The one living in a fantasy world is you, professor. Let's look at some more examples:

With farm subsidies, you actually get an increase of the price of food:

1. Lower Food Prices for American Families

The foremost reason to curtail farm protectionism is to benefit American consumers. By shielding the domestic market from global competition, government farm programs raise the cost of food and with it the overall cost of living. According to the Organization for Economic Co-operation and Development, the higher domestic food prices caused by U.S. farm programs transferred $16.2 billion from American consumers to domestic agricultural producers in 2004. That amounts to an annual "food tax" per household of $146. This consumer tax is paid over and above what we dole out to farmers through the federal budget.

American consumers pay more than double the world price for sugar. The federal sugar program guarantees domestic producers a take of 22.9 cents per pound for beet sugar and 18 cents for cane sugar, while the world spot price for raw cane sugar is currently about 10 cents per pound. A 2000 study by the General Accounting Office estimated that Americans paid an extra $1.9 billion a year for sugar due to import quotas alone.

American families also pay more for their milk, butter, and cheese, thanks to federal dairy price supports and trade barriers. The federal government administers a byzantine system of domestic price supports, marketing orders, import controls, export subsidies, and domestic and international giveaway programs. According to the U.S. International Trade Commission, between 2000 and 2002 the average domestic price of nonfat dry milk was 23 percent higher than the world price, cheese 37 percent higher, and butter more than double. Trade policies also drive up prices for peanuts, cotton, beef, orange juice, canned tuna, and other products.

These costs are compounded by escalating tariffs based on the amount of processing embodied in a product. If the government allowed lower, market prices for commodity inputs, processed foods would be substantially cheaper. Lifting sugar protection, for example, would apply downward pressure on the prices we pay for candy, soft drinks, bakery goods, and other sugar-containing products.

The burden of higher domestic food costs falls disproportionately on poor households. Farm protections act as a regressive tax, with higher prices at the grocery store negating some or all of the income support the government seeks to deliver via programs such as food stamps.

If American farm subsidies and trade barriers were significantly reduced, millions of American households would enjoy higher real incomes.

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All government regulations, such as environmental regulations, drive costs up on things such as gas and real estate for everyone:

Government and High Prices

By Thomas DiLorenzo

The U.S. Congress is holding hearings on why gasoline prices have risen; pundits are beginning to repeat the anti-capitalist oil company bashing of the 1970s; and the U.S. Department of Housing and Urban Development (HUD) recently issued a report blaming prosperity for rising housing prices and self-servingly calling for more HUD subsidies for "the poor."

The Washington establishment has been quick to blame "greedy oil companies" and American prosperity for higher gas and housing prices, but the government itself is at fault with its policies of government-mandated price increases.

Urged on by American environmentalists' hate affair with the automobile, the U.S. government has employed every possible means to restrict the supply and drive up the price of gasoline. Regulation places over 90 percent of the outercontinental shelf off the California coast off limits to oil exploration; there are massive oil deposits in Alaska which are also off limits for exploration despite the fact that the existing oil wells there are being bled dry; and myriad other environmental regulations imposed on the oil industry drive up the costs of oil production.

For example, the government recently mandated that "reformulated" gasoline be sold in many areas of the U.S., which caused an immediate 10 cents per gallon price increase. American motorists have also been paying at least another 10 cents more per gallon of gas because of another Environmental Protection Agency (EPA) mandate for "oxygenated fuel," which the EPA itself claimed even before it issued the mandate contains Methyl Tertiary Butyl Ether, a water contaminant and potential health hazard. Gasoline taxes add as much as another 75 cents per gallon in some states.

Tax cuts and deregulation are the obvious means to deal with rising gasoline prices, but that would diminish the power and influence of the state, so it is not likely be achieved.

Housing prices have gone up sharply in some American markets because of increased demand for housing fueled by rising prosperity. Normally, after a short lag, housing supply increases will follow, which would moderate the price increases. But zoning, building code, and environmental regulations have made it more difficult and costly to build houses. More ominously, there is currently a nationwide governmental movement to dramatically reduce the supply and increase the cost of housing under the rubric of "smart-growth" regulation, one of the dumbest ideas to be hatched by the state in many years.

Motivated in part by the environmentalist hatred of the automobile, so-called smart-growth proponents, which include dozens of governors, hundreds of local government officials, and Vice President Al Gore, want to force much of the population back into the cities (and presumably out of their automobiles an into mass transit) by using regulation to drive up the costs of housing in the suburbs.

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And let's not forget the garbage situation, which government failed miserably at:

Garbage Mess: Private Sector is Cleaning Up

By Geoffrey Segal

Remember the "garbage crisis" of the 1980’s, when the forlorn garbage barge, full of New York city’s trash, cruised up and down the East Coast looking for somewhere to dump its load. While it littered the headlines a decade ago, you hardly hear about it anymore. In fact, the "crisis" of insufficient landfills went away, almost unnoticed, and the nation now has more landfill space than ever before. Thanks to a government program? Nope. In addition to recycling programs, a factor that played a significant role in addressing this crisis was that the private sector got into the business of running solid-waste disposal facilities.

Private sector landfill management has dramatically improved the efficiency of landfill operations, lessened their environmental impact, and saved cities countless amounts of money in the process. However, a handful of governors want to derail this move in a classic NIMBY (Not In My Back Yard) move, by re-initiating "flow control", the placement of limitations on the interstate trade of trash.

Over the last decade, city and county governments have turned over their solid-waste operations to private companies at a vigorous pace. According to a recent survey by solid-waste consulting firm, R.W. Beck, 27 percent of municipalities with populations greater than 100,000 are considering privatizing their landfill. Another survey showed that more than half (17) of the nations 30 largest cities have already privatized their landfills, and two others contract out their landfill operations.
But why the sudden change? What gives the landfill industry the edge that lets it grow so fast? A major contributing factor is that private firms are much better situated to address the regulatory and financial challenges of the modern solid-waste industry.

In 1976 federal regulations were established to minimize environmental impacts of landfill operation. But two results of these regulations have been rising landfill costs and the closure of "unfit" sites--mostly thousands of small government-owned landfills. This dramatic increase in capital and operational costs of solid-waste disposal made larger, regional "megafills" more cost effective and accelerated privatization.

While larger landfills are more environmentally friendly because of the reduction in the amount of smaller sites, they also cost a great deal more money to build. This is a difficult hurdle for local governments to overcome; however, a solid waste company can finance the megafill, find an acceptable location, and build and operate it serving any willing governments in the region.

Private companies are interested in profit and focus a great deal of attention on efforts to reduce costs, and thus, improve efficiency. Private companies can also raise capital more easily than local governments, without the use of unpopular taxes to raise revenue. Finally, private landfills are held to a higher standard of environmental regulations than local governments. And municipal and county contracts hold landfill operating companies accountable for inadequate performance.

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"All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident." - Schopenhauer