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Ep 211: The Tragedy of Our Farm Bills

The Seen and the Unseen - hosted by Amit Varma

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The Distortion of the Price System

In a marketplace where there is demand and supply, how would an agriculturalist decide what to sow? He would do it on the basis of prices. The distortion comes in when the government says that look I'll give you an MSP for you know produce y at which point in time that distorts a signal coming from the marketplace. For example Punjab's involvement with rice number one there is of course you know they have these MSP incentives to make rice and sell ricenumber two. One of the unintended consequences or unseen effects of all of this Punjabi farmers growing rice is the air pollution in Delhi because then they burn the stubble and the winds carry it to Delhi.

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