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Comment by xupybd | Hacker News Reader

I live in a much more socialist country than the US. And when I think of the US I think of hard line capitalists that can't stand socialism. But reserves like this seem out right communist. State owned reserves designed to manipulate market prices. What am I missing? Or are my assumptions about the US and capitalism wrong?

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This level of central planning is indeed quite rare (though much more common in agriculture, as it's been around for longer than most smart folks realized government-mandated cartels are a bad idea). Fortunately, the more tyrannical aspects of this scheme were recently struck down by the Supreme Court.

That's why it's an interesting story.

I'd say they are wrong, the US is full of these regulations, particularly around farming - cheese reserves, almond sale limits, assured prices (if the market price is below X, the State makes up the difference), etc. The claims about how free market oriented the US is are mostly propaganda.

Socialism has a "branding" problem in the U.S. It's been successfully portrayed by some to mean Soviet style communism, but then when you ask the average person who doesn't like socialism if that means they want to give up Social Security and Medicare they get confused.

I'm a capitalist, but if asked about my Social Security I'd still prefer to get back some of the money taken out of my pay checks for years.

Your assumptions about the US and capitalism are wrong. You are not alone, it is the national mythology in the U.S., and increasingly the world. But the rise of capitalism was never truly about a 'free market', but has always been sheparded by the state.

Reserves like this are built to smooth smaller variability in markets to make them less chaotic, I guess. If weather impacts logistics for a short time, if a particular crop is bad in part of the country, etc.

It's not communistic in any definition I can gather, but rather a trust mechanism to keep small hiccups in a market from causing larger effects than they should. Internationally, I suppose, it's a negotiating mechanism to keep trade in an advantageous state.

This and other resource reserves are artifacts of Depression era or WWII-era programs intended to stabilize prices or resource levels. Some of them outlived their intended lives because they continued to be generally useful to their participants.

For example, the complainant in the Raisin Reserve case is estimated to have profited to the tune of several million (cumulative) for the years in which the reserve kept prices above market rates. (This is where his "debt" to the government came from--he chose to commercially sell raisins at the above-market rates made possible by the raisin reserve rather than to the reserve as contractually obligated). He suffered no actual monetary harm--indeed, he had quite a bit of financial gain since the reserve prevented massive losses in bad/glut years, but like most psuedo-libertarians his short-term profits mattered more than long-term considerations. Expect to see him lobby for a bailout in the near future when a natural catastrophe guts his crop or a glut drops prices below sustainability.

We have a different form of redistribution, a non-socialist one, a crappy one that does not actually help citizens.

When capitalists screw up, as in the economic crash of the late 2000s, it is acceptable to give them huge sums of capital in a wealth transfer because they more or less hold the economy hostage. On the other hand, when capitalists succeed, our government works to ensure that their gains are as unaffected by taxation and regulation as possible. If they fail they win, if they win they win.

We engage in huge, expensive, idiotic wars where the government pays out enormous sums of money to defense contractors. Lobbyists get laws made and passed that alter the rules of credit and lending (think credit card terms, student loan terms, etc) in the interest of capital. People who approve and expedite those processes on the government side move on to cushy jobs at those financial institutions/gov't contractors/etc.

Sometimes, for these reasons (and for reasons like the one you raise), people say that the US economy is not really a capitalist one, and thus the US can not be brought to bear on critiques of capitalism. This is the same as socialists arguing that USSR was not really socialist because its behavior does not match up to a doctrine written in a book.

An unregulated easily leads to price sparks and crashes. This can easily become catastrophic for governments, so they try to keep the prices stable for both the consumers as well as the producers.

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