Wednesday, April 11, 2012

A pure market theory states that supply and demand will adequately allocate all resources in a society to where they are needed. It relies on markets to provide and distribute resources without government intervention. This market does not exist in the world, and it cannot exist because markets are imperfect. Government intervention is necessary because markets are flawed and self-servient. An example of this in Rivoli's book is on page 32, where Rivoli discusses the authorizing of the Bracero program by Congress in 1942, which allowed Mexican labor to enter the United States for short periods to work in agriculture. Rivoli states that this program "illustrates again the political influence that enabled cotton farmers to avoid competitive markets." (Rivoli 32) This program allowed cotton to be picked more effectively than it would have otherwise, and protected farmers from the volatile labor market. Another example is the payment of subsidies from the U.S. government to cotton growers, put in place by the Farm Bill act of 2002. Under this bill, cotton farmers received a direct payment of "6.66 cents per pound of cotton regardless of the market price." (Rivoli 59). This bill protected farmers from business risks such as bad weather, bad credit, and tough competition. The Crop Disaster Program reimburses farmers for losses due to bad weather, and the Farm Loan Programs provide financing to farmers who are unable to get credit from private sources. The government has been a good friend to the cotton farmers, and have given them a leg up in the global cotton economy. While culture interacts with economics in the very broad sense that government interaction due to cultural values, a specific example from the text appears on page 30. Rivoli explains that the Deep South was more reluctant to trade in their traditional farming tools for more advanced technologies that would increase productivity. She explains that this hesitance to trade in their mules for tractors was due to a "faithful attachment to tradition and reluctance to change..."(Rivoli 30). This grasp to old ideals effected Deep South's cotton production greatly, placing them far behind Texas in annual production. One thing that surprised me in this section of the book was the small number of organic growers. During the summers I work on a blueberry farm, but about 7 years ago the owner, never a smoker, got lung cancer from the pesticides he sprayed on the fields. So, we switched to organic. Not only did greater demand for organic blueberries increase our sales, but we noticed that the blueberry plants responded better to the organic sprays than the chemical ones. Seeing the difference between the blueberry and cotton industry is very interesting to me because of this.

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