"Conservative" Protectionism

It is interesting to observe what passes for the far left and the far right in this country, when it comes to "free trade". On the wacky left, we have the "anti-globalization" activists who stand for... well, I'm not sure what they stand for, but they're against "globalization." Another more moderate faction of the left believes that free trade can help impoverished nations develop and provide better lives for their people. The wacky "right" preaches "free trade" for U.S. exports and trade barriers for foreign imports. A more moderate faction of the right preaces self-interest - that we should use trade barriers to protect domestic industries, and to force developing nations to sell us raw materials for us to turn into manufactured goods as opposed to allowing them to develop their own manufacturing industries - moderated, of course, by third world sweatshops where labor-intensive goods can be made at a low cost. (Please don't get me wrong here - a majority of Democrats seeming falls into the category of the "selfish right" when it comes to trade issues.)

These self-interested efforts by the right can at time seem cartoonish, such as legislating that Vietnamese catfish can't be sold as "catfish" in American stores and restaurants, but simultanously (and fraudulently) claiming that Vietnamese catfish farmers were "dumping" their products at below-market prices to the detriment of domestic catfish. Whether or not Vietnamese catfish are or are not "catfish", it seems, depends upon which classification furthers the government's immediate protectionist goal.

These days, President Bush seems to waver between the wacky right and the self-interested right. Although I guess it could be argued that his wackiness is motivated by a different form of self-interest - the goal of buying votes in swing states through the imposition of illegal trade barriers. (William F. Buckley reminds those who hate the World Trade Organization that the U.S. was a leader in its creation, and, of course, "If the idea is free trade, then somebody has to have the authority to rule that you're cheating.") If you have recently heard Tom Usher complaining about the repeal of steel tariffs, consider whether his fund raising efforts and participation in a Bush Administration transition team played more of a role in the imposition of those tariffs than did actual need.

As a result of this renewed focus on trade barriers, there have been some interesting articles and editorials on the issue of U.S. agricultural subsidies. The New York Times editorialized about cotton subsidies, noting that some of the rules which permit first world agricultural subsidies are due to expire next year. It also notes that, despite those rules, the Bush Administration has nonetheless granted improper subsidies for U.S. cotton:

American cotton costs a great deal to produce by international standards. Yet even though global cotton prices were crashing from 1999 to 2002, our share of global exports grew to 40 percent, from 25 percent. That was because Washington propped up King Cotton with $12.9 billion in subsidies. We were, in effect, paying the rest of the world to buy American product rather than the cheaper cotton grown in Africa and South America. In recent arguments in its W.T.O. case, Brazil offered credible expert testimony that absent Washington's subsidies, America would have exported some 40 percent less cotton. That actually seems like a conservative estimate. Still, it illustrates the magnitude of the injustice being perpetrated against poor nations for which cotton might be the only competitive export.

Similar attention is being directed at sugar subsidies which, though legal, massively raise the price of sugar for U.S. consumers. (We don't really notice, because sugar remains cheap even at "twice the price".)

One of the problems with subsidies is that, once they take root, it is very hard to eliminate them. At the start of World War II, concerns over the supply of beeswax, used to seal munitions for overseas shipment, led to subsidies for bee farmers. Those subsidies remain in place. Jimmy Carter's family became wealthy as "gentleman farmers" growing heavily subsidized peanuts. While states collect billions of dollars from the tobacco industry's settlement of their suits over health care costs caused by smoking, we continue to subsidize tobacco farmers. It has been suggested that, had Congress taken its present approach to failing industries during the 19th Century, we would still have blacksmith shops - and that argument is compelling.

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