Corn tortillas in Mexico…

There is currently a tortilla crisis in Mexico. Protests in the streets, shortages, etc. The president has tried to impose a price ceiling and demand that no one “hoard” tortillas, but we know how that’s going to work out… Tortillas will sell for what they’re worth (on the black market if no where else) and/or people that make them will distribute them to whoever they like. What cased this problem? Well, there are two obvious ones. American subsidies for biofuel have artificially raised the price of corn on world markets. Reasonable people can argue that that’s OK (They’re wrong of course:-) but there’s another, larger problem. Mexico restricts imports of corn with strict quotas. Nothing quite like restricting supply AND rising world prices as a one two punch for the prices of corn tortillas. Of course, many will blame this on “Market failure” . As usual, whenever you hear that term, you should replace it with “government interference”. Subsidies distort market prices (to the consumer’s detriment usually) and trade restrictions do nothing but enrich special interests, once again at the expense of consumer’s pocketbooks. If Mexico would just allow imports to come, it would ease some of the price pressure. God forbid we allow domestic producers to compete, they might have to lower prices!


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