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Government Sugar Policy: Buy High, Sell Low?

Posted By Bryan Riley On March 23, 2013 @ 9:00 am In Economics | Comments Disabled

[1]

Newscom

It was recently reported [2] that the federal government is considering buying 400,000 tons of sugar to prop up prices for sugar producers. The government would then sell the sugar at a loss of 10 cents per pound, costing taxpayers $80 million.

Conventional wisdom for investors is “buy low, sell high.” The government proposes taking the opposite approach, buying sugar at an artificially high price and selling it at a loss. With this type of economic policy, is it any surprise the government is running deficits as far as the eye can see?

The government guarantees [3] a minimum price for sugar processers and inflates U.S. prices by restricting sugar imports. This type of crony capitalism [4] rewards industries based on who has the most powerful lobbyists, and it undermines our country’s economic freedom [5].


Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2013/03/23/government-sugar-policy-buy-high-sell-low/

URLs in this post:

[1] Image: http://blog.heritage.org/wp-content/uploads/sugar-spoon.jpg

[2] reported: http://online.wsj.com/article/SB10001424127887324096404578356740206766164.html

[3] guarantees: http://www.ers.usda.gov/topics/crops/sugar-sweeteners/policy.aspx#price

[4] crony capitalism: http://blog.heritage.org/2012/04/22/chart-of-the-week-crony-capitalism-leads-to-higher-sugar-prices/

[5] economic freedom: http://www.heritage.org/index

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