Monday, October 2, 2006

Required Reading - Farm subsidies

Daniel Griswald at Cato writes about what farm subsidies really mean to the 98% of us who are not farmers in the United States. He nicely points out that not only is there an awful lot of money invovled, but these subsidies (that both Democrats and Republicans seem to love so much) harm the environment and raise the cost of food.
Trade barriers and domestic price supports also force tens of millions of families to pay higher food prices. According to the Organization for Economic Cooperation and Development, U.S. farm programs transferred an average of $10.5 billion a year from U.S. food consumers to producers from 2003 through 2005. That amounts to an annual food tax of $140 for a family of four — a regressive tax that falls most heavily on poor families that spend a larger share of their budgets on food.

Artificially high food prices also drive up production costs for the U.S. food processing firms, reducing their competitiveness and jeopardizing jobs. A recent report from the U.S. Commerce Department shows that import quotas have cost thousands of American jobs in sugar-using industries. Tens of thousands of U.S. bakeries, restaurants, and other businesses suffer lost sales and reduced profitability because of artificially high prices they must pay for food commodities.
This is why government intervention = bad. Even when you think the outcome is good.

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