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Agricultural Subsidies

The Usurer (who writes more in one e-mail than I write in most days) writes, regarding this article:

... what would happen under at least semi-capitalism as we have in the West is fine as far as dumping is concerned ... but it might have been worthwhile to add in a note to the effect that the failure of local markets to adapt would be attributable to gross corruption and the like, just as one of the later articles mentioned.

This certainly does deserve further discussion. The recent history of Zimbabwe is instructive. I don't have the writing flair to do a better job than Steven Den Beste did over at USS Clueless last year: 1, 2, 3, 4.

The summary is that Zimbabwe's economy has been turned into a total disaster at the hands of its government. This was a country that had been an exporter of food (despite subsidies and dumping!) that a few years of tyranny have turned to famine and starvation. It's reminiscent of what happened to the Ukraine as a result of Stalin's policies. It is governments that destroy economies, and governments (through corruption, socialism, unceasing war, or surely through many other creative ways) that keep them from rebuilding.

Second, labour freed up can only be put to good use when there is capital to lever its output, and in many cases the only significant capital that African countries have is the land and what seedstock they have on hand to sow with.

Labor is certainly more productive when it leverages capital, but it goes too far to imply that capital is necessary. It is unpleasant but possible to build tools with one's bare hands (which is, after all, how the first tools were created) and after a few cycles of using existing tools to create better tools, seemingly daunting projects such as building housing are definitely within reach.

Clearly such a course of events is not desirable when a much easier path -- the importation of capital — exists. But investors won't come knocking unless they have reasonable assurances that they can make a profit, and the corrupt governments and unstable societies in Africa keep all but the bravest investors away. (The IMF and World Bank are special cases; they're involved in lending other people's money, seized by taxation, and they frequently make loans in cases no sane investor would.)

Africa's fundamental problem is that the preconditions necessary for capitalism to thrive — an absence of large-scale violence (that's putting it nicely...), government commitment to defending individual rights including property rights, and entrepreneurial drive — are notably lacking. Africa does not attract private capital because other parts of the world (e.g. some parts of SE Asia) are much more attractive on these points.

Another thing is that while dumping per se is not the problem, unpredictably changing levels of dumping etc make planning of anything damn near impossible with or without corruption, a particular problem when people are poor farmers with not much access to respectable market information to begin with.

This is a good point and I have to defer to John's knowledge in this area. I assumed that agricultural policies regarding subsidies and dumping have been more-or-less stable for decades. All economic adjustment is painful, and the more painful the less information and liquidity you have. (Which isn't to imply that the adjustment isn't worth the pain; it's merely to recognize that there is pain in the short run.)

Proper and long-lasting reform is far away, and for now the only viable way to at least some measure of growth is for Europe to stop effing the rest of the world around with its goddamn subsidies. At present, realpolitik (to the extent it is the west's responsibility towards the third world) leans towards using arguments that are right but don't have much ideological substance. The trick is to do so without pushing the dumping-is-bad line in a general sense, which as you point out the articles failed to accomplish.

There's something else Europe is doing that bothers me more than the subsidies (which, as I say, aren't necessarily bad for Africa) — Europe's hysterical fear of genetically modified foods. Europe is a major potential market for African food exports, but Europe places heavy restrictions on the importation of GM foods. GM foods are clearly the lowest-cost to produce, and are Africa's best chance to be competitive in international agricultural trade, not to mention being the best way for the continent to feed itself. But growing GM foods would shut Europe's doors against African exports, so they fear to use them.

(On an off-topic but related note: A while ago there was an Oregon ballot measure to require labeling of GM foods. I voted against it, and the measure was defeated, but had it passed I planned to make a point of purchasing only GM food, on principle.)

I've been having trouble finding figures for how much the United States spends annually on agricultural subsidies. I'd ideally like to have historical data back to WWII or so. Do any of my readers know? Mail me!