Wednesday, July 05, 2006

Farm Subsidies

The LA Times today argues that, in order to the jump-start the stalled Doha trade talks, the US ought to unilaterily drop its farm subsidies. Since the US's farm subsidies are widely used in intro economics courses as an example of how government regulations distort markets and cause deadweight loss, this proposal is one that most all economist should be behind. Money quote:
Who does the U.S. trade delegation represent when it refuses to budge on farm subsidies and market access? Certainly not American taxpayers or consumers. Farm subsidies cost taxpayers about $19 billion last year. For their money, consumers got the privilege of paying more for some food because farm supports (and quotas on some imports, such as sugar) distort markets.
They go on:
Ending these subsidies and lowering agricultural tariffs would boost the U.S. economy, eliminate waste and help farmers in the Third World trade their way out of poverty. It's a shame Washington thinks that its protectionist farm policies are something to be surrendered only grudgingly, and only if others do so. Good riddance, we say.
I can't argue with this, especially in light of the recent Washington Post report, cited in the op-ed, that billions of farm subsidies go to people who don't even farm....

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