I am studying the political economy of food subsidies in democratic countries (with a focus on bread subsidies in Israel and the UK, 1939-1977).
In countries with universal food subsidies, the following idea was was frequently expressed:
Universal food subsidies are poorly targeted, fiscally unsustainable (especially when global food prices are skyrocketing, as in the early 1970s) , and cause distortions such as wastage, smuggling abroad and feeding to livestock. The government should implement the following reform: Abolish (or cut) food subsidies and increase official food prices to reflect their actual production costs. Simultaneously, compensate the poor via increased transfer payments.
I wish to study the history of this idea. Three questions for SHOE readers:
a. Does this idea have a name in English (a brief, simple name that is suitable for sloganeering)? So far, I have not been able to find a name in English. In Israel (ca. 1965-1977), it was called by the slogan "A subsidy for the needy person, not for the good" (this phrase rhymes in Hebrew).
b. Today, this idea is frequently advocated by the IMF and World Bank, in the context of advice to (autocratic) developing countries such as Egypt and Tunisia.
Do you know any examples of economists and policymakers who advocated it (ca. 1900-1977), in the UK and other elsewhere? (The UK had universal bread subsidies in 1939-1956 and 1974-1977.) Do you know of any books/papers that I should consult? (Did Pigou ever write on this subject? What about other leading UK economists such as Kahn, Robinson and Kaldor? Treasury economists? Policymakers and politicians from both major parties?)
In the Israeli context, Abba Lerner advocated this idea as early as 1954; Don Patinkin did the same in the early 1970s.
c. In both Israel and the UK, the government originally made a deal with the unions: We give you universal food subsidies and you give us wage moderation in return. In Israel, when the government changed its approach and sought reform, the national labor union staunchly opposed reform and successfully delayed it for about 20 years; bread prices were frozen for 11 years during 1964-1974. In the UK, the TUC played a major role in the restoration of universal bread subsidies in 1974, under the second Wilson government (after the Conservatives had abolished them in 1956). What do you know about the role of labor unions in establishing universal food subsidies, and in subsequently blocking reforms that would abolish or cut those subsidies? Here, I should note that In democracies (especially post-WW II), food subsidy policy had major macroeconomic implications, and was closely intertwined with incomes policies/the COLA system.
Any ideas and suggestions would be greatly appreciated.
Daniel Schiffman
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