Food Socialism Coming to an EU Near You!

The EU is legislating away food speculation to decrease food price volatility. This could not possibly backfire.

Goldman Sachs, Barclays, Deutsche Bank, JP Morgan and Morgan Stanley together made an estimated £2.2 billion from speculating on food including wheat, maize and soy between 2010 and 2012. Speculation increases price volatility and has been a major factor in the sharp spikes in global food prices of the last six years.

These two sentences utterly contradict one another. If food speculation increases price volatility,  then the speculators must be buying food when prices are high, thus driving up the prices, and selling food when prices are low, thus depressing prices. If speculators did that, they would hemorrhage money. But the  first sentence said they were earning money!

If people don’t smarten up and learn some economics, laws like this one will eventually lead to what Mises called “socialism of the German pattern.” If the response to every perceived bad outcome (e.g. food price volatility) is regulation, and the result of the regulation is to exacerbate bad outcomes, eventually the economy will be so heavily regulated that it be an effective command economy. Though the means of production will still be nominally owned by private individuals, the state will control them.