EclectEcon

Economics and the mid-life crisis have much in common: Both dwell on foregone opportunities

C'est la vie; c'est la guerre; c'est la pomme de terre . . . . . . . . . . . . . email: jpalmer at uwo dot ca


. . . . . . . . . . .Richard Posner should be awarded the next Nobel Prize in Economics . . . . . . . . . . . .

Tuesday, February 08, 2005

Ag. Subsidies: The View from the Land of Oz

I do not really believe the U.S. gubmnt is going to do much to reduce its agriculture subsidies. They might do a bit to make sure really rich people don't get toooo much in the way of gubmnt hand-outs, but that will be about it. The policy changes will mostly be placebo in nature --- it will look as if they are doing something, but they will not have much, if any, effect on world markets.

BrianF sent me this link on how the U.S. ag. support system is viewed in Australia:

Australian producers call it farming the US Treasury, and it's good money if you can get it. Over the past nine years US farmers have received more than $US131 billion ($170 billion) in government funding, allowing many to make more out of the government than they do out of their crops. (emphasis added)

Australian farmers have long complained those large subsidies depress commodity prices and corrupt world markets. But it has taken revelations about just who is getting this huge financial support to change public debate and policy in the US.

... [National Farmers Federation CEO Ben] Fargher says there is a growing understanding in the US that farm support is not reaching struggling family farms; that it encourages production in marginal areas at the expense of the environment and hinders diversification, as well as the larger problem of damaging opportunities for farmers in developing countries. "There are just so many arguments against subsidies," he says. "The logic points to reform. The problem is, it is a political issue. There will be US farm lobby pressure, and it has to go through the US decision-making processes."

The article specifically mentions cotton, wheat, and sugar as crops where U.S. policies are causing serious distortions in world markets.

One caveat to what I have argued: if the U.S. keeps losing so many cases before the WTO, the changes may have to be more substantial than the mere window-dressing I have suggested they will be.
 
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