Saturday, June 18, 2005

How the federal government keeps Africa poor and America polluted

One word: subsidies.

This article, from Reason, explains how American agricultural subsidies severely hurt sub-Saharan African economies. An excerpt:
U.S. agriculture policy undermines U.S. efforts to alleviate poverty because it drives down global agricultural prices, which in turn cost developing countries hundreds of millions of dollars in lost export earnings. The losses associated with cotton subsidies alone exceed the value of U.S. aid programs to the countries concerned.
And consider this:
The aid is ineffective because of the appalling way in which Africa is governed. In recent decades, of each dollar given to Africa in aid, 80 cents were stolen by corrupt leaders and transferred back into Western bank accounts.
So by eliminating pork-barrel farm subsidies, we can help Africa more than any government-to-government aid ever will. With subsidies, we're basically saying, "Okay, we like our society the way it is. We don't want to let anybody else join the party." So our subsidies keep worldwide agricultural prices artificially low, and the hardworking African farmer trying to help his country build a self-sufficient economy gets hammered down by big American corporations receiving fat-cat subsidies via "our" reprsentatives on Capitol Hill.

If we really want to "make poverty history," we have to kill all subsidies, now. I don't care how many "family farmers" will be put out of business in America. The fact is many more families are dying in Africa because of these subsidies.

Subsidies also make more environmentally-friendly energy not financially-feasible in America. From an MSNBC article on the success of ethanol produced from sugar cane in Brazil:
In the United States, the sugar-cane industry has had little incentive to diversify into ethanol production because import quotas support U.S. sugar prices far above world levels...

...Most U.S.-produced ethanol is now made from ground corn in a process that has been faulted as inefficient. Corn yields less sugar per acre than sugar cane, and the refining uses substantial amounts of energy. To keep ethanol competitive with gasoline, major refiners such as Archer Daniels Midland Co. have relied since the 1970s on a tax subsidy, now 51 cents a gallon.
Yeah, that makes sense. Let's use import quotas to keep sugar prices artificially high and therefore stop sugar cane growers from producing ethanol efficiently, but then give subsidies to corporations who make ethanol inefficiently. To make matters worse, the federal government has high tariffs against imported ethanol:
The United States imposes a stiff tariff on imported ethanol. But over the past 12 months, 160 million gallons of the Brazilian product still entered the country. The U.S. agribusiness giant Cargill Inc., the third-largest U.S. ethanol refiner, announced plans last year to refine Brazilian ethanol in El Salvador and export it to the United States duty-free under provisions of the Caribbean Basin Initiative.

To be fair, the Brazilian ethanol industry (big surprise) hasn't done this all on its own:
In the 1990s, some distillers went bankrupt and many refiners and sugar-cane farmers fell on hard times. But the government stuck by its commitment to alternative fuels, purchasing unsold stocks of ethanol and showering tax breaks on cabdrivers who used ethanol.
But imagine if the U.S. wouldn't have had all of those subsidies, tariffs, and other forms of economic protectionism in place since the 1970s. If there were a truly free market in sugar (and its products), the Brazilian industry wouldn't have needed so much government help and there probably would be a thriving sugar cane-based ethanol industry in America.

Instead, we're more relient than ever on foreign oil, and we're fighting a War in Iraq to secure future oil sources fight terrorism.

Sustainable development is the all the rage right now. Well, capitalism has led us increasingly toward more sustainable industries. That's how capitalism works. If a business isn't sustainable, then it goes out of business. Think about subsidies; all they do (by definition) is prop up failing businesses. How can that ever be good? If we prop up our own failing, polluting industries with subsidies, we prevent other, more sustainable industries from developing.

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