Economics in One Lesson: The Shortest and Surest Way to Understand Basic Economics by Hazlitt Henry

Author:Hazlitt, Henry [Hazlitt, Henry]
Language: eng
Format: mobi, epub
Publisher: Crown Business
Published: 2010-08-10T16:00:00+00:00

1The cotton program has been, however, an especially instructive one. As of August 1, 1956, the cotton carryover mounted to the record figure of 14,529,000 bales, more than a full year’s normal production or consumption. To cope with this, the government changed its program. It decided to buy most of the crop from the growers and immediately offer it for resale at a discount. In order to sell American cotton again in the world market, it made a subsidy payment on cotton exports first of 6 cents a pound, and, in 1961, of 8.5 cents a pound. This policy did succeed in reducing the raw-cotton carryover. But in addition to the losses it imposed on the taxpayers, it put American textiles at a serious competitive disadvantage with foreign textiles in both the domestic and foreign markets. The American government was subsidizing the foreign industry at the expense of the American industry. It is typical of government price-fixing schemes that they escape one undesired consequence only by plunging into another and usually worse one.

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