I live in a much more socialist country than the US. And when I think of the US I think of hard line capitalists that can't stand socialism. But reserves like this seem out right communist. State owned reserves designed to manipulate market prices. What am I missing? Or are my assumptions about the US and capitalism
wrong?
This level of central planning is indeed quite rare (though much more common in agriculture, as it's been around for longer than most smart folks realized government-mandated cartels are a bad idea). Fortunately, the more tyrannical aspects of this scheme were recently struck down by the Supreme Court.
I'd say they are wrong, the US is full of these regulations, particularly around farming - cheese reserves, almond sale limits, assured prices (if the market price is below X, the State makes up the difference), etc. The claims about how free market oriented the US is are mostly propaganda.
Socialism has a "branding" problem in the U.S. It's been successfully portrayed by some to mean Soviet style communism, but then when you ask the average person who doesn't like socialism if that means they want to give up Social Security and Medicare they get confused.
Your assumptions about the US and capitalism are wrong. You are not alone, it is the national mythology in the U.S., and increasingly the world. But the rise of capitalism was never truly about a 'free market', but has always been sheparded by the state.
Reserves like this are built to smooth smaller variability in markets to make them less chaotic, I guess. If weather impacts logistics for a short time, if a particular crop is bad in part of the country, etc.
It's not communistic in any definition I can gather, but rather a trust mechanism to keep small hiccups in a market from causing larger effects than they should. Internationally, I suppose, it's a negotiating mechanism to keep trade in an advantageous state.
This and other resource reserves are artifacts of Depression era or WWII-era programs intended to stabilize prices or resource levels. Some of them outlived their intended lives because they continued to be generally useful to their participants.
For example, the complainant in the Raisin Reserve case is estimated to have profited to the tune of several million (cumulative) for the years in which the reserve kept prices above market rates. (This is where his "debt" to the government came from--he chose to commercially sell raisins at the above-market rates made possible by the raisin reserve rather than to the reserve as contractually obligated). He suffered no actual monetary harm--indeed, he had quite a bit of financial gain since the reserve prevented massive losses in bad/glut years, but like most psuedo-libertarians his short-term profits mattered more than long-term considerations. Expect to see him lobby for a bailout in the near future when a natural catastrophe guts his crop or a glut drops prices below sustainability.
We have a different form of redistribution, a non-socialist one, a crappy one that does not actually help citizens.
When capitalists screw up, as in the economic crash of the late 2000s, it is acceptable to give them huge sums of capital in a wealth transfer because they more or less hold the economy hostage. On the other hand, when capitalists succeed, our government works to ensure that their gains are as unaffected by taxation and regulation as possible. If they fail they win, if they win they win.
We engage in huge, expensive, idiotic wars where the government pays out enormous sums of money to defense contractors. Lobbyists get laws made and passed that alter the rules of credit and lending (think credit card terms, student loan terms, etc) in the interest of capital. People who approve and expedite those processes on the government side move on to cushy jobs at those financial institutions/gov't contractors/etc.
Sometimes, for these reasons (and for reasons like the one you raise), people say that the US economy is not really a capitalist one, and thus the US can not be brought to bear on critiques of capitalism. This is the same as socialists arguing that USSR was not really socialist because its behavior does not match up to a doctrine written in a book.
An unregulated easily leads to price sparks and crashes. This can easily become catastrophic for governments, so they try to keep the prices stable for both the consumers as well as the producers.
It's such an incredibly outdated way of conducting business. The podcast was really terrific in showing the underworkings of an industry that I would never even think twice about. Very interesting
Perhaps it's too soon to tell. According to SCOTUS, the ruling was on 6/22/2015 and judgement was issued on 7/24/2015. At least this means the program is defunct, so I suspect the Raisin Administrative Committee no longer discusses this matter in the same way. Does this mean raisins could be cheaper in the future if there is less supply control/"diversion"?
That 2013 case mentioned in the article is of utmost importance. I suggest you read up on it to understand just how dangerous the government has become. No tinfoil hat here, agencies are simply out of control because their powers are so unchecked everyday people don't stand a chance.
That agencies' powers are "unchecked" is an odd conclusion to draw from an article announcing that Cato's position won and the Supreme Court has concluded that farmer's must be paid for their confiscated raisins.
Maybe. But still, that's not evidence that the agency is unchecked so much as a complaint that it takes too much effort in some cases to check it.
And more importantly, this was not exactly a case where the agency was running amok in blatant violation of the law. It was a genuinely controversial legal proposition whether personal property was covered by the Takings Clause of the 5th Amendment until this case was decided. Most legal checks on agency action do not require enunciation of new principles of Constitutional law by the Supreme Court, so this is not a great example.
One episode of The Simpsons had the characters driving up a mountain. Off to the side was a sign: "STRATEGIC GRANITE RESERVE". Just about as useful as a raisin reserve.
For the US, correct. For something like Singapore, I think a strategic granite reserve is actually useful.
It is interesting that remnants like this still exist after the economic transition at end of WW II: strategic raisin reserve, rent control in New York to accommodate returning servicemen and their families (http://citylimits.org/2015/03/09/nycs-endangered-species-a-r...).
They're mostly gone, but their existence had a very different cause:
'This basic system led to the infamous "butter mountains" and "wine lakes" of the 1980s, with farmers being paid to produce goods for which there was no market.' [1]
This seems very different to the USA system, where according to the article: 'The profits from the raisins, often seized for no payment, are then used to pay the expenses of the committee or pay back farmers for their seized produce. In one recent year, $65,483,211 was made, although it was all spent, with none left over for farmers'.
There are definitely other programs that are more like farmers being paid to produce goods for which there was no market. Although what's more common in the U.S. is farmers being paid to leave their fields fallow to avoid over-production. The raisin reserve model is unusual, but there are many ways in which the U.S. regulates/manipulates agricultural markets specifically.
