Cultivating Failure?

Many farmers in the United States, Europe and Japan receive subsidies from their respective governments. This means that a government subsidy is paid to farmers to supplement their income, as well as influence the cost and supply of commodities such as wheat, grains, cotton or soybeans.

Imagine a US soy farmer who cannot produce soy as cheaply as a farmer in Brazil, and actually loses money by growing and selling his crops.  A subsidy means that the US government would pay the farmer the difference between his cost and the selling price in order to allow him to continue farming.  Essentially, the US government then pays farmers for their inability to compete with prices in the world market.  If, however, the government didn't pay the farmers, then soy farming in the United States could possibly end as a viable profession.  Thus I propose to ask the following: through understanding and analyzing both the idea of comparative advantage and the importance of government leaders to serve the people of their countries, should the government of the United States continue its policy of providing subsidies to farmers?  

“Developing countries face considerable disadvantages in trade disputes with their more powerful and wealthier counterparts. Nonetheless, Benin, Burkina Faso and Mali successfully challenged US cotton subsidies, a watershed event in international trade relations. In the past two decades, the cotton industries of Benin, Burkina Faso and Mali have become increasingly competitive and gained a growing share of the world market” (Heinisch).  

As of right now, the US is the only country that beats West and Central Africa in cotton exports, and each countries respective government determines profits from said exports. The government, who also set prices for export, heavily regulates the cotton sector. “Under domestic and international pressure, governments gradually withdrew state support, leaving cotton producers’ fate to market forces. Meanwhile, despite international trade agreements, the US government increased payments to its cotton producers” (Heinisch).  Many have blamed these subsidies for “driving down the world cotton price by increasing supply, thus reducing the earnings of West African farmers and governments,” however as a result; they “joined forces and solicited help to influence US policy” (Heinisch).

The West Africans serve as viable proof that it is possible for a politically weak and developing country, when provided with the right conditions, to “turn multilateral institutions against their more powerful creators. The West African campaign is an example of politically weak countries effectively exploiting the liberal economic principles of multilateral institutions to challenge protectionist policies in the industrialized world” (Heinisch).

Nevertheless, the US agricultural subsidy system operated post war is “generally agreed to have been economically wasteful and without redeeming social merit as its benefits went over overwhelmingly to the richest farmers. The subsidy system is usually thought to have been created because of the political power of agricultural interest groups, the dominance of rural legislators on the agriculture committees and the capture of the Department of Agriculture by rural interests” (Wilson).

The recent economic crisis serves as proof that the United States should not continue its policy of providing subsidies to farmers, and never should have in the first place. In today’s competitive world, efficiency is more important then making sure every economy and nation is equal, and that others do not get 'crushed' because they are weaker. Also, free trade does not make it impossible for weaker countries to grow; it just makes it a long-term process. Jobs will be created, standards of living will increase, products will be cheap, of good quality, and more accessible. The world is a competitive place, and every country must deal with it head on, not avoid it because there is economic inequality. The West African countries serve as perfect evidence of this.

            Thus, it makes no sense for the US to pay their farmers because they are bad at being farmers. This would only go against the idea of free trade that the US has adopted. The US may feel like they need to subsidies due to pride – they were once superior farmers, but have now fallen short, but instead should focus their energy and money on something they know they do best, and use it to improve the economy.

            When analyzing comparative advantage, one could argue that although the US is ‘bad’ at farming, it is happy when farming. This does not mean that the US should continue its endeavor to be a farming country, when it does not wreak economic benefits. It is for that reason that the personal must be separate from subsidizing. One should not subsidize to make their people happy, for what will truly make them happy is a thriving economy, and in the US’s case, the ability to shop, consume and feed capitalism. What is not important is not what the people want, but how we can cater to their needs, and the countries needs, without confusing that with pleasing. For the sake of the US’s economy they should do the same.  

Works Cited:

HEINISCH, Elinor Lynn. "West Africa Versus The United States On Cotton Subsidies: How, Why And What Next?" Journal Of Modern African Studies 44.2 (2006): 251-274. International Political Science Abstracts. Web. 8 Dec. 2011.

WILSON, G.K. "Special Interests, Interest Groups And Misguided Inter-Ventionism: Explaining Agricultural Subsidies In The USA” Politics 11.2 (1976): 129-139. International Political Science Abstracts. Web. 8 Dec. 2011.