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The free market is when you get something for free by Paul Beingessner
(Wednesday, Nov 12, 2003 -- CropChoice guest commentary) --
George Bush's American government is dedicated to promoting free markets
around the world. At least that's what it would like you to believe. The
truth might be somewhat different. True, the U.S. is determined to turn
Iraq into a bastion of free enterprise, and has decided to rewrite Iraqi
laws to reorganize its economy to fit that model. But the U.S. appears
content to follow the maxim of bad parents everywhere: "Do as I say, not
as I do". Nowhere is this more evident than in Bush's handling of the
rebuilding of Iraq. Is this being done in the model of the free market,
where the best price, the lowest bidder, gains the business? No, it's
being done in the best model of pork barrel politics where the
Administration's friends procure multi-billion dollar contracts in a
secret process hidden from any public scrutiny.
Of course this attitude among American governments is not limited to
foreign policy. The American attitude to cotton is another example.
Cotton farmers are "batten" a thousand when it comes to collecting
government subsidies. In 2001/2002, the 25,000 American cotton farmers
pocketed nearly $3.9 billion in subsidies from American taxpayers.
Without those subsidies, cotton growers in the U.S. simply wouldn't be
able to survive. Or so they will quickly tell you.
Cotton is also produced in many other countries, especially some of the
poorest African countries where cotton is the mainstay of some
economies. As you might imagine, American consumers use a lot of cotton
to stay up with the latest fashions. Hence the American market is
attractive to cotton producers but relatively inaccessible since the
large subsidies keep production high in the U.S. and prices relatively
low.
Cotton is a textbook case for free trade. Poor countries have it and
produce it cheaply. A rich country is a high cost producer but produces
lots of it anyway because of subsidies that encourage production. Just
the place for a good dose of free trade/free market economics. Of
course, for that to happen the rich country would have to believe in the
free market.
Looking at this from the vantagepoint of a country, Canada, that isn't
exactly a mecca for cotton production, it all looks pretty sad. Some of
the poorest countries of the world are suffering because world cotton
prices are depressed. American cotton farmers rake in billions. Now, in
fairness, I suspect those farmers are not all getting rich. The ones who
own their land are likely doing pretty well, while the ones that rent or
are buying land are likely paying small fortunes for the privilege of
farming.
But what really ices the cake in the cotton situation, is that the
subsidies don't end with the farmer. It turns out that cotton users, in
this case American companies that turn that cotton into cloth, have to
be bribed to purchase American cotton. Between 1995 and 2002, the
government paid $1.68 billion to these companies under the "upland
cotton marketing certificate program". Even that bastion of free
markets, Cargill, received more than $87 million to purchase cotton.
Cotton was a hot topic at the failed world trade talks in Cancun,
Mexico. Some Third World countries demanded concessions on cotton from
the U.S. What they got instead was the suggestion that they grow
something else. Cotton became a contributing factor to the failure of
the talks.
Hypocrisy, corruption, pork barrel politics, and the rhetoric of free
trade seem to go together. None of this is new or surprising to farmers.
Cotton farmers, like farmers everywhere, focus on trying to protect
their turf. We all want free trade for our exports and protection from
imports. If our buyers can be bribed to purchase our products, so much
the better. We've built entire farming systems around these principles.
And it even works occasionally for a few farmers. These are almost
always in rich countries. Farmers in poor countries are generally the
victims. Mostly, this system is increasingly failing farmers everywhere.
The way farmers conduct their businesses is at the root of their
problems. In a free market, low prices discourage production. Farmers,
on the other hand, respond to low prices by trying to increase
production. They sell their production, as individuals, to a small group
of buyers, purchase inputs from a small number of sellers and generally
have virtually no market power. They compete for land with any number of
investors, hobby farmers and speculators. This situation is true for
most of the world's farmers.
Farmers are gradually becoming aware that they can't solve their
problems by the simple application of free market theory. Markets are
seldom free and the economic powers-that-be seldom really want them that
way. If there are solutions to this dilemma, they will be solutions that
work for farmers everywhere, not just solutions that appear to work for
a few. The global economy has left us no other choice.
(c) Paul Beingessner (306) 868-4734 phone 868-2009 fax
beingessner@sasktel.net | |
