As tensions escalate in hotspots around the globe, libertarians rightly remind us that it is trade, the freest trade, that brings peace and prosperity between global adversaries. Free trade, approached from a perspective of common equity, demystifies the cultural differences that might be otherwise found inscrutable, differences that heighten tensions. It has been said that the introduction of Pepsi and Pizza Hut into the Soviet Union did as much to bring an end to the Cold War as did President Reagan’s rightly-tough rhetoric and policy.
At the same time, predatory practices—driven by economies that are decidedly not free-market (or limited government), do a disservice to the potential goodwill of free trade. Such cronyism is the hallmark of failing and floundering regimes worldwide, and ultimately neither the United States, nor these nations, are helped by our acceptance of the status quo, and in these past few weeks a number of reports have been released that serve as helpful (and warning) guideposts on why we absolutely must not tolerate the economic tinkering of crony capitalist subsidization by other nations.
Such is the case with the global sugar trade, the subject of several of these reports. Sugar, a staple with massive economic implications worldwide, is also generally regarded as the commodity with the most market distortions associated with it.
The Institute for Policy Innovation put it best in their recent report, Seeking a Global Solution in Sugar Trade Policy, “US agriculture is the most efficient and productive in the world. In a reasonably free global sugar market, the United States can compete in sugar.” The problem is that, despite the best efforts of free marketeers, that global sugar market is anything but free. Mexico heavily subsidizes it’s domestic sugar industry, with the government owning and operating roughly 20 percent of the market overall—severely undercutting US firms, hobbled with an ever-increasing array of regulatory burdens from an administration seemingly determined to keep the US economy limping along.
So while Mexico does what it can to prop up its inefficient producers, the US is doing whatever it can to make sure that its efficient agricultural firms are being left behind (and at the same time, Mexico is working to drive its pool of manual labor to the higher wages of the north).