Wednesday, August 11, 2004
In Carl Hiaasen's brilliantly funny and entertaining novel, "Strip Tease," the villains belong to the South Florida sugar lobby—a group that bribes congressmen to vote for sugar subsidies. Although fiction, Hiaasen clearly makes the Libertarian case for free trade as he explains how agricultural subsidies keep farmers in the United States rich and condemns those in Third World countries to poverty.
A form of corporate welfare—that is, taxing the middle class to give to the rich—agricultural subsidies are particularly onerous. By artificially depressing the price of sugar or corn, domestic farmers can sell their product below what it costs to grow it and still make a profit. The artificially low price prevents competition from foreign farmers who cannot afford to sell below cost. If this reads like a great deal, it is—if you own several thousand acres in the Delta. The rest of us are overtaxed and unable to sell the products we produce in foreign markets because foreigners can't afford to buy them.
Economics aside, our collective intelligence is insulted by those who live in million-dollar houses and tell us how tough it is down on the family farm. "We would be fair," they say, "but everyone else is unfair."
The lack-of-fairness claim of our trading partners is a convenient way for all sides to point the finger while milking the taxpayer. The United States accused the Canadians of "dumping" lumber. Dumping is the practice of selling a product in a foreign market below the cost of production. To "protect" the domestic logging industry, we placed a tariff on Canadian lumber and increased the cost of a new home by over $1000. We receive the benefit of having our roads destroyed by log trucks and we get to pay more for it.
Recently, Gulf Coast shrimpers claimed India and Thailand were dumping shrimp on the U.S. market. Translated, this means we can't compete so we want the government to protect our inefficiency. It's an election year, so expect the Bush administration to throw out economic theory and impose a tariff on foreign shrimp. At the same time, you might want to plan to eat more chicken. There should be plenty of it because the French have accused Tyson of dumping chicken in Europe and intend to impose a tariff. See how silly this gets?
We can be magnanimous when we deal with crops we don't grow. Yuppies love to brag about drinking "free trade" coffee or tea that ensures the workers were well paid and provided for. Notice coffee and tea are not major domestic crops. Where is the free-trade sugar, cotton or corn?
Democrats oppose free trade because unions want to protect jobs, no matter how inefficient they are. Republicans talk free trade until it affects them or endangers an election. Even Jackson's local right-wing radio talk shows oppose NAFTA. The level of economic understanding on these shows should embarrass the entire Mississippi educational system.
Last week the World Trade Organization (WTO) agreed to begin negotiating the end of agricultural subsidies. If and when this comes to pass, the world will be a more prosperous place. People will have less reason to go to war. Everyone will benefit except for a few rich farmers. As for them, let them learn to deal blackjack.
Lawrence Silver is a business professor at Mississippi College and a regular contributor to the Jackson Free Press.