Thursday, July 5

Parable of Gasoline and Milk

It is perhaps even more instructive to see how the government regulates these two commodities. Oil companies are constantly harassed by government as the world's great Satans, with windfall profits taxes and price gouging regulations, all on an industry that barely makes a 10% profit on sales in the best of times. Milk, on the other hand, gets huge government subsidies and handouts, including a price support system that is both arcane and incredibly costly. So Oil: windfall profits taxes. Milk, which is pricier but easier to produce: price supports. Does anyone really want to argue that regulation is a result of real market realities rather than just populist pandering for and against favored and unfavored groups?

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