Monday, May 11, 2015

Rich Enough To Play At Being Poor

SWPL burrito-slinger Chipotle has raised a few Red Team hackles by announcing that they will no longer serve food containing genetically modified organisms. Here's one particularly risible quote from the link:
One recent study by researchers at Washington State University estimated that between 1996 and 2011, pesticide and herbicide use increased by more than 400 million pounds as a result of GMO cultivation.

If you ever find yourself short on fodder for an intro stats or principles of logic course, I urge you to put that on a midterm.

Anyway, if it makes wealthy westerners feel all warm and fuzzy inside to eat conventionally cultivated food, what's the harm? They're not obliging the desperately poor and malnourished people of the world to play Marie Antoinette after all.

Well, unless you count the mandatory labeling crowd. Recall your principles of economics: imposing mandatory costs on producers will shift the long-run cost curve upward, driving marginal producers out of business and raising entry barriers for new firms. Incumbent producers benefit from the monopoly-promoting policies, and if the policy covers the entire market (such as for food), consumers with low price elasticity of demand end up footing the bill. The unfortunate equilibrium results in two types of high-cap agribusiness: organic and GMO on the one hand, and unregulated subsistence farming on the other hand.

Then again, decades of farm policy and land use restrictions have spiked the GINI coefficient in agriculture anyway. Mandatory GMO labeling will do little more than cement the already-egregious market advantage enjoyed by spectacularly gigantic firms like ADM and Monsanto, so maybe it's not such a big deal after all.

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Do you have suggestions on where we could find more examples of this phenomenon?