Question: What does McWilliams mean by "perverse" subsidies? Define and/or illustrate with an example. Draw a connection between perverse subsidies and the externalized costs (negative externalities) that we discussed in a previous module.
This is the previous module: (Week 2: In an economic transaction between a producer and a consumer, an externalized cost or (negative) externality is a cost to someone who is not involved in the transaction. For example, the consumer doesn't pay for it, and the producer doesn't pay for it. Joel Salatin alludes to this concept when he talks about food that is not “honest.” List three externalized costs associated with food production (and consumption), and try to identify the third part(ies) likely to pay for each. Which cost on your list concerns you the most? This course benefits greatly from interaction and community building, so feel free to "like" and/or comment on your classmates' entries. For this discussion in particular, you may be better prepared for the middle of the course if you read through a lot of different examples of this phenomenon. I don't want to start listing them for you, though. I think it would be more productive for you to hear from each other.)
This is all the information/directions that is provided to me. I can't provide the link to the book as my account would be terminated, you can find the books on Z Library. The question is not incomplete and this is all the information that was given to me, I cannot add any more information. This is my second time asking this question.
This is all of the information that was given to me, there is nothing else I can provide. Go to Z Library and look at the books: James McWilliams Just Food and Barbara Kingsolver's Animal Vegetable Miracle.
In order to understand what McWilliams means by "perverse" subsidies, we first need to define the term. A subsidy is a financial aid or support provided by the government to certain industries or activities, usually with the aim of promoting economic growth, job creation, or social welfare. However, "perverse" subsidies refer to those subsidies that have unintended negative consequences or outcomes.
McWilliams argues that perverse subsidies often create market distortions and lead to unsustainable practices or behaviors. These subsidies often result in environmental harm, social inequality, or economic inefficiency. They essentially encourage and support activities that are detrimental to society and the environment.
To illustrate this concept, let's consider an example. One of the commonly cited examples of a perverse subsidy is the agricultural subsidies given to large-scale industrial farming operations. These subsidies often support the production of crops that require large amounts of pesticides, fertilizers, and water. The use of these inputs can have significant negative externalities, such as pollution, soil degradation, and water scarcity. In addition, these subsidies can contribute to the concentration of power and wealth in the hands of large agribusinesses, while smaller farmers are left struggling.
Now, let's draw a connection between perverse subsidies and the externalized costs (negative externalities) discussed in the previous module. As mentioned earlier, negative externalities refer to costs imposed on individuals or society that are not directly accounted for in a transaction between a producer and a consumer. In the context of food production, externalized costs can include environmental pollution, depletion of natural resources, and public health risks.
Perverse subsidies exacerbate these negative externalities because they incentivize and support activities that generate such costs. In the case of agricultural subsidies, for example, the use of pesticides and fertilizers can result in water and air pollution, impacting the health and well-being of communities near farms. The costs associated with addressing these environmental and health issues are often borne by society as a whole, rather than the producers or consumers who benefited from the subsidies.
In conclusion, McWilliams refers to "perverse" subsidies as those subsidies that have unintended negative consequences. These subsidies can lead to unsustainable practices, environmental harm, social inequality, and economic inefficiency. They often result in externalized costs, where the negative impacts are not adequately accounted for in economic transactions between producers and consumers.