Dumping product is losing money, the only way it makes profitability sense in Democratic Capitalism would be if the increase of profit from dumping 1 unit is greater than the marginal cost of producing that unit.
And even if that was the case industry wide, without collective action from government or cartel persuasion (or there being a monopoly which is the result of a LACK of government action), it wouldn’t make sense to do for any individual because you make more being a free rider.
The issue of misaligned incentives does exist, we have enough food to feed everyone and we aren’t doing it, but the pandemic milk dumping was because of the pandemic, not Capitalism. Farmers did donate some food to food banks but it’s a once-in-a-lifetime disruption nobody was prepared for so the food banks couldn’t take all that was available.
Yes, I think of this as a messaging problem. Uncontrolled capitalism is essentially anarchy. It creates perverse incentives, which can result in behavior like dumping or limiting product at very high cost when it would be cheaper and more profitable in the short term to sell it (see OPEC, DeBeers). I don’t know of a successful capitalist state with a government that doesn’t regulate capitalism.
In this case, though, yeah, a pandemic disrupted supply chains, changed consumption patterns, created labor shortages. We all understand the toilet paper shortage wasn’t engineered because we could see the cause. When a root cause invisible to us, it’s a common reaction to assume bad intent.
Dumping product is losing money, the only way it makes profitability sense in Democratic Capitalism would be if the increase of profit from dumping 1 unit is greater than the marginal cost of producing that unit.
And even if that was the case industry wide, without collective action from government or cartel persuasion (or there being a monopoly which is the result of a LACK of government action), it wouldn’t make sense to do for any individual because you make more being a free rider.
The issue of misaligned incentives does exist, we have enough food to feed everyone and we aren’t doing it, but the pandemic milk dumping was because of the pandemic, not Capitalism. Farmers did donate some food to food banks but it’s a once-in-a-lifetime disruption nobody was prepared for so the food banks couldn’t take all that was available.
Meanwhile most of dumped milk was dumped in US
Yes, I think of this as a messaging problem. Uncontrolled capitalism is essentially anarchy. It creates perverse incentives, which can result in behavior like dumping or limiting product at very high cost when it would be cheaper and more profitable in the short term to sell it (see OPEC, DeBeers). I don’t know of a successful capitalist state with a government that doesn’t regulate capitalism.
In this case, though, yeah, a pandemic disrupted supply chains, changed consumption patterns, created labor shortages. We all understand the toilet paper shortage wasn’t engineered because we could see the cause. When a root cause invisible to us, it’s a common reaction to assume bad intent.