Post a response to this discussion thread
Go pick up your brain, grundle-James, it rolled out your ear again.
Here's an example of grundle-James' free market at work, and it's happening right now. The International Monetary Fund considered the case of Mexico. You know, Mexico? Our neighbor to the south? Well, it seems they don't import enough coffee down there to satisfy the IMF and the World Bank. So before they'll write any development loans, they required Mexico to begin importing coffee in 1998.
Now, why should Mexico begin importing coffee? They grow enough for domestic consumption and more besides, which is a source of income for the country. The coffee growers could dependably get a price of 13 or 14 pesos (about $1.25 US) per kilo of unprocessed beans as recently as 2000.
However, because of the requirements of international free marketers, Mexico had to begin importing coffee for the first time in its history. Nestle, which put pressure on the IMF and World Bank to require coffee imports, bought a license from the Mexican government to import 600,000 sacks of coffee this year. They haven't imported one bean, but the prospect that they MIGHT import cheaper Vietnamese coffee has caused the bottom to drop out of the domestic market, and this year, brokers are offering coffee grower 6 pesos per kilo. Of course, the growers can't make a living at that price, but Nestle can make a killing buying up Mexican coffee at 7 or 8 pesos per kilo, and selling it for the usual after market price, netting themselves 6-7 pesos unearned profit for every kilo they buy.
So, what's the free market justification for this? Besides greed, I mean. Why should Mexico be required to grant import licenses when they grow plenty of coffee domestically? No real reason, except Nestle executives apparently need to buy this year's model yacht.
But that's the free market at work! Mexican coffee growers should have to compete with Vietnamese coffee growers in a race to the bottom for prices for their crop. And do you see the price drop in the grocery store or at Starbucks? Hell no! Why doesn't the retail price drop? Because the processors such as Nestle are whipsawing the growers and keeping the end price up because they know consumers will pay that price. There is no supply-and-demand, just pure greed, but that's grundle-James' free market in action!
Post a response to this discussion thread