Asymmetrical Information

Well, I'm skeptical the American initiative was going anywhere in Washington anyway. This was one case where Bush needed political capital to win over his own caucus and he hasn't got any left. I think the most likely best-case scenario was that we abolished some programs by name to meet WTO needs, followed quickly by big "emergency" subsidy packages as soon as a few farmers started to feel the pinch. Rinse and repeat.

I will not argue the Democrats would have been any more virtuous on farm subsidies--not as long as we have more than two senators from states ending in Dakota.

But who knows? Bush met with Bono yesterday, so anything is possible.

"The French ... seem to be doing their best to make sure that the Doha round of WTO talks doesn't go anywhere."

Sounds like a dog bites man story to me.

not as long as we have more than two senators from states ending in Dakota.

Yeah, but don't forget that basically every state has farmers.

I guarantee that a unilateral reduction, regardless of its economic virtues, wouldn't fly. Bush could probably get enough votes for a real multilateral agreement that he could point to and say that "the Europeans dropped their tariffs and price supports too," although it wouldn't precisely be easy. CAFTA had only the tiniest increase in the sugar quota, and the sugar lobby was strongly against it. But they were able to balance it by bringing other parts of the farm lobby onside.

its been mostly democratic senators that have been the worst villains in terms of price supports. I say this in terms of the specific price supports that they tend to indulge in. In most Blue states, you get a significant amount of intense farming, so the subsidies are for products like milk that directly harm poor people at home while also inhibiting the importation of interesting products from abroad.

Red states tend to be involved more in export oriented crops that have both positive and negative effects on poor people (most of whom are outside the country). Price supports for wheat and corn help, in some way, poor urbanites in 3rd world while harming poor farmers there. Price floors for fluid milk hurt large numbers of americans, and those most affected are in the districts of vociferous supporters of dairy compacts, etc.

If you could wipe out dairy farming in NY, IL, and CA you'd see the balance of virtue mainly shift to Dems, but until then, they are the worst, due to their hypocrisy and infliction of harm on their own constituents.

its been mostly democratic senators that have been the worst villains in terms of price supports.

I'd say the biggest villains are the southern senators from states like Arkansas, Florida, Georgia, and Louisiana who pimp for subsidies for huge agribusinesses in sugar, cotton, and rice. They don't even have the right to claim that they're supporting family farmers, because those guys are all gazillionaire oligopolists who end up either raising the price for American consumers (sugar) and/or displacing products from poor countries struggling to get by.

The dairy industry is protected because people like to protect family farmers, and as for the claim the dairy compact hurts poor consumers, I think we established on this board that poor people have all the money they need to eat well and nutritious meals with proper guidance. An extra 50 cents on a gallon of milk hurts them a lot less than the extra $1.50 on a gallon of gas we've experienced lately, for example.

Republicans control the Senate. They've controlled the House for 10 years. If they wanted to kill all farm subsidies, they could do so. There are enough Democrats from states where farm votes don't matter that they could easily add to their 55-vote caucus. Republicans love farm subsidies as much as Democrats, and that isn't going to change, except only one party is honest about it.

It should be noticed that the big debate over milk price subsidies came between the small-herd states in the midwest and the northeast and the milk agribusiness states such as California, where very large herds dominate the milk production industry.

But nowhere is there any discussion about the impact of eliminating price supports and other agricultural subsidies on specific crop production. How much less rice would be produced if the large rice famers in Arkansas had to pay market prices for their inputs and sell their products at market prices? Where would we find the replacement rice? What impact would that acquisition have? What would happen if there were no crop subsidies for wheat? How much would get produced when the subsidy support incorporated in land prices was removed?

For the initial hit from removing price supports would come in the value of the land being used for production. In some respects the agricultural support programs in the United States have to be looked at as just land price supports; pull the price supports and land prices plummet.

The drop in land prices as subsidies are removed, curiously enough, might have the salutary effect of allowing more new market entrants ( immigrants,legal or otherwise) get into the business. But lots of big agribusinesses and agricultural lenders would be wiped out.

Another interesting question that is not commonly discussed is the question of where the next generation of farmers will come from. As in the EU,the number of next generation family members staying on the farm is dropping rapidly. Farming will become agribusiness just as a way of transfering both assets and workforce from families that not longer want to be on the land and in the farming business. The number of children under 18 has been reported for North Dakota, which has about 30,000 farm units. In 1970 there were over 50,000 children on those farms. In 1998 there were fewer than 12,000. North Dakota is on the cutting edge of farm depopulation and consolidation.

For the farm subsidy story, one should look at the work of the Environmental Working Group(ewg.org) on who gets the money and where. Their Food Subsidy Database is a treasure trove on this subject.

I'd say the biggest villains are the southern senators from states like Arkansas, Florida, Georgia, and Louisiana who pimp for subsidies for huge agribusinesses in sugar, cotton, and rice.

As far as sugar goes, you have to add Montana, the Dakotas, Minnesota, and a bunch of other states too-- sugar beets are big there.

I looked at the CAFTA votes closely; the two senators per state rule made a nice test. In every case where a state's two senators voted differently, the more conservative senator (or the Republican if one senator was a Republican and one a Democrat) voted for and the more liberal voted against. This held regardless of whether the state had two Dems, one liberal and one moderate, two Republicans, one moderate and one conservative, two Republicans, one conservative and one very conservative, two Republicans, one very liberal and one liberal, or one of each party, whether the Democrat was liberal or moderate and the Republican moderate or conservative.

Of course, CAFTA had some strong party loyalty things going on, too. But the general pattern holds for other votes; various districts and states have different free-trade leanings, but after controlling for regional effects or partisan effects of who's in charge, Republicans and conservatives representing the same district or state are more free trade than Democrats, moderates, and liberals.

John: Thanks. Now, recalling Bush's steel import quotas, is this more evidence that Bush is neither a Republican nor a conservative?

But nowhere is there any discussion about the impact of eliminating price supports and other agricultural subsidies on specific crop production. How much less rice would be produced if the large rice famers in Arkansas had to pay market prices for their inputs and sell their products at market prices? Where would we find the replacement rice? What impact would that acquisition have? What would happen if there were no crop subsidies for wheat? How much would get produced when the subsidy support incorporated in land prices was removed?

This is merely a long-winded request for an argument over self-sufficiency theory. Summarily, what would happen if the landholders were confronted with the unsubsidized value of their land is that they would either find that their current use was sustainable without the subsidy, or else find a more efficient use for the land -- either directly, or bu sellomg it to someone who would do so. Long-term subsidy merely promotes perpetuated inefficiency if inefficiency exists, or creates an unjustiifed wealth transfer if it doesn't. And as for net food supply, there are plenty of developing nations who would be quite happy to take their turn climbing the development ladder by starting with agricultural exports -- its just that the tradtional US and EU ag subsidies have dramatically reduced their price competitiveness.

" Now, recalling Bush's steel import quotas, is this more evidence that Bush is neither a Republican nor a conservative?"

The steel quotas were a mistake, in my opinion, but I don't think they show that Bush isn't conservative. He picks his battles carefully. He's allowed more spending than he would have preferred, as a trade-off to try to implement big, substantive shifts in how things are done. I think that Bush bowed to the reality that our political system encourages excess spending, in order to focus on education reform (no child left behind, which brought some accountability and a form of competition to our public schools), tax cuts (all taxpayers keeping a higher percent of their own money), social security (trying to modify the pay-as-you-go system with no savings, which lowers investment and makes us subject to demographic and other shifts) and the war on terror.

I think that the short-lived steel import quotas were a bow to political reality, not evidence of what Bush would do if he were a dictator with a free hand. He doesn't have total control and thus has chosen his battles carefully. You can argue over whether major procedural shifts are more important than short term spending cuts (or about whether these were the most important procedural shifts). But, a strong argument can be made that Bush is focusing on long-lasting change in a conservative, fiscally-responsible direction.

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