Market Rate Food Is Luxury Food

by jefftkjefftk3 min read23rd Nov 201912 comments

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Economics
Personal Blog

We're in the middle of a major food crisis. It is so expensive that people have little left for shelter, clothing, or other necessities. We cannot let this continue, but that doesn't mean every proposal is a good one. Specifically, I want to address the extreme position of eliminating marketing orders and allowing unrestricted production of market rate food. This has historically been pushed by farmworkers, who are far from unbiased, but lately some " Yes In My BarnYard" farmer groups have been advocating for this as well.

Let me be clear: new market rate food is luxury food. You cannot solve a problem that disproportionately affects low-income people by producing more food they clearly cannot afford. The market cannot grow its way out of this crisis.

With deregulation, farmers would massively shift to luxury crops, and we would have shortages of bread, milk, eggs, and other staples. While high-margin crops like nuts, oranges, and arugula would get somewhat cheaper, that's no help to low-income families that can barely afford the basic calories they need.

While YIMBYs claim insufficient supply is the underlying problem, the real issues are much more complex than you learn in Econ 101. Lack of supply is only a symptom of a fundamentally broken system where food is a commodity, for sale to the highest bidder. We cannot leave something as fundamental as food to capitalism.

Since deregulation is clearly not the answer, what do we do instead? The number one thing we need is more and better public food. Public Food Authorities provide a critically important service for food-insecure people, but the Faircloth limit caps production at October 1, 1999 levels. Our PFAs are also chronically underfunded for the vital work they do, and are not able to the produce the nutritious food our low-income families deserve. We need to remove the cap, and reverse decades of underinvestment and neglect.

We should also fully fund SNAP. The waiting-list for benefits can be multiple years, which is incredibly damaging. We also need to fully enforce the Small Area Fair Market Food rule to make sure that grocers are fairly compensated for their participation in SNAP, but do not make a windfall from the program.

We also need far more affordable food. Most regions still do not require new market-rate farms to reserve any of their production for low-income consumers. We should require 35% affordable food from all new farms nationwide, and we should ban in-lieu payments which in practice do not end up being effectively invested in food production. We should also expand affordable food production bonuses: farmers who commit to producing 50% or 100% affordable food should be granted substantially higher production limits.

Finally, we need to establish national food control to protect consumers from the skyrocketing price of food. We should enact a national cap on food price increases at 1.5x the CPI to help prevent the exploitation of consumers at the hands of private farmers, and we should allow states to pass stronger caps if appropriate.

We cannot leave this problem to get worse, and we cannot leave it to the market to solve. We must invest in our cities and towns, and every night someone goes to bed hungry is a failure for us as a nation.


The most important thing we need to do to resolve the housing crisis is allow people to build so much new housing that the cost falls to the cost of housing construction, and the above is a satirical analogy to a world in which we have heavy restrictions on regional food production that are similar to the restrictions we put on housing production. Just as we still need SNAP and WIC even though food is generally affordable, we would still need housing assistance programs in a world where housing was much cheaper. But if production restrictions made food as expensive as housing and SNAP had a multi-year waiting list, "fully fund SNAP" would be a far less impactful and far more expensive step than "remove the production restrictions."

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It's not at all clear to me that housing and food are similar enough for this analogy to work. It seems to me that I can totally imagine a world in which the argument in the initial part of your post is right, and for that matter I can also imagine a world in which the corresponding argument about housing is right; whether either of them actually is right depends on details that needn't be the same in the two cases.

So the implicit argument here (if I'm understanding right) -- "some people say that to solve our housing problems it isn't enough to build more houses, so we should prioritize building affordable housing or something instead; here's an analogous thing people might say about food, which is obviously silly; likewise, saying these things about housing is silly, so the main thing we need to do is to build more houses regardless of exactly what they are" -- doesn't work for me. It's not obvious enough that the food version of the argument is wrong, nor is it obvious enough that if one is wrong then the other is too.

(I do tend to agree that building more housing is much the most important thing to do to address the difficulties many many many people have in affording somewhere to live, so my unconvincedness here isn't the result of not liking the conclusion.)

If the arguments are actually analogous, then this shows that one of them is wrong. Maybe there are important differences between food and housing, but if the argument doesn't mention them, it is wrong. It's that simple.

It is also striking that when people claim that there are differences and flail around looking for differences, the differences generally support the wrong side. It makes is pretty clear that they didn't have any belief about the topic.

It's hard to tell whether the arguments are "actually analogous" because ...

  • The spoof-argument about food, in the OP here, leaves lots of things implicit. (E.g., "With deregulation, farmers would massively shift to luxury crops, and we would have shortages of bread, milk, eggs, and other staples"; it doesn't go into details about why this would allegedly happen.) So we don't know what the parallel argument about housing actually says.
  • The parallel argument about housing leaves everything implicit, in that we don't actually know what it is. Jeff hasn't (so far as I know) pointed at a specific pro-housing-regulation article and copied its arguments, he's provided a bunch of food-arguments that supposedly parallel common housing-arguments. So what's "the argument" here?

I think it's reasonable to suspect that they aren't "actually analogous" in sufficient detail that if one is wrong then the other is too because ...

  • They depend on all sorts of details about the world that there's no particular reason to expect behave the same way in the food and housing cases. E.g., is a (fictional) several-year waiting list for SNAP equivalent to a several-year waiting list for, er, whatever housing thing this is meant to be parallel to? It might be, but maybe not; the timescales on which hunger and homelessness happen aren't exactly the same, after all, nor are the timescales associated with normally-functional food-buying and house-buying, and if I try to imagine mechanisms leading to several-year waiting lists for food assistance and for housing assistance, it's not clear to me that I should expect them to be similar. (Hence, the prospects for fixing them might differ.)

And I don't understand why you are so sure that if the arguments are analogous then "this shows that one of them is wrong". Normally, when that sort of thing is true it's because the conclusions of the two arguments are incompatible, but that doesn't seem to be the case here. Perhaps you mean "this shows that the one about housing is wrong" because you find it obvious that the one about food is wrong (though in this case I am not sure why you said "one of them", which seems wrong on Gricean grounds), but I don't find that convincing because

  • The argument about food is liable to seem obviously wrong simply because it's based on a world that is clearly quite different from ours in implausible-seeming ways.
  • If I leave aside the fact that the things it says about food are in fact false in our world, it's no more obviously wrong (to me) than the argument about housing that it's meant to be undermining by its more-obvious wrongness. In some hypothetical world where food is highly regulated and unaffordably expensive, would it be the case that deregulating it would bring prices down to the levels we see in our world? Are you sure you aren't just assuming that since Jeff has described a world that differs from ours in those two respects, the regulation must be the cause of the cost?

Maybe this argument is a straw man. That is, maybe it's not accurately describing the arguments that people use. But that is a very different problem than saying this argument might be OK.

I agree. That's why I listed those two issues (1. the spoof argument might not be a good analogy for real arguments about housing; 2. the spoof argument isn't obviously wrong) separately.

is a (fictional) several-year waiting list for SNAP equivalent to a several-year waiting list for, er, whatever housing thing this is meant to be parallel to?

Section 8

Thanks! Here are a couple of relevant extracts for anyone else who didn't know the same things as I didn't know. First, what it is:

Section 8 of the Housing Act of 1937 [...] authorizes the payment of rental housing assistance to private landlords on behalf of low-income households in the United States. Of the 5.2 million American households that received rental assistance in 2018, approximately 1.2 million of those households received a Section 8 based voucher.

Second, those waiting lists:

In many localities, the PHA waiting lists for Section 8 vouchers may be thousands of families long, waits of three to six years to obtain vouchers is common, and many lists are closed to new applicants. Wait lists are often briefly opened (often for just five days), which may occur as little as once every seven years. Some PHAs use a "lottery" approach, where there can be as many as 100,000 applicants for 10,000 spots on the waitlist, with spots being awarded on the basis of weighted or non-weighted lotteries, with priority sometimes given to local residents, the disabled, veterans, and the elderly.

"Fully Fund Section 8" is part of Bernie Sanders' housing proposal and is popular among people on the left. If we think low income people should get housing vouchers, why give out so few?

If I thought there was no way to bring down the cost of housing I would probably agree, but since supply is so restricted giving Section 8 to everyone who needs it would (a) raise rents even more, (b) be incredibly expensive, and (c) transfer a huge amount of money to landlords.

Building public housing (at higher densities than would normally be allowed) or just removing zoning restrictions would go much farther.

How does the price cap suggestion avoid the usual econ-101 rule that a price cap either does nothing or causes a shortage?

It doesn't; this post is satire.