Income Forgone – Jim Webster’s thoughts on the “new” agricultural policy in the UK

There is a reason for governments getting involved in controlling food prices. Hungry people riot and overthrow governments. The Arab ‘Spring’ is perhaps the most recent example of the chaos caused because the wheat price rose and various states no longer had the income to subsidise the price of food. Unfortunately food prices are regressive. There is a lot of discussion about regressive taxation, (“If the activity being taxed is more likely to be carried out by the poor and less likely to be carried out by the rich, the tax may be considered regressive.”) but in in reality food prices are regressive.

If food prices go up with a bang, the prosperous family might well have to cut back on the skinny vegan decaf cappuccino but needn’t think twice about having a holiday home in Cornwall as well as the Dordogne. The poor family will not be able to afford new shoes.

So I have no problem with government stepping in to subsidise food prices. Indeed, governments have been stepping in to control the market since the days of ancient Athens, if not earlier. Because hungry people riot and overthrow governments.

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