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Old 12-23-2008, 09:24 AM   #41
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Originally Posted by kyounge1956 View Post
That's counterintuitive to say the least. If the U.S. uses less of some resource, demand falls, which means the price of that resource drops, which means people who can't afford that resource now become able to do so. If the U.S. uses more, the price goes up. IIRC this recently happened with the price of corn—ethanol subsidies increased the demand for corn in the U.S. and as a result the price of tortillas in Mexico went through the roof.
You are assuming if "demand falls" then production will remain the same and prices drop.

Prices fall with mass production.

In some instances poor countries benefit by being able to leech off of percentages of excess production. The more production there is the more there is of that percentage. In other instances poor countries use so little of a product it would not be worth operating costs to produce it for them at all.

Couple of examples:
Do you think the American public's fascination with all things computer/electronic has caused those items to be cheaper - or more expensive? How much would a laptop cost in Zimbabwe if western demand had not caused a gazillion of them to be produced?

How much would an MRI machine cost if we didn't have at least one in every small city in the US & many in the large cities? Does our "overconsumption" of MRI machines help - or hurt - the MRI situation in Guyana?

If not for certain countries that use massive quantities of oil thus creating a huge market, there would not be as much oil production, exploration, & transportation, pipeline, refinery & business infrastructure, etc as exists currently - thus less oil on the market. Prices would surely go up as operating costs per barrel would go up.

(BTW -as to the tortilla example - the price of tortillas in Mexico has been artificially fixed for years - the price was raised (maybe partially because of ethanol) & of course the Mexican govt had to blame it on the bad ole USA - you don't think the Mexican govt is going to take responsibility for anything negative in their economy do you?)
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Old 12-23-2008, 09:53 AM   #42
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Quote:
Originally Posted by Texarkandy View Post
You are assuming if "demand falls" then production will remain the same and prices drop.

Prices fall with mass production.

In some instances poor countries benefit by being able to leech off of percentages of excess production. The more production there is the more there is of that percentage. In other instances poor countries use so little of a product it would not be worth operating costs to produce it for them at all.

...

(BTW -as to the tortilla example - the price of tortillas in Mexico has been artificially fixed for years - the price was raised (maybe partially because of ethanol) & of course the Mexican govt had to blame it on the bad ole USA - you don't think the Mexican govt is going to take responsibility for anything negative in their economy do you?)
Interesting counterpoint. I had not thought of that, but it certainly could be a positive in some cases. If we 'over consume' MRIs and computers here in the US, the used ones can go to poor countries that might not have them at all otherwise.

As to the tortilla, it would be interesting to know the cost of production before/after corn prices raised due to ethanol. Are we talking home-made tortillas, so the cost would mostly be the corn itself? I would imagine a bushel of corn would make a lot of tortillas.

-ERD50
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Old 12-23-2008, 10:22 AM   #43
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Interesting counterpoint. I had not thought of that, but it certainly could be a positive in some cases. If we 'over consume' MRIs and computers here in the US, the used ones can go to poor countries that might not have them at all otherwise.

As to the tortilla, it would be interesting to know the cost of production before/after corn prices raised due to ethanol. Are we talking home-made tortillas, so the cost would mostly be the corn itself? I would imagine a bushel of corn would make a lot of tortillas.

-ERD50
The price of tortillas in Mexico is kind of like the CPI in the US. The Mexican govt also has price controls.

"it would be interesting to know the cost of production before/after corn prices raised due to ethanol."
That would be fine but one would have to make sure they include all of the other inflationary factors in there also besides just the price of cornand how much inflation there is for other items in the Mexican marketplace to see if tortillas have gone up at the same or a much higher percentage -not to mention taking a look at what items may be now cheaper for the Mexican consumer that would offset an increase in tortilla prices - to assess the impact on the average Mexican household.

This article's nearly 2 years old (but that's when a lot of this "price of tortillas" thing was really last in the news as far as I know):

The Seattle Times: Nation & World: Mexican leader puts brakes on tortilla prices

From the article:
"The rise is partly because U.S. ethanol plants have been gobbling corn supplies and pushing prices as high as $3.40 a bushel, the highest in more than a decade.

But Calderon also blames price gouging by Mexican middlemen who grind corn into flour and sell it to thousands of tortilla vendors.

"The increases in the international corn market do not justify the tortilla hikes in this country in the last weeks," Calderon said."
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Old 12-23-2008, 12:55 PM   #44
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And what does that have to do with the price of tortillas in Mexico the price of tea in China?

(Adjusting tinfoil hat...)

As T-Al oft says, there's just too dang many people. Consider, for instance, the breadbaskets of the world, which require large amounts of petroleum and other stuff to keep the world fed. And trying to go more organic would likely reduce yields, creating a need for more land under plow, negating at least some of the benefit. And a few bad weather years, from "climate change" of whatever cause would cause major problems for those at the margin. We are straining the capacity of our power/water/sewer systems, and running out of landfill space. Pollution of various sorts is screwing with the "environment"; I refer you to the swirling mass of garbage out in the Pacific...

The World's Largest Dump: The Great Pacific Garbage Patch | Ocean | DISCOVER Magazine

Could be that simplicity may not be so voluntary...
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