Beyond Econ 101.
The ongoing Euro-spat has pushed the debate over agricultural subsidies to the forefront. While the US does not quite have the highest ratio of farm subsidies to GDP, it’s pretty close.
When it comes to subsidies, I’m of the opinion that there had better be a very good reason for them, and I don’t see a good reason for farm subsidies in the US or any other developed country. I believe it was this article that led me to my current position; there are many other arguments that take the Econ 101 approach to subsidies — they’re an unnecessary distortion of the market.
Tom Friedman today resorted to calling us all French because both the US and France are clinging to these outdated subsidies.
But setting these traditional arguments aside, I think there is a distinctly environmental line of argument against farm subsidies:Given the task of feeding over 6 billion people, it would make sense to grow different crops wherever they grow best, simply because we have limited resources, and as that 6 turns into a 9 or a 10, it’s going to be even more important that the world as a whole makes the best possible use of the resources there are — one might even carefully use the words “natural environment” to describe where different crops should be grown. (I guess if you hold that agriculture itself is unnatural, we’ll have to agree to disagree).
A completely subsidy-free world food market is the best way to ensure this happens. Where there are subsidies, you find people essentially manufacturing environments in which to grow food, because they’re getting paid $2 for every grain of rice they produce (or whatnot). The huge profit margins make it economical to import water from far, far away, or build elaborate systems to “trick” crops into growing, and so on.
A slight problem is that sometimes, all the good land for growing a particular crop is located in only one area of the world. With an accurately priced fuel market, though, I think that the “right” balance could be struck between buying local and growing in the “right” place.
In other words: You tell ’em, Tony.