|Subject||Market Interference, Price Ceilings and Subsidies|
|Topic||Government and the Economy|
|Key Words||Subsidies, Price Controls, Price, Official Price, Minimum Wage, Poverty|
The Mexican government has proposed that most subsidies on corn tortillas should end. In addition, the intention is to remove price controls. The effect on prices is uncertain, but hand-made tortillas from premium corn cost several times the official price. Instead of these subsidies, the government intends to give direct aid to the poor.
Mexicans are concerned because tortillas are a staple of their diet. Hitherto, tortillas have been cheap, helping the poor to obtain nourishment. But, in the future, with higher prices and a minimum wage of $3 a day, it will be difficult. Indeed, most families earn less than $10 a day, and one-half live in poverty. Further, a respected economist is skeptical whether the government will save much money
In contrast, the tortilla corn-flour producers are in favor of the plan. One industrialist commented that the subsidy was inefficient and expensive because it benefited everyone.
(Updated February 1, 1999)
|Source||Adolfo Garza, "End of tortilla subsidies would cost Mexicans", Cincinnati Enquirier, November 22, 1998.|
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