Question
Go to the Internet and find a news article that discusses a potential positive or negative externality.
Summarize key points in your initial discussion post. Be sure to use the concepts and frameworks we are covering this week. For example, you may want to address what externality this regulation attempting to address?
Is it a positive or negative externality? What is the current policy being used?
Is there an alternative policy approach that may work better/worse (taxes or subsidies, for example) and why?
How effective does the current policy appear to be working?
Reflection –include a paragraph in the initial response in their own words reflecting on specifically what they learned from the assignment and how they think they could apply what they learned in the workplace.
Response/Answer
Subsidies Externalities
Currently, the U.S. farmers are facing a depressed farm economy, including continues market uncertainties and unresolved trade agreements.
The White House proposed that the U.S. Department of agriculture should decrease of 15 percent in funding due to the “duplicative programs and overly generous subsidy programs” The intent of the White House is to save money by eliminating subsidies to higher income farmers and reducing premium subsidies. This reduction could aid some of the federal government’s farm subsidies increasing their financial gain from millions to billions.
This is a perfect example of an eternality by an effect of one economic agent action affecting another one for worse by changing their cost. For example, middle-class farmers will be limit to the subsidies (spillover cost) but will continue to pay the premium subsidies. In the other hand, this action will benefit the federal government.
In this case, what would you do as a farmer?
Sources:
https://www.cnbc.com/2019/03/12/farmers-slam-trump-2020-budget-plan-that-includes-cuts-to-subsidies.html
https://learn.umuc.edu/d2l/le/content/353087/viewContent/13930379/View