FauxPolitik

Thursday, August 21, 2003

Agricultural Protectionism: Apropos of your posts, Flyer, though with only a passing mention of textiles, Jacob Levy takes on trade at TNR:
Agricultural protectionism--the combination of quotas, tariffs, and subsidies for farm products--may be the purest example of destructive special-interest politics ever created. Rich countries--with a few exceptions, such as Australia--burden their own populations three times over. The policies cost taxpayers directly--the atrocious 2002 U.S. farm bill is slated to cost $180 billion over ten years. (Worse, annual unbudgeted "emergency" farm spending during the late 1990s accounted for a great deal of the spending boom that squandered much of the predicted budget surplus long before the first Bush tax cut took effect.) In return for their largesse, taxpayers get the privilege of paying higher prices as consumers (and, of course, inflated prices for basic foodstuffs hit the poorest proportionately hardest). And, by locking up an excess of labor and capital in an agribusiness sector that couldn't turn an honest profit on its own, agricultural protectionism inhibits productivity growth, preventing shifts in employment and investment to more productive parts of the economy.

Still, the costs agricultural policies impose on their own societies are manageable in the huge economies of the developed world.

He concludes that the current U.S. position is one of stalemate: with the EU not moving toward liberalizing trade, the U.S. has no incentive toward dropping subsidies:
In the meantime, the ostensible U.S. position is an odd one. We accept the principle that trade in agricultural goods ought to be liberalized, and that this is a matter of justice as well as of efficiency. But we're not willing to give any more than Europe and Japan are--and "Europe," in this case, means "France." The current administration is supposed to be unburdened by the temptation to wait for French approval for everything that happens in the international arena; it's supposed to be willing to indulge some American idealism rather than reducing everything to the cynical level of Gallic sophistication. Where's a bit of unilateralism when you need it?
It's a nice piece of analysis, one that calls the bluff of free-trade-for-free-trade's-sake posturing.

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