NBC debunks bacon shortage myth by citing … free-market economics

posted at 11:21 am on September 28, 2012 by Ed Morrissey

Lately, there has been a kind of mock-panic at the thought of a bacon shortage, driven by higher feed costs and a drought throughout the Midwest.  However, the effect of these conditions hasn’t been a shortage, but rather higher prices passed on to consumers — which might make bacon less accessible, but doesn’t create a shortage.  This lesson in economics and reality comes to us not through AEI or the Chamber of Commerce — but through NBC, hardly known for its adherence to Hayek:

Even though headlines for the past couple of days screamed, “Bacon shortage!” (including one of our own) and social media blew up with jokes about the impending “porkocalypse,” it’s all a lot of oinking over nothing.

The summer drought, and rising corn prices have hurt hog farmers for sure. Soy, a component of hog meal, is also costing more, driven by ravenous demand by China. But all that will only lead to bacon being temporarily more expensive, not an outright “shortage.”

Why not?  Because in a free market, pricing allows for maximum efficiency between the tension of supply, demand, and costs:

First, as long as prices are allowed to rise and fall freely, there can be no shortage. Shortages only occur when the government fixes prices and consumers want more supply than exists. That results in rationing. There’s zero evidence to suggest the government would do that, or that there would be any “runs on the pork bank.”

“As long as prices roam free, there’s never a shortage or a glut,” said Bob Brown, an independent meat market analyst in Edmond, Okla. “It will find a way to clear the market.”

Those of us old enough to remember the gas lines of the 1970s need no lesson in the economics of shortage.  The lines formed during two OPEC economic attacks, while the US limited domestic production through a complicated series of tax and regulatory policies.  The shortage came from artificial limits imposed by government on the markets, not through actual shortage conditions.  (The same was true in the 1940s, but there was a rational reason for the government action — it needed the gasoline for the war in Europe and the Pacific.)

The lesson from this should be clear: we should avoid government price-fixing.  Unfortunately we don’t, and probably nowhere more so than in agriculture, where price supports and subsidies distort markets.  So far, though, that hasn’t impacted the bacon market enough to cause real shortages, at least not in the US.

So how did this rumor get started? It started in Britain, where producers want more price fixing rather than freer markets:

The only sign of a pork shortage is a press release from Britain’s National Pig Association proclaiming, “A world shortage of pork and bacon next year is now unavoidable.”

But let’s put on our critical reading glasses. The rest of the notice points to declining sow herds in the EU and asks British supermarkets to pay higher prices to pig farmers. It asks for shoppers to only buy British-made pork to protect British farmers, identifiable by the “Red Tractor” symbol on the package as part of a “Save our Bacon” campaign.

“British supermarkets know they have to raise the price they pay Britain’s pig farmers or risk empty spaces on their shelves next year,” said NPA chairman Richard Longthorp in the press release. “But competition is so fierce in the high street at present, each is waiting for the other to move first.”

Get it? This is an attempt by British pig producers to build grassroots support among British shoppers to apply pressure to supermarkets. Their tool for propping up prices is fear, wrapped in bacon, wrapped in the Union Jack. It’s pork propaganda.

This is why everyone is better off with the free market, rather than command-and-control economies.  It avoids the possibility of a Baconocalypse, a goal that should generate support across the political spectrum.  It’s a great micro lesson in the virtues of free markets, and a surprising one from the same news division that runs MSNBC.

 


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The War is Won???

faraway on September 28, 2012 at 11:24 AM

Uh huh, sure. When the Bacon Wars begin you just think back to this day and then kick yourself.

Bishop on September 28, 2012 at 11:25 AM

Three different ones.

Red Cloud on September 28, 2012 at 11:26 AM

Me? I’d rather have E15 in my gas tank than a plate full of delicious crispy bacon.

tmitsss on September 28, 2012 at 11:27 AM

Thanks, NBC! Bummer that free-market economics aren’t allowed to work in the US though.

JohnTant on September 28, 2012 at 11:29 AM

First, as long as prices are allowed to rise and fall freely, there can be no shortage. Shortages only occur when the government fixes prices and consumers want more supply than exists.

Weird that they can only apply that logic to bacon instead of say, minimum wage laws or government health care.

Washington Nearsider on September 28, 2012 at 11:30 AM

This is good to know. Because when the MSM push to limit free speech critical of the Child-rapist of Islam and advocate the Supreme Court ‘respect’ Sharia, we will be disallowed our bacon.

Pretty much how it’s illegal to get a 32-oz cup of sugar-saturated Dr. Pepper in NYC.

Liam on September 28, 2012 at 11:30 AM

Those of us who’ve enlisted in The War On Bacon army salute you, Ed. Good news, indeed, and once again, the free market solves the propaganda problem.

thatsafactjack on September 28, 2012 at 11:31 AM

However, the effect of these conditions hasn’t been a shortage, but rather higher prices passed on to consumers — which might make bacon less accessible, but doesn’t create a shortage.

Perhaps the administration should tack on a surcharge on our grocery bills to set up an Obamapork program.

Happy Nomad on September 28, 2012 at 11:32 AM

Weird that they can only apply that logic to bacon instead of say, minimum wage laws or government health care.

Washington Nearsider on September 28, 2012 at 11:30 AM

God forbid it be applied to energy…

SWalker on September 28, 2012 at 11:32 AM

No Bacon? It would be the end (and pieces) times.

trigon on September 28, 2012 at 11:33 AM

Yes, but – The War on Bacon Burgers ……..continues.

FlaMurph on September 28, 2012 at 11:33 AM

Those of us who’ve enlisted in The War On Bacon army salute you, Ed. Good news, indeed, and once again, the free market solves the propaganda problem.

thatsafactjack on September 28, 2012 at 11:31 AM

It’s a TRAP…

SWalker on September 28, 2012 at 11:34 AM

Simply a ploy, to blame high food costs on the “free market” instead on the 0bama’s regime insane need to ruin our engines with 15% ethanol.

Rebar on September 28, 2012 at 11:36 AM

One of the unsubsidized agricultural products is pork. The market sets the price based upon supply and demand.

AZfederalist on September 28, 2012 at 11:38 AM

“Give us our daily bacon and grant Thine increase in the EBT.”

Archivarix on September 28, 2012 at 11:38 AM

It was the Duke Brothers trying to make a run on pork bellies.

hawkdriver on September 28, 2012 at 11:43 AM

Yes, but how do I get my free obama phone?

lorien1973 on September 28, 2012 at 11:45 AM

Gee, it sure would be great if they would speed up some other misconceptions in the news.

Cindy Munford on September 28, 2012 at 11:46 AM

Three different ones.

Red Cloud on September 28, 2012 at 11:26 AM

Heh. Got it.

98ZJUSMC on September 28, 2012 at 11:47 AM

The Obama Administration already has it figured out-It’s the increased demand for bacon in all those Muslim countries that has created the shortage and driven up the prices. By extension, the brilliant thinkers in the White House have deduced that if we cut off bacon supplies to Iran, not only will they be driven to their knees, stop nuclear production and sue for peace-but the resultant increase in bacon will lower prices for everybody.

MaiDee on September 28, 2012 at 11:48 AM

Weird that they can only apply that logic to bacon instead of say, minimum wage laws or government health care.

Washington Nearsider on September 28, 2012 at 11:30 AM

or, not.

98ZJUSMC on September 28, 2012 at 11:48 AM

A reminder, there is no SPAM shortage tho!!

http://www.youtube.com/watch?v=lQEg-inKQyM

Scrumpy on September 28, 2012 at 11:51 AM

…N B C motto…Nobody But Cowears!

KOOLAID2 on September 28, 2012 at 11:52 AM

The War is Won???

faraway on September 28, 2012 at 11:24 AM

Uh oh. This could crush MKH’s ratings.

platypus on September 28, 2012 at 11:55 AM

Now…If Obama gives out free phones with bacon on the side…sign me up!!!!!!!!!!!!

logicman_1998 on September 28, 2012 at 11:56 AM

Bacon shortage?

HA HA! Charade you are.

Nick_Angel on September 28, 2012 at 11:57 AM

Humanity facing GLOBAL BACON SHORTAGE!!!!11!!!!

Doomwatchers are painting an apocalyptic picture of a world where weeping humanity is reduced to scraping meagre nourishment from mash without bangers, hole without toad, scratchings without pork and, chillingly, sarnies without bacon.

According to the BBC, a drought-hit US maize harvest has forced up cereal prices worldwide, prompting a sharp rise in the cost of pig nosh prices.

More significantly for UK palates, EU pig welfare rules have provoked a “dramatic” rise in the cost of the animal.

Blighty “imports about 60 per cent of its pig meat from other EU countries”, and porcine experts expect this supply to be cut “significantly” over the next 12 months.

Prices will have to rise, analysts warn. Stephen Howarth, of the pig tentacle of the UK’s Agriculture and Horticulture Development Board, hinted that only those with deep wallets will get their laughing gear round porker-based nourishment.

He said: “Those who were willing to pay would still be able to get it, but some may find it more difficult. It will be interesting to see how they react.”

Well, we at El Reg have a pretty good idea how they’ll react, and it involves inner cities burning and pig farmers wielding shotguns fighting off ravenous mobs of bacon lovers armed with knives, forks and frying pans.

Phil Brady, spokesman for the British Sausage Appreciation Society*, summed it up with admirable understatement when he told the Beeb: “Pork has always played an important part in British cuisine.”

If Britain can pull through the impending pork crisis without suffering complete social and culinary collapse, there is hope that future generations will not be reduced to looking at dusty pictures of bacon sarnies while sitting on granddad’s knee as he tearfully recounts tales of pinnacles of pork perfection.

Stephen Howarth reckons that swine herds who avoid going trotters-up in the next year should benefit from a decent 2013 northern hemisphere grain harvest, thereby improving mankind’s long-term pork prospects. ®

Bootnote

* Not to be confused with the American Pork Sword Appreciation Society, patron Paris Hilton.

By Lester Haines of The Register

http://www.theregister.co.uk/2012/09/13/bacon_crisis/

Scrumpy on September 28, 2012 at 11:58 AM

The War is Won???

faraway on September 28, 2012 at 11:24 AM

Uh oh. This could crush MKH’s ratings.

platypus on September 28, 2012 at 11:55 AM

Never… MKH won the war on Bacon single handedly, with a lot of help from the very lovely Kelly Maher..

SWalker on September 28, 2012 at 11:58 AM

bacon is the candy meat , there are a lot of hogs running around. So there will never be a shortage of bacon on my plate , yes im clinging to my guns and BBQ

mojack on September 28, 2012 at 12:02 PM

Wait till the Muslims acquire a taste for bacon leading to a huge increase in demand.

bayview on September 28, 2012 at 12:03 PM

Don’t expect NBC to consider free market economics when considering anything on the macro level.

besser tot als rot on September 28, 2012 at 12:11 PM

Whilst it is surprising that the National Bastard Communist news channel go it right wait until QE3 and QE4.

You’ll be able to get your bacon for the bargain price of $25 a pack.

CorporatePiggy on September 28, 2012 at 12:20 PM

besser tot als rot on September 28, 2012 at 12:11 PM

My first thought when reading this is that they will still immediately go to idiots like Krugman and Reich and talk abot how we have to increase demand to reduce unemployment. But that’s not the way the market works-if you increase demand businesses don’t hire more to meet demand, they simply charge more until demand equalizes.

But logic was never the libs strong point…

PetecminMd on September 28, 2012 at 12:35 PM

Price is part of that invisible hand that moves to insure a steady supply of commodities.
A way there could be a real shortage of bacon would be if the government stepped in and fixed prices then the store would run out.

But as long as the free market can adjust prices bacon will be in the stores.

The higher prices when a commodity is in shorter supply provides incentive to producers to increase production to capitalize on the higher price.

esnap on September 28, 2012 at 12:37 PM

EBT cards inherently drive prices higher because people that use them are not limited by there ability to pay (some else pays) so there is no self imposed throttle on there buying decision.

So, for us that pay taxes and don’t use EBT we pay double, once to pay for the EBT and another by having to compete at the grocery store against people that buy things they normally would not be able to afford.

Thank you F.F. Piven

esnap on September 28, 2012 at 12:43 PM

That is exactly what i said when you put the first article up.

astonerii on September 28, 2012 at 1:07 PM

But as long as the free market can adjust prices bacon will be in the stores.

esnap on September 28, 2012 at 12:37 PM

If only the final link in the chain is free market, then it’s not a free market. Feed corn is artificially skyhigh due to a decidedly unfree market – thanks to the 0bama regime – but it’ll be the “greedy bacon producers” that will get the blame for the price.

Rebar on September 28, 2012 at 1:15 PM

The more you know…

ptcamn on September 28, 2012 at 1:44 PM

Talking about rationing, remember when the left was up in arms because we were saying Obamacare would bring rationing and “death panels”? And how they claimed everything would be covered under that plan? Yeah…

http://www.nytimes.com/2012/09/17/opinion/health-care-reform-beyond-obamacare.html?_r=0

But… but…I thought…!!! … Hey, look, the NFL referees are back!!!

ptcamn on September 28, 2012 at 1:56 PM

It was the Duke Brothers trying to make a run on pork bellies.

hawkdriver on September 28, 2012 at 11:43 AM

:) Laughed out loud. I can’t even here “pork bellies” without thinking of the Duke brothers. I’m glad someone else has been programmed and it isn’t just me.

Axe on September 28, 2012 at 2:37 PM

“As long as prices roam free, there’s never a shortage or a glut,” said Bob Brown, an independent meat market analyst in Edmond, Okla. “It will find a way to clear the market.”

But that isn’t true. He’s saying “shortage or glut,” but obviously only thinking “glut” since he’s using “clear the market” as the answer.

The idea that the “correct” price will be applied to the commodity if the market is allowed to fix the price, and that the correct price will move lower or higher as demand acts on more or fewer resources, doesn’t mean there can be no shortage. It just means that some things are so scarce and expensive that not everyone can have them. You can say “there is no shortage of diamonds” by the above logic, but people aren’t walking around, holding their bellies, saying, “You know what I could go for? A ring with a huge diamond on it.” Common food is different. If the market has fixed a “correct,” high price on a staple, that’s got to be a shortage, or shortage doesn’t mean anything.

Axe on September 28, 2012 at 2:48 PM

*hear

PS. For sports, Shakespeare, nakedness, swearing, interviews, opinions, and Bacon related news, be sure to catch The War on Bacon, 6:15 Eastern, right here on Hot Air, featuring commentary by the Hot Air’s own Mary Katherine Ham, and the always controversial Kelly Maher (now out of prison!).

Axe on September 28, 2012 at 2:55 PM

Strawman and you fell for it. All is not well.

The price of bacon is going to be higher. Meaning food prices are going to be higher. That’s the baconacolypse.

Anyone who thought we’d “run out” of bacon was just stupid.

bingsha on September 28, 2012 at 3:58 PM

Soy, a component of hog meal, is also costing more, driven by ravenous demand by China.

Those f-ing Chinese, again! You’d think those Japanese fishermen could do a better job of ‘Neighborhood Watch’!

I have to go buy an archery set to practice for the coming Hunger Bacon Games…

socalcon on September 29, 2012 at 10:05 AM

Thank you F.F. Piven

esnap on September 28, 2012 at 12:43 PM

Letting R. Cloward off the hook? Must be related.

socalcon on September 29, 2012 at 10:11 AM