative out of the fact they will have paid highly for these products. Spending “exploitatively” on this product definitely implies that the consumers will have less to spend on other necessities. Restrictions caused by this intentional hoarding of commodities by farmers is evidently depicted in any market economy whereas, in a competitive economy, the high cost of productions or the inefficient ways of productions are subsequently controlled by fall in pricing commodities. In its counterpart agricultural commodity, the least qualified farmers, the presence of poor farming equipments plus unfavorable environmental conditions are the factors that aid this lowering in price.

It’s arguably wrong to state that as a result of the restriction initially created leads to a rise in farm products and a subsequent allowance for farmers to possess a greater level of purchasing power from the city buyers. The move that the government decides to pay farmers to control their production or rather giving out the same amount of money to farmers to create an artificial shortage of commodities is arguably the same as paying other people with taxpayers’ money for completely sitting idle. This policy depicts a move to rob someone of his or her resources and to pay another who has entirely been sitting idle. It also leads to a complete loss of community net resources since people are paid for not producing meaning that reserves of resources are used to pay people who are in fact not concerned in working towards accumulating future resources. The resultant worst case scenario is an intense loses in value of the monetary currencies as well as a persistent increase in living costs. The international trade fairs held yearly have been mandated to come up with “a fair” price that will not exploit consumers as well as not diminish producers. While the producers are in effect advised to allow market forces take course, consumers are expected to expect much more or less in the same market (Hazlitt 103).