The rising price of beef gives a meaty lesson about the limits of the government’s ability to tackle inflation by throwing more money into the problem.
Even in an environment where almost everything is becoming more expensive, the price of a pound of beef can make your eyes water. The Bureau of Labor Statistics says beef prices have risen 12 percent specifically since last September, specifically at the same time as beef sticks rose 16 percent. This is significantly higher than the growth of food products (7.7 per cent) and all products (5.3 per cent) in the last 12 months.
The Biden administration, perhaps worried about political tolls that food prices could rise in the middle of next year, announced plans earlier this month to guarantee a ৫০ 50 million loan to beef producers. According to the U.S. Department of Agriculture, it was on top of the 500 500 million approved as part of a $ 1.9 trillion American rescue plan that was supposed to “increase processing capacity and increase meat and poultry competition.”
The second part of the White House plan is to shamefully involve meat processing companies. Brian Diss, director of the White House National Economic Council, said in a press briefing last Friday, Detroit Free Press Report.
Taken together, the White House’s approach to higher meat prices could be summarized based on the idea of greater government subsidies based on the idea that increasing competition in the meat-packing industry would increase supply and reduce barriers.
But, such as the description of David Fram Atlantic Today, there are some good reasons to be skeptical of this argument. For starters, it takes about 200 million (and a few months, if not more) to build a new meat-processing plant. This means that the Biden administration’s new loan programs will not buy additional power and any gains will not happen immediately. Even if the plan succeeds, small producers may need ongoing support beyond initial loans – if there was a market for more, smaller meat processors, the private sector would already be investing in them.
“There’s a real risk,” Froome wrote, “that the initial promise of $ 500 million in assistance and loan guarantees for small packers would extend into continued market intervention to keep small competitors in business in the face of higher efficiency and lower prices. Big packers. “
Of course, since it’s Frum, he handles the flaws in President Joe Biden’s plan with Kid Gloves, even admitting that White House officials had no answer to his pretty basic question of how it would actually work, you know. Yet, he writes, “the architects of the Biden plan are uncomfortably aware that it depends on many hopes, assumptions, and optimistic assumptions.”
Let’s just say this: a good way to waste $ 500 million without affecting the price of beef.
In some ways, Biden’s approach here reflects his recent big announcement on the use of the Defense Production Act to make the COVID tests more widely available to the public. Thanks to an unqualified Food and Drug Administration (FDA) that still refuses to approve the Quid Covid test, which is still readily available in Europe and elsewhere, the U.S. has a relatively small supply of these tests – and naturally, this means that the tests are relatively more expensive here. This is a problem because the main advantage of the Quid test at home is that you can take the test whenever you want, but it’s much harder to do when the tests are $ 20 – and even harder when you can’t find one.
Biden’s solution is to force companies to test more using the hammer of government power. This may seem plausible in theory, but in reality, even the White House acknowledges that it will not be able to move. And only 280 million The test is enough for every adult in America … a test.
But 280 million sounds like a big number. So is 500 500 million. In fact, they are large numbers. But in the context of a national economy like America, they are actually quite small. So small to be trivial, really.
It is not impossible to imagine a more costly response from the government to the rise in beef prices. The Biden administration could approve ড 20 billion from Congress that raises cows, builds more meat-processing plants and sends weekly coupons to every American family to reduce the cost of steaks and burgers at local supermarkets. (At the very least, this will allow us to write funny headlines about the beef grilled during the congressional hearings in our news business.)
It would be a reaction that could remove the needle, although it would be horrible So, many levels. The unforgettable interventions that Froome has described will only be a part of it. It won’t take long for the beef industry to become a sacred cow for Congress, as corn farmers already have.
And even if the government does all this, it will do nothing to solve it Original The root cause of the current cattle price problem is: a severe drought in the western United States that has caused the herd to shrink and the average beef to be slaughtered is 15 pounds less. This will not fix the problems of the ongoing epidemic-related workers in the meat-packing plants, who are working less efficiently despite having full staff because they need to take the necessary precautions to limit their outbreak which could create even bigger obstacles.
The lesson here is about the government’s inability to manage the economy on a large scale. Using the Defense Production Act is not the best way to test Covid more quickly in American homes than to remove the FDA red tape. The test makers will do the rest. Anyone who wants to build a new meat-processing plant is guaranteed a ৫০ 50 million loan that will not address supply chain problems at existing plants or end the Western drought.
The higher prices, while politically difficult for the Biden administration, will send a signal to the supply chain that more workers will be employed and more cows will be raised. Other than that, it’s just a matter of waiting – because any government intervention would be trivial or ineffective.
And maybe we should eat more pork for a while.