President Bush challenged world leaders on Wednesday to abolish all trade tariffs and subsidies
I read an article today about Bush promoting the elimination of trade barriers as a way to reduce world poverty.
I suppose there must be economic theory which suggests this as true. I am definitely on the side for concern over trade reducing security and increasing world poverty, even if I can't defend my fears.
At one level it is clear that a nation that subsidizes its food production and then sells excesss production onto the global market at "below cost" is having a negative impact on the world because it can undersell smaller producers who don't have such subsidies to reduce their prices.
Beyond simple economic subsidy, I'd also consider something I'd try calling "unsustainable resource" subsidy. A nation that "uses up its top soil" through erosion or any natural resource, most especially energy, is creating a market that will someday fall, and discourages more sustainable production elsewhere.
For example, the U.S. uses 25% of the world's oil. We can take that oil and produce things we can sell to others, including food, and scale our activity to cut costs because of our cheap energy. So because we've got the technology to exploit cheap energy, we can undersell others who depend on cheap labor which might be more sustainable.
For example, small farmers in Mexico were put out of business by NAFTA imports from the U.S. So these subsistence farmers go from independent economics on the land to the cities to find work which may or may not exist. Of course it's never so simple, and perhaps many small farmers are "inefficient" and deplete the soil and such in their own unsustainable ways. Still I worry when we encourage more and more people to abandon agriculture and there's no clear reason to believe that "modern" high-energy/technology/input methods will be sustainable as fossil fuels (Oil and Natural gas) become more scarce and expensive.
I think that nations (and regions) ought to consider local food production as a necessary condition for freedom and security, even at a greater cost. I guess subsidies begin as an effort to make local production competitive, and then have a side effect of encouraging overproduction which lowers prices and encourages market expansion and more subsidies.
I am amazed that markets work as well as they do. However I have no faith that they ultimately serve our best interests at least unmoderated. Lower prices now can mean destroying cultures and lives. If the future were indeed only "higher and faster", perhaps we can afford to reduce the world farming to ownership by a dozen super transnational companies, run by 0.001% of humanity. I just don't believe it.
I would support and end of subsidies within the U.S. IF it meant farmers could get a fair price for their production. I would support consumers paying 50% more for food, in exchange for reduced government spending on subsidies. Of course this would be a "regressive" policy for hurting the poor, but I guess the government can increase "food stamps" or whatever program to help the poor.
A "fair price" is a messy idea to support. If the government promises $1/gallon for milk, and there's an oversupply, then the government must be willing to buy the surplus. Once you have a surplus, what do you do with it? How can the government guarantee a fair price without encouraging possible overproduction?
Anyway, I guess I don't know WHAT the president is talking about, or possibly myself either!
I suppose there must be economic theory which suggests this as true. I am definitely on the side for concern over trade reducing security and increasing world poverty, even if I can't defend my fears.
At one level it is clear that a nation that subsidizes its food production and then sells excesss production onto the global market at "below cost" is having a negative impact on the world because it can undersell smaller producers who don't have such subsidies to reduce their prices.
Beyond simple economic subsidy, I'd also consider something I'd try calling "unsustainable resource" subsidy. A nation that "uses up its top soil" through erosion or any natural resource, most especially energy, is creating a market that will someday fall, and discourages more sustainable production elsewhere.
For example, the U.S. uses 25% of the world's oil. We can take that oil and produce things we can sell to others, including food, and scale our activity to cut costs because of our cheap energy. So because we've got the technology to exploit cheap energy, we can undersell others who depend on cheap labor which might be more sustainable.
For example, small farmers in Mexico were put out of business by NAFTA imports from the U.S. So these subsistence farmers go from independent economics on the land to the cities to find work which may or may not exist. Of course it's never so simple, and perhaps many small farmers are "inefficient" and deplete the soil and such in their own unsustainable ways. Still I worry when we encourage more and more people to abandon agriculture and there's no clear reason to believe that "modern" high-energy/technology/input methods will be sustainable as fossil fuels (Oil and Natural gas) become more scarce and expensive.
I think that nations (and regions) ought to consider local food production as a necessary condition for freedom and security, even at a greater cost. I guess subsidies begin as an effort to make local production competitive, and then have a side effect of encouraging overproduction which lowers prices and encourages market expansion and more subsidies.
I am amazed that markets work as well as they do. However I have no faith that they ultimately serve our best interests at least unmoderated. Lower prices now can mean destroying cultures and lives. If the future were indeed only "higher and faster", perhaps we can afford to reduce the world farming to ownership by a dozen super transnational companies, run by 0.001% of humanity. I just don't believe it.
I would support and end of subsidies within the U.S. IF it meant farmers could get a fair price for their production. I would support consumers paying 50% more for food, in exchange for reduced government spending on subsidies. Of course this would be a "regressive" policy for hurting the poor, but I guess the government can increase "food stamps" or whatever program to help the poor.
A "fair price" is a messy idea to support. If the government promises $1/gallon for milk, and there's an oversupply, then the government must be willing to buy the surplus. Once you have a surplus, what do you do with it? How can the government guarantee a fair price without encouraging possible overproduction?
Anyway, I guess I don't know WHAT the president is talking about, or possibly myself either!
posted by Ares Olympus at 4:32 PM
0 Comments:
Post a Comment
<< Home