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Tuesday, April 26, 2011

Free Trade?

The United States is supposedly a supporter of free trade. But our agricultural subsidies are a painfully obvious exception. This article lays out pretty clearly some of the problems with farm subsidies:
(1) Farm subsidies don't help small farmers. Most of the money goes to agribusinesses.
(2) The subsidies go to specific crops, distorting the markets and making food that we don't necessarily prefer cheaper. It is possible Americans would be healthier without subsidies. Either way, our farms would be more efficient.
(3) Farm subsidies impoverish developing nations' farmers. The cheap exported food of the United States pulls down the world price, hurting farmers around the world. This results in the need for more aid from developed countries such as the United States. It's a cycle that can be avoided by cutting subsidies to U.S. farmers.
(4) Cheaper food is an illusion. We pay for it through taxes.

The article does make a serious error in thinking subsidies will do anything to the deficit and we should leave Medicare alone. I'll leave that bit of inanity alone.

To add further to this absurdity, not only do we pay our farmers to be inefficient, we pay Brazil's farmers to stop them from putting tariffs on our goods. These Brazil subsidies are to save us from tariff's on our goods because of the subsidies we pay our own farmers. Can we say government excess? We're paying Brazilian and American cotton farmers! All this while cotton prices are rising and American farmers don't even need subsidies.

One more article: This one addresses the human side a little more directly. While a lot of people are hurt by farm subsidies, the purpose of the subsidies is to help a smaller group. Farmers are subject to a lot of conditions beyond their control. So do we subject them to the forces of the market and climate or offer them some sort of insurance?

Here's my idea: Offer insurance subsidies. If farmers are operating at a loss, pay them some modest amount to help them keep going. If that loss continues for some length of time (set by someone who knows more about farming than me), channel that subsidy to some kind of retraining and funding to get the farmer into a different field of their choosing.

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