Farm subsidies harm the poor

Posted: Sep 17, 2003 12:00 AM

BURLINGTON, Vt. - Despite what all my friends who junketed down to Cancun, Mexico, for the World Trade Organization meeting say, I think it's better to be here in Burlington. Cancun, after all, is overrun with socialists, Marxists, bureaucrats and unwashed activists with pierced faces. Burlington is too, of course. But I've got nicer weather.

The talks in Cancun failed for two reasons. First, they failed because Americans and Europeans talk a great game about free trade but are outrageously protectionist when it comes to agriculture. And, second, because the poor countries, led by Brazil, were sufficiently peeved by point No. 1 so as to foolishly decide that no progress was better than some progress.

There are two ways to be a protectionist. You can make the other guy's stuff more expensive for consumers through tariffs, duties, customs fees and other taxes at the border, or you can make your own stuff artificially cheaper for consumers by subsidizing it.

The rich countries, with a few exceptions, spend more on crops than they're worth. The price of cotton, for example, has fallen by 60 percent since 1995 to around 40 cents a pound. But under George Bush's farm bill, U.S. cotton farmers will receive payments of 66 cents a pound. This amounts to a direct subsidy of more than $3 billion to America's 25,000 cotton farmers.

And that's just cotton. American taxpayers will spend nearly $500 billion on farm subsidies and programs over the next decade - roughly $4,400 per tax-paying household, according to Brian Riedl of the Heritage Foundation.

Not only does this soak taxpayers for the benefit of a small special interest, it condemns billions of people to poverty because our subsidies make it impossible for foreigners to sell their crops.

Writing for, economists Kevin Hassett and Robert Shapiro cite studies suggesting that a lifting of European agricultural subsidies could lift the annual income of everybody living in sub-Saharan Africa by 13 percent.

Ending subsidies would do more than foreign aid - i.e. transnational welfare - ever did for the world's poor for the simple reason that governments of poor countries stink at doing pretty much everything we think governments should do.

And despite what anybody may tell you, the only thing that makes poor countries less poor is economic growth. For years, the folks represented by those anti-WTO protesters believed the best way to solve poverty was to socialize it. This is actually the best way to make poverty permanent.

As Ugandan president Yoweri Museveni noted earlier this year, the "real solution to the defeat of (AIDS) lies in economic development and trade. In Africa, we have a terrain in which HIV, malaria, TB and other infections thrive to a degree nowadays unthinkable in Europe and the U.S. The common thread is poverty. For poverty creates an environment, physical as well as social, highly favorable to disease. So, even as we mobilize our people to change their behavior to protect themselves against HIV, we have to promote broad-based economic growth that will lead to improvement in living conditions and levels of education. The surest path to that kind of growth is trade and investment."

The Europeans should be ashamed of themselves because they claim to care more about the Third World - and pretty much everything else - than we do. The United States should be ashamed because we claim to be free marketers and we're not. And the protesters should be ashamed because their solution to a bad process is to make it much worse.

If the protesters had their way, there would be less, not more, global trade. Not only would that keep poor people poor, it would continue to hurt the environment they claim to care so much about. Rich countries have clean environments. Poor countries don't.

In fact, since I'm here in the Green Mountain State, let's use Vermont as Exhibit A. Vermont is returning to its preindustrial state. In 1850 only 37 percent of Vermont was covered in trees. Today it's 77 percent and growing. The reason? The forests are literally reclaiming Vermont's famously cute farms as such back-breaking work ceases being economically viable. Of course, the few farms that are left - often for nostalgia's sake - are propped up by federal subsidies that not only hurt poor dairy farmers abroad, they make milk more expensive for poor kids in America, too.

Vermont didn't lose its farms because it got too poor. It lost its farms because it got too rich - thanks largely to the hard work of earlier generations of Vermonters who sold the fruits of their labors all around the world. Today, this wealth allows it to provide lavish health benefits, set aside natural resources and generally adopt the politics of a giant college campus, complete with civil unions and socialist congressmen.

These are the sorts of choices rich states - and countries - can make (even if I think some of them are batty). The fastest way to get the rest of the world to look like Vermont is to let it follow Vermont's example. Not the example of today, but of yesterday. Vermont's today could be Africa's tomorrow.