Monday, June 25, 2007

Golden Opportunity to Abolish Farm Subsidies

As I pointed out recently, food prices are soaring. This is particularly true for food commodities such as corn and other grains. And as we're talking about globally traded commodities, this is not just an American phenomenon. As is pointed out in the latest The Economist, there are good reasons to believe that food commodity prices will remain high for several years to come.

One aspect of this that most people -including until now me- have failed to highlight is that this means that now exist a golden opportunity to do away with one of the most evil and destructive government programs: farm subsidies. Why this program is particularly bad is something which I have explained repeatedly in the past and the case for doing away with it would really be just as strong at any time.

But, the problem have always been that certain influential groups, meaning the general farm lobby in America and the government of France in the EU, have blocked any cuts in farm subsidies. These forces remain strong and will likely continue to oppose cuts. But with soaring prices causing farm income to soar, this means that the forces working for a cut should have an easier time. With farmers making more and more money and with the real income of low income urban people being squeezed, the injustice and absurdity of taxing the latter to benefit the former becomes more obvious than ever. If only free market advocates can enlighten people about how they are impoverished by farm subsidies, then enough public anger could perhaps be mobilized to abolish or at least sharply reduce farm subsidies.


Anonymous pinus said...

From the point of view of the government and the agricultural lobby, you have the analysis completely wrong.

Their argument would be that soaring prices require further subsidies into the agricultural sector to reduce costs and thus prices.

Alternatively, they could cap prices of intermediate agricultural products, of course accompanying this with a compensation for the farmers.

Does it sound like economic nonsense? So what? ;-(

9:58 PM  

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