Free Trade Decimates Agriculture
By LINN HAMILTON
The free traders think they hold the moral high ground. They denounce any
opponent as a protectionist, as if this epithet would be sufficient to silence
the most salient advocate of tariffs. NAFTA, GATT and the WTO favor international
trade, yet the opposite should be the case. John Maynard Keynes, the great
British economist, stated that "I sympathize with those who would minimize,
rather than those who would maximize economic entanglements between nations.
Ideas, art, knowledge, hospitality and travel should be international. But
let goods be homespun whenever it is reasonable and conveniently possible,
and above all let finance be primarily national."
Here in a brief passage Mr. Keynes advocates a restraint on free trade and
especially on the international flow of capital while favoring local industry
and production. The free trade crowd seeks to maximize profits without regard
to considerations that represent the hidden
social and environmental costs. They preach efficiency but their cost equation
does not include social, welfare, lower wages, lower benefits to workers,
and environmental destruction.
A more accurate name for free trade is deregulation. Deregulation, however,
does not always have a happy ending as the American experience with the
savings and loan scandal will testify.
David Ricardo, a British economist of the 19th century, originally advocated
free trade. His argument was that if one country could produce a product
cheaper than another than that is where the product should be produced.
Ricardo's logic was sound, but his argument is irrelevant in today's economic
world. His argument assumed that the factors of production, particularly
capital, would be internationally immobile. In today's world capital is
extremely mobile. This fact alone invalidates Ricardo's argument that international
trade will benefit all its partners. If capital flows largely to one country,
or even to a few countries, then the countries with a major exodus of capital
will suffer economic stagnation. Also, for a country to gain from free trade
the benefits must not be offset by higher liabilities. However, after a
country specializes it can no longer be free not to trade and this loss
of freedom can be a liability. Free trade turns into bondage to the international
Another liability of free trade is the cost of transportation. The gains
from free trade must more than pay for the transportation costs. Transportation
costs do not always appear on the balance sheet of an export or import company
because the government at taxpayer expense subsidizes them. Energy costs
are a big part of transportation costs and these are underwritten by investment
tax credits, federally subsidized research, and military expenditures that
insure access to petroleum. The environmental cost of fossil fuel burning
is also not factored into the price of gasoline. Therefore, to the extent
that energy is subsidized so too, is free trade. If the exporters and importers
had to pay the true cost of energy and transportation, then their free trade
profits would be greatly reduced.
The people through the efforts of their governments built the main transportation
systems in this country, and in all other countries. The harbors, the internal
waterways, the railroads, the highways, and the airports were not build
by the giant multinational corporations that are now making big profits
from free trade, but rather by the power of the government.
American agriculture exports its wheat, soybeans, corn, cotton, beef, pork,
chicken and other products to other nations. This export activity is subsidized
by the cheap energy policy of the federal government. Our agricultural production,
especially that west of the Missouri River Valley, is heavily subsidized
by the federal and state governments' building of water and hydro-electric
power dams, water aqueducts and irrigation systems.
Our agriculture is also subsidized by the steady depletion of our topsoil
and the water aquifers, neither of which can ever be replaced. Agricultural
producers all over the nation have been subsidized for decades by the federal
government with billions of dollars in commodity support grants and loans,
with the lion's share of these going to the very largest farmers. Is it
any wonder our corn is cheap when it arrives in Mexico?
The social costs of our agricultural free trade policy have never been tallied
but they are truly massive in proportion to any free trade benefit that
might be gained by the corporations that import and export agricultural
products. Consider the loss of the family farm system and the elimination
of the land-based middle class in America. What price tag would one place
on this loss? Consider the growth of rural poverty since 1980. Consider
the crime, ignorance, and welfare costs of the rural population who used
to gain their livelihood from farming, but who now can now longer do so.
Consider the wrecking of the rural school system. Every year 100 rural schools
close in America. Consider the cost of this wreckage and the fact that rural
youth can no longer obtain an education from these schools. These are the
costs that are not counted on the balance sheets of the agri-business companies
as they rack up handsome profits from their free trade activities.
A few large corporations that import and export agricultural products do
benefit from free trade, but the American citizenry is the big loser as
it subsidizes the energy and transportation costs, the agricultural subsidies,
the western water and electric systems, and then receive less wages and
benefits, fewer social welfare programs, and less health care for their
pains. The agricultural environment is also the loser as the topsoil and
the aquifers are depleted and the rural areas sink into poverty and ignorance.
Linn Hamilton is a rural advocate in Washington, Penn. Email firstname.lastname@example.org
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