Shameful Hypocrisy

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In our class discussions on development and the environment we didn’t talk much about trade.  For all the billions of dollars rich countries dish out in aid to make themselves look like they care, many more billions are spent protecting inefficient farmers in their own constituencies.  Why is it that not more development agencies, who care about developing countries, do not vociferously call on governments of the rich to stop protecting their farmers?  Some do, such as Oxfam, but they don’t seem to make any headway.  Europeans and Japanese from the left and right, who supposedly care about the starving poor in Africa or South Asia, vehemently defend their agricultural policies, which effectively block out imports from the developing world.

The members of the OECD spend up to US$300 billion on agricultural subsidies every year!  Country Programmable Aid of the OECD didn’t even top $100 billion in 2011.  The EU’s Common Agricultural Policy represents half the EU’s budget of 122 billion euros, with direct farm subsidies alone accounting for nearly 40 billion euros.  In the United States the total annual amount of farm subsidies stands at around US$15 billion.  The 2002 US Farm Security and Rural Investment Act rewarded US farmers with nearly US$200 billion in subsidies in the subsequent ten years. That was US$70 billion more than previous programmes and represented as much as an 80% increase in certain subsidies!  But the crown belongs to peace-loving Norway whose farm support is the highest in the OECD at more than 60% of farm income.  Unbelievable.  Japan is not far behind.

The resulting trade distortions tend to disproportionately disadvantage the world’s poorest agricultural producing countries, such as those in Africa and South America.  They encourage overproduction of food at home and discourage food production elsewhere.   Oxfam estimates that subsidies, price floors and outright bans has deprived Ethiopia, Mozambique and Malawi of potential export earnings of at least US$238 million since 2001.  Clearly, we’re not talking about peanuts here, but big bikkies.

Fortunately New Zealand and Australia stand along side the developing countries on this one as our agricultural industries receive few or no subsidies and are virtually unprotected.  New Zealand has the lowest level of government support to agriculture in the OECD at just 1% of farm income, Australia 3% and the United States 9%.  Whenever I’ve been in Europe, Japan or North America and brought this issue up, I have been gobsmacked at the reaction of the locals.  For some reason they can’t see the injustice in their policies.

This is not to say that trade liberalisation will suddenly fix the problems of the developing world, but depriving their citizens from exporting to wealthy countries exacerbates their poverty.  Many well-meaning young people from the rich countries go to Africa to help out for a year or two.  But then they nearly all go back, usually with a very healthy suntan.  I wonder if they’ve ever thought about spending their energy putting pressure on their own governments to open up their markets to African products?  Could the young Americans who were so het up about atrocities in Uganda spend their energy convincing Congress to cut their heinous corn subsidies?

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5 comments on “Shameful Hypocrisy

  1. ryankf says:

    Corn is King Clinton! I’m going to have to chime in on the same level i did with Sarah last week. Just because it’s the right thing to do doesn’t mean anyone is going to do it.
    In other words, no one in the US is going to get elected on a anti-farm platform. Though farming in the US is almost entirely big agri-business it is never the less still closely linked with the American identity. Anti-farm is roughly equivalent to anti-American.
    I totally agree with you and think that farm subsidies in the US should be abandoned. The US produces more food than it can consume and export. Farmers are often paid to til their crops back into the ground. It’s sickening. Or at the very least they get paid even when their crops don’t grow as evidenced by this years harsh summer: http://www.time.com/time/health/article/0,8599,2120278,00.html
    Yet, i don’t for a second think that we’re going to wise up and let the markets do what they’re intended to do. We still want our cheap beef, cheap ethanol, cheap etc etc. Sure, once we become altruistic and come home with our African tans and want what’s best for all inhabitants of the earth we’ll be happy to pay extra for unsubsidized crops. Obviously American’s are already paying extra for them through the subsidies but that takes us back to the American farmer and our own sense of identity we’re trying to protect with our votes.
    Don’t tell me to help the underprivileged of the world, tell me how it’s better for me to pay less taxes, reduce the burden on land from factory farming, and that i’ll have the added benefit of feeling good about myself after because i helped the underprivileged of the world. I know it’s cynical, but American’s, and i would argue others (Norway), are happy to cheat in order to get what they want. The best, and in my opinion ultimately only way out is to give people a better option than cheating. We all want to do what’s right, as long as it doesn’t hurt too bad.
    I’m happy to recycle, and compost, and shop local (farmer’s markets), but sometimes i still go grab a corn-laden Macca’s beef burger knowing (at least at home in the US) that everything about that purchase supports a system i don’t approve of. Human beings en mass are just like water, we follow the path of least resistance. It’ll take some major education efforts and some strong personalities in government to effect the kinds of changes that do away with subsidies of this type and improve global agriculture markets.

  2. clintonwatson says:

    Americans may love their cheap beef, corn and ethanol, but they’re paying for it indirectly through fiscal transfers which favour a few. So consumers are actually paying more to get their “cheap” food!

    I think the rich feel better about their decadent lifestyles through seeing their governments give out aid to “the poor”. But this seems more a token gesture and just deals with a sense of guilt, rather than, as you say Ryan, a real sense of caring for those in the developing world. Perhaps if aid were cut, Europeans, Japanese and Americans would be forced to look at other ways of compensating for their guilt…Then real action could happen.

  3. aidangnoth says:

    And that is why Realism is considered the dominant theory of IR….
    Interesting argument, I’m inclined to agree with Ryan’s point about this being similar to Sarah’s piece in terms of “it would be nice, but states aren’t going to do it”.

    Clinton could you expand on your last comment saying that the U.S. is inidrectly paying for their behaviour indirectly through fiscal transfers which only favour a few? Would you also argue that they could be paying for it in terms of ‘image’? That these actions devalue many Western states claim to being ‘good global citizens’ which in tern affects our relationship with these poor States?

  4. clintonwatson says:

    The US government is using taxpayer money, taken from ALL its citizens, to line the pockets of a FEW farmers. This has a deadweight cost so it’s actually costing everybody more. Furthermore, it encourages inefficient production and stifles competition which provides incentives to innovate and improve productivity. That’s what I meant.

    I would definitely argue that the actions of Europe, Japan and North America devalue Western claims of being “good global citizens”. That’s why I titled my blog “shameful hypocrisy”. I think it’s shameful there are not more vociferous calls to end these policies. I suppose the realist would just shrug her shoulders and say, “That’s the reality of a self-help system”. I guess this means realism is king? But then, wait, hang on, governments have gone a long way to creating international markets and to pulling down these harmful barriers. How does a realist explain that? She can’t! So how come realism is the dominant theory of IR? Perhaps it is in the US, but based on our lecturers here at Vic, realism doesn’t seem to be the dominant theory at all…

  5. aidangnoth says:

    Haha, I agree with you on that, Realism being the dominant theory of IR does not seem to hold true in New Zealand- and I was saying that more in jest. Oh right, ok I see how that works thanks for elaborating. The U.S. does seem to have a history of making bad decisions regarding its agricultural sector (Soviet Union and Cuba embargos which have cost U.S. farmers billions of dollars in lost export revenue).

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