Redistribution - An Example

Redistribution

This year (2012) warm spring weather in the Northeast and Midwest (USA) caused apple trees to bud earlier than usual. A subsequent frost damaged the delicate blossoms. The result: a severe decline in production up to 90%.

This led to higher demand and prices in Washington where there was a good harvest escalated. A classic example of supply and demand. Or demand and supply. A mild spring with no frosts followed by a warm summer provided the ‘perfect’ growing season.

This demonstrates the redistribution principle: a shortage somewhere and a glut somewhere else does not create anything extra, but just moves it about. The consequent ‘wealth‘ (market forces) to the fortunate grower is at the expense of the loss to the low yielding farmer.

Gain balanced by loss. Except the balance is probably skewed by raising prices above a balance point.  The ultimate new price/unit probably exceeds the old. Inflation in action.

Do prices revert to an earlier one or do the

prices remain at the new ‘high’?

Note added 01.01.2013

• Bad weather is held responsible for the expected price rise of food. This should theoretically be a short-term effect until a better seasonal crop of raw food is harvested. Doubtless, however, the price rise as a result of shortage will never be matched with a reduction when there is surplus or excess. An example of sustained profiteering without justification.