2023-04-11

Free market competition thrives productivity and cuts inflation

Following Russia’s invasion, Ukraine was forced to divert around half of its exports from the blocked Black Sea ports into Poland, Hungary, Romania, and other border countries. The move, facilitated by the European Commission, was meant to throw an economic lifeline to Ukraine, one of the world’s largest agricultural producers, and ensure its exports could reach global markets. Healthy free market competition could have stimulated supply chains and local businesses to enhance productivity after the lockdown measures.

In fact, much of the product has instead flooded local markets.

Now Poland will temporarily stop all imports of grain from Ukraine, the two countries’ governments announced Friday. The measure comes after a meeting earlier in the day between Poland’s new Agriculture Minister Robert Telus, who took office Thursday, with his Ukrainian counterpart Mykola Solskyi at a border crossing between the two countries.

The Ukrainian side has proposed to severely restrict, and for the moment even stop completely, grain arrivals to Poland“, Telus said during a joint press conference after the meeting. He added that restrictions would not extend to the transit of grain intended for other countries.

Earlier this week, Politico added, Telus’ predecessor resigned amid mass farmers’ protests over the issue. Romania and Bulgaria have seen similar waves of unrest, with farmers staging demonstrations in the capitals and blocking border crossings.

The War in Ukraine costs billions. Primarily due to the central banks’ printing trillions in local currencies, surging inflation has been exacerbated by governments forcing a worldwide economic shutdown during the same time period. How additional restrictions to free markets (and to business productivity) would now improve the outlook?

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