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Governments pay to keep food at the cheapest point possible to ensure stability. a fed population doesn't kill their governments. Agriculture is not a regular i

Governments pay to keep food at the cheapest point possible to ensure stability. a fed population doesn't kill their governments. Agriculture is not a regular industry; its a national security issue Farming is not a profitable endeavor. There would be a lot less financial advisors in the world otherwise. A carbon tax will either drive up prices or reduce suppliers, increasing prices. Reducing farmland will require more efficient methods which will also drive up prices The result will be the public pays more for food, not the agriculture industry makes any more or less money. It will require more imports which will come from countries with less regulation and more exploitable resources. We've seen the story of disruptions to the food supply play out before. The reality is this is a more dangerous gamble than most people realize.

chaostheory 2y ago
I wouldn’t be surprised if the masses interpret these changes as “let them eat cake” given that inflation is already hammering the middle and lower classes.
- chairmansteve 2y ago
  Denmark is a net exporter of food. In other words a net importer of agricultural pollution. So they could refice food exports without domestic political consequences. In theory.
- RayVR 2y ago
  in Denmark, inflation is currently running at a 1.6% annualized rate, as of the most recent reading[0]. This is the full basket inflation rate, including volatile categories (food and energy). Core inflation is even lower, with the latest reading at 1.3% (annualized) in October 2024. Food inflation is, of course, volatile. It currently sits at a moderately elevated level of 3.9% (October 2024, annualized). Food prices declined earlier this year for two consecutive months, though that will be a minor consolation after the significant food price inflation in 2022 and persisting, though at a slower pace, through 2023. All of that to say, "let them eat cake" mentality is unlikely in a country where they have consistently ranked at the top of a world happiness index. Additionally, while I'm not well versed in Danish politics, I am under the impression that the Social Democrats have responded much better to the mass immigration that has been an ongoing issue for many parties throughout Europe. I think this is indicative of a party that adapts rather more quickly to the consequences of their previous policies and is less ideologically stubborn - at least on some issues. 0: https://ycharts.com/indicators/denmark_inflation_rate https://ycharts.com/indicators/denmark_inflation_rate
  - lowkey 2y ago
    Economists look at inflation on a month/month or year/year basis. This is not an accident as it purposely ignores the destructive cumulative effect of inflation. Individuals, by contrast look at the cumulative effect of inflation. If inflation runs hot for several years and then comes back to a moderate level, prices don’t go down regardless of what economists would have you believe. The effect of inflation has memory.
    - RayVR 2y ago
      Economists look at inflation in many, many ways. I don't think anyone that's reasonably well informed, especially economists, misunderstands the cumulative impact of price changes. Economists that make monetary policy decisions look at recent inflation trends + projected inflation because they are tasked with price stability, which requires them to often respond to shocks well outside their control (war in Ukraine, massive government spending, tax cuts, covid-19 pandemic, etc.) I was trading and researching fixed income and inflation markets (and implementing in multi-billion dollar portfolios) years ago when you had inflationistas claiming the Fed was going to cause double digit runaway inflation. At the same time, you had people claiming the Fed was not doing enough to support markets. No matter what monetary policy makers do, it will be pretty much universally mocked by pundits and especially anyone that wants to talk their own book. Academic economists don't really focus much on any particular reading of inflation, unless perhaps they have their own axe to grind about how it is measured or responded to. Monetary policy can't change the past, which is why they evaluate current and expected inflation, not what happened in two years ago. Just because prices increased dramatically in 2022 does not mean the Fed or any other central bank should aim for deflation.
  - braincat31415 2y ago
    1.6% is the change in the CPI. The actual inflation is about 8%. There was a huge change in the CPI in 2022 or 2023, mostly attributed to sharply higher cost of energy.
    - RayVR 2y ago
      I don't think you understand the numbers I listed. Read what I wrote again and try to think about the parts you don't understand, look them up, then read again.
rob74 2y ago
So, what are you proposing? Just do nothing about climate change, as we have done before, and have worse social consequences in the near future rather than now? Denmark is more at risk from rising sea levels than other countries (https://cphpost.dk/2023-02-17/news/rising-sea-levels-threaten-copenhagen-in-not-too-distant-future https://cphpost.dk/2023-02-17/news/rising-sea-levels-threate...), so they want to do something about it.
- motohagiography 2y ago
  not OP, but how about some technology innovation instead of governance and taxation? the effect of taxing farmers as though they were some kind of vanity industry will be similar to what nationalizing farms has done in prior schemes like this. it creates a national dependency on imported food from countries that do not bankrupt their farmers, and suddenly (shocked!) the entire Danish food supply crosses the borders to arrive and is then subject to federal management. this latter case is of course the purpose, and climate change is merely a pretext. I hope european farmers are able to organize a revolt.
  - shakna 2y ago
    What technological innovation do you think farming could adopt, that it hasn't already...? They don't operate with simple machinery. They regularly use some of the most complicated systems that mankind can build, such as satellite systems, chemical analyses, etc. Governance is needed, where progress does not occur naturally.
    - motohagiography 2y ago
      invent, not adopt. that's the difference between government and industry, government doesn't invent anything except problems to manage. reality is, governments want smallholding farmers out of the business and to replace them with agribusinesses because it's a process of de-kulakizing their subjects. it has nothing to do with science or environment at all. I think maybe a war over this stuff will give us the reset we need.
vuxie 2y ago
Specifically on reducing farmland. Denmark is intensly cultivated, and the reduction targets the lowest yield land that for various reasons were reclaimed over the last two centuries. Using the high yield land more efficiently is intended.
mtsr 2y ago
Denmark has a population of 5.8 million and currently produces enough to feed 15 million. There’s no need for imports because of 15% less farmland. Besides, all this export only contributes about 1% of GDP. So it’s not economically important either. One can even argue that the reduction in environmental and climate impact will create room for other industries that already are carbon-taxed.
- teitoklien 2y ago
  1. Agriculture is not a machine like consistent harvest giver, especially with more climate change (that’ll happen regardless of emission slowdown), it is good to have produce enough to feed 5.8(=6 million approx), a bad harvest can bring that 15 million down to 7 million very fast. 2. All produce is not of same quality, 15 million people’s produce will probably only produce 11-12 million produce that is marketable in stores after transporting it 3. Economies of scale matters, going from 15 million people’s produce to a 10 or 8 million produce doesnt just means a linear cost reduction, the price per unit for crops also rises, which can potentially make it hard to compete with other agro hubs in the Eurozone, dwindling Denmark’s independent source of food supply over time.
  - wbl 2y ago
    Denmark does not have to stand alone thanks to the EU.
    - martinsnow 2y ago
      That may change in the future if the populist parties gain more traction in the eastern EU.
      - scotty79 2y ago
        Then they can chop the trees down and make furniture or building materials and sell them to pay for agricultural re-expansion..
- signalToNose 2y ago
Ma8ee 2y ago
As you point out, there are several valid reasons to subsidise farming. But then subsidise farming, not carbon emissions! And while you are at it, use those subsidies to encourage farming that is sustainable, both for the climate as well as biodiversity.
- jdenning 2y ago
  What's the point of a carbon tax if it's balanced by a government subsidy? Edit: Genuinely curious what I'm missing..
  - bramblerose 2y ago
    The subsidy could be independent from the carbon emissions (e.g. by subsidies on the produced goods) while the carbon tax isn't, effectively creating an incentive to produce in a less carbon intensive manner.
  - addcommitpush 2y ago
    Low carbon farms balance would be: "low carbon" profit + subsidy - small carbon tax High carbon farms balance would be: "high carbon" profit + subsidy - high carbon tax If ["low carbon" profit - small carbon tax] > ["high carbon" profit - high carbon tax] (e.g. if the carbon tax is high enough), farms have an incentive to lower their carbon emissions. The subsidy is here to make sure ["low carbon" profit + subsidy - small carbon tax] > 0
    - jdenning 2y ago
      That makes sense - thanks!
  - chgs 2y ago
    If I can make 1 unit of food for €50 and use 50 tons of carbon, or make it for €60 and use 10 tons of carbon, a carbon tax and food subsidy would allow me to sell that €60 low carbon food for €50 and force me to sell the high carbon food for €60 This gives an economic incentive to use the lower carbon method, funded by those who use more carbon, while not changing the end price or output.
wqaatwt 2y ago
> A carbon tax will either drive up prices or reduce suppliers, increasing prices Of if there is an equivalent subsidy (i.e. the tax is basically redistributed) it would encourage to produce less carbon/methane intensive production
danlitt 2y ago
I am not sure how this responds to the comment you are actually responding to. You say, > Governments pay to keep food cheap > A carbon tax will either drive up prices or [drive up prices] So, this is just number rearranging. The public pays either way. Ok. The comment you replied to says > Currently the public subsidizes the agriculture industry by paying for the consequences of the industry's carbon emissions. So the public pays in this case too. More number rearranging. Not at all clear why this makes prices increase. So why do you think this implies prices increase? Do you think the price of carbon determined by the government is too high? Or do you just want to ignore this externality until we pay it all at once?
- Spivak 2y ago
  We should simply ignore the externality all together because we're all paying for it anyway. Either the subsidies take into account the carbon tax or they don't. If they do then it's number rearranging. Government gives dollars and then immediately takes some of them back, it's a convoluted appropriations bill. If they don't then food prices go up which is contrary to the government's goal of keeping food cheap at the point of sale. If you want to reward reducing carbon emissions by giving additional dollars or paying for more expensive but better for the environment equipment then that could potentially be effective.
  - dwallin 2y ago
    Trying to reduce a negative by pumping resources into a positive rarely works out as expected and often has surprisingly distortionary effects. (see ethanol and corn production in the USA) I’m personally of the opinion we should be doing far more tying together of revenue neutral taxes and subsidies within an industry. When you want to reduce a negative externality you tax that and then redistribute the proceeds equitably back across relevant actors. When you want to increase a positive externality, you equally tax actors and then distribute it asymmetrically according to the behavior you want to encourage. Or combine the two approaches to address both negative and positive externalities in one go. These approaches allow you to be more targeted, while minimizing overall market distortions.
  - 2y ago
gravitronic 2y ago
give the carbon tax revenue to consumers to offset that the price of food now reflects it's true cost. people can still afford to eat and food producers would actually be incentivized to reduce emissions.

chaostheory 2y ago

I wouldn’t be surprised if the masses interpret these changes as “let them eat cake” given that inflation is already hammering the middle and lower classes.

chairmansteve 2y ago
Denmark is a net exporter of food. In other words a net importer of agricultural pollution. So they could refice food exports without domestic political consequences. In theory.
RayVR 2y ago
in Denmark, inflation is currently running at a 1.6% annualized rate, as of the most recent reading[0]. This is the full basket inflation rate, including volatile categories (food and energy). Core inflation is even lower, with the latest reading at 1.3% (annualized) in October 2024. Food inflation is, of course, volatile. It currently sits at a moderately elevated level of 3.9% (October 2024, annualized). Food prices declined earlier this year for two consecutive months, though that will be a minor consolation after the significant food price inflation in 2022 and persisting, though at a slower pace, through 2023. All of that to say, "let them eat cake" mentality is unlikely in a country where they have consistently ranked at the top of a world happiness index. Additionally, while I'm not well versed in Danish politics, I am under the impression that the Social Democrats have responded much better to the mass immigration that has been an ongoing issue for many parties throughout Europe. I think this is indicative of a party that adapts rather more quickly to the consequences of their previous policies and is less ideologically stubborn - at least on some issues. 0: https://ycharts.com/indicators/denmark_inflation_rate https://ycharts.com/indicators/denmark_inflation_rate
- lowkey 2y ago
  Economists look at inflation on a month/month or year/year basis. This is not an accident as it purposely ignores the destructive cumulative effect of inflation. Individuals, by contrast look at the cumulative effect of inflation. If inflation runs hot for several years and then comes back to a moderate level, prices don’t go down regardless of what economists would have you believe. The effect of inflation has memory.
  - RayVR 2y ago
    Economists look at inflation in many, many ways. I don't think anyone that's reasonably well informed, especially economists, misunderstands the cumulative impact of price changes. Economists that make monetary policy decisions look at recent inflation trends + projected inflation because they are tasked with price stability, which requires them to often respond to shocks well outside their control (war in Ukraine, massive government spending, tax cuts, covid-19 pandemic, etc.) I was trading and researching fixed income and inflation markets (and implementing in multi-billion dollar portfolios) years ago when you had inflationistas claiming the Fed was going to cause double digit runaway inflation. At the same time, you had people claiming the Fed was not doing enough to support markets. No matter what monetary policy makers do, it will be pretty much universally mocked by pundits and especially anyone that wants to talk their own book. Academic economists don't really focus much on any particular reading of inflation, unless perhaps they have their own axe to grind about how it is measured or responded to. Monetary policy can't change the past, which is why they evaluate current and expected inflation, not what happened in two years ago. Just because prices increased dramatically in 2022 does not mean the Fed or any other central bank should aim for deflation.
- braincat31415 2y ago
  1.6% is the change in the CPI. The actual inflation is about 8%. There was a huge change in the CPI in 2022 or 2023, mostly attributed to sharply higher cost of energy.
  - RayVR 2y ago
    I don't think you understand the numbers I listed. Read what I wrote again and try to think about the parts you don't understand, look them up, then read again.

rob74 2y ago

So, what are you proposing? Just do nothing about climate change, as we have done before, and have worse social consequences in the near future rather than now? Denmark is more at risk from rising sea levels than other countries (https://cphpost.dk/2023-02-17/news/rising-sea-levels-threaten-copenhagen-in-not-too-distant-future https://cphpost.dk/2023-02-17/news/rising-sea-levels-threate...), so they want to do something about it.

motohagiography 2y ago
not OP, but how about some technology innovation instead of governance and taxation? the effect of taxing farmers as though they were some kind of vanity industry will be similar to what nationalizing farms has done in prior schemes like this. it creates a national dependency on imported food from countries that do not bankrupt their farmers, and suddenly (shocked!) the entire Danish food supply crosses the borders to arrive and is then subject to federal management. this latter case is of course the purpose, and climate change is merely a pretext. I hope european farmers are able to organize a revolt.
- shakna 2y ago
  What technological innovation do you think farming could adopt, that it hasn't already...? They don't operate with simple machinery. They regularly use some of the most complicated systems that mankind can build, such as satellite systems, chemical analyses, etc. Governance is needed, where progress does not occur naturally.
  - motohagiography 2y ago
    invent, not adopt. that's the difference between government and industry, government doesn't invent anything except problems to manage. reality is, governments want smallholding farmers out of the business and to replace them with agribusinesses because it's a process of de-kulakizing their subjects. it has nothing to do with science or environment at all. I think maybe a war over this stuff will give us the reset we need.

vuxie 2y ago

Specifically on reducing farmland. Denmark is intensly cultivated, and the reduction targets the lowest yield land that for various reasons were reclaimed over the last two centuries. Using the high yield land more efficiently is intended.

mtsr 2y ago

Denmark has a population of 5.8 million and currently produces enough to feed 15 million. There’s no need for imports because of 15% less farmland. Besides, all this export only contributes about 1% of GDP. So it’s not economically important either. One can even argue that the reduction in environmental and climate impact will create room for other industries that already are carbon-taxed.

teitoklien 2y ago
1. Agriculture is not a machine like consistent harvest giver, especially with more climate change (that’ll happen regardless of emission slowdown), it is good to have produce enough to feed 5.8(=6 million approx), a bad harvest can bring that 15 million down to 7 million very fast. 2. All produce is not of same quality, 15 million people’s produce will probably only produce 11-12 million produce that is marketable in stores after transporting it 3. Economies of scale matters, going from 15 million people’s produce to a 10 or 8 million produce doesnt just means a linear cost reduction, the price per unit for crops also rises, which can potentially make it hard to compete with other agro hubs in the Eurozone, dwindling Denmark’s independent source of food supply over time.
- wbl 2y ago
  Denmark does not have to stand alone thanks to the EU.
  - martinsnow 2y ago
    That may change in the future if the populist parties gain more traction in the eastern EU.
    - scotty79 2y ago
      Then they can chop the trees down and make furniture or building materials and sell them to pay for agricultural re-expansion..
signalToNose 2y ago

Ma8ee 2y ago

As you point out, there are several valid reasons to subsidise farming. But then subsidise farming, not carbon emissions! And while you are at it, use those subsidies to encourage farming that is sustainable, both for the climate as well as biodiversity.

jdenning 2y ago
What's the point of a carbon tax if it's balanced by a government subsidy? Edit: Genuinely curious what I'm missing..
- bramblerose 2y ago
  The subsidy could be independent from the carbon emissions (e.g. by subsidies on the produced goods) while the carbon tax isn't, effectively creating an incentive to produce in a less carbon intensive manner.
- addcommitpush 2y ago
  Low carbon farms balance would be: "low carbon" profit + subsidy - small carbon tax High carbon farms balance would be: "high carbon" profit + subsidy - high carbon tax If ["low carbon" profit - small carbon tax] > ["high carbon" profit - high carbon tax] (e.g. if the carbon tax is high enough), farms have an incentive to lower their carbon emissions. The subsidy is here to make sure ["low carbon" profit + subsidy - small carbon tax] > 0
  - jdenning 2y ago
    That makes sense - thanks!
- chgs 2y ago
  If I can make 1 unit of food for €50 and use 50 tons of carbon, or make it for €60 and use 10 tons of carbon, a carbon tax and food subsidy would allow me to sell that €60 low carbon food for €50 and force me to sell the high carbon food for €60 This gives an economic incentive to use the lower carbon method, funded by those who use more carbon, while not changing the end price or output.

wqaatwt 2y ago

> A carbon tax will either drive up prices or reduce suppliers, increasing prices Of if there is an equivalent subsidy (i.e. the tax is basically redistributed) it would encourage to produce less carbon/methane intensive production

danlitt 2y ago

I am not sure how this responds to the comment you are actually responding to. You say, > Governments pay to keep food cheap > A carbon tax will either drive up prices or [drive up prices] So, this is just number rearranging. The public pays either way. Ok. The comment you replied to says > Currently the public subsidizes the agriculture industry by paying for the consequences of the industry's carbon emissions. So the public pays in this case too. More number rearranging. Not at all clear why this makes prices increase. So why do you think this implies prices increase? Do you think the price of carbon determined by the government is too high? Or do you just want to ignore this externality until we pay it all at once?

Spivak 2y ago
We should simply ignore the externality all together because we're all paying for it anyway. Either the subsidies take into account the carbon tax or they don't. If they do then it's number rearranging. Government gives dollars and then immediately takes some of them back, it's a convoluted appropriations bill. If they don't then food prices go up which is contrary to the government's goal of keeping food cheap at the point of sale. If you want to reward reducing carbon emissions by giving additional dollars or paying for more expensive but better for the environment equipment then that could potentially be effective.
- dwallin 2y ago
  Trying to reduce a negative by pumping resources into a positive rarely works out as expected and often has surprisingly distortionary effects. (see ethanol and corn production in the USA) I’m personally of the opinion we should be doing far more tying together of revenue neutral taxes and subsidies within an industry. When you want to reduce a negative externality you tax that and then redistribute the proceeds equitably back across relevant actors. When you want to increase a positive externality, you equally tax actors and then distribute it asymmetrically according to the behavior you want to encourage. Or combine the two approaches to address both negative and positive externalities in one go. These approaches allow you to be more targeted, while minimizing overall market distortions.
- 2y ago

gravitronic 2y ago

give the carbon tax revenue to consumers to offset that the price of food now reflects it's true cost. people can still afford to eat and food producers would actually be incentivized to reduce emissions.