Saturday, July 09, 2005

Ag Subsidies

Dean Esmay has an interesting thread (as usual) running about a comment that President Bush made regarding agricultural subsidies before the recent G-8 Summit.

I join the prevailing sentiment among commenters on the thread that this would be a great thing, but we’ll remain skeptical of it actually happening. The wrappings of “save Africa” are not going to get the job done, though. Sure, everyone in the US and EU is more than happy to pay lips service to this and even increase monetary aid, and those who take the time to think about it can usually end up supporting some form of debt forgiveness. However, when presented with a choice between US/EU farmers and African farmers the vast majority of citizens and nearly all politicians are going to choose their own population over a foreign population.

The thing is, there may never have been a better time for US and EU politicians to take on this issue. The reason that now is such a good time to end government subsidies and artificial price controls in “first world” nations is simple. OIL. The price of crude is certainly not headed southward any time in the near future. As such, oil is going to remain an inflationary force on the world economy and puts future economic growth in doubt. By allowing agricultural prices to fall across the board the harm high oil process can do to the economy is lessened. If the argument is framed in terms of lower food prices in response to higher oil prices US/EU politicians present their constituents with a proposal that they can support.

I’m not holding my breath, but I’d like to see someone make a serious stab at removing this terribly misguided policy.


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