Novel attack on farm subsidies

Discussion
1

Now this one is interesting:

The US suffered a final defeat on Thursday in its dispute with Brazil
over cotton subsidies at the WTO.

The organization's appellate body upheld a ruling last year by trade
judges who said US subsidies to cotton farmers broke international trade
rules by depressing world prices and harming cotton farmers in Brazil
and elsewhere.

The decision could force the US to lower the subsidies it pays farmers
to grow cotton and, eventually, other crops.

[...]

The outcome is desirable but the principles are all wrong. U.S. farm
subsidies are paid by U.S. taxpayers and are therefore a violation of U.S.
taxpayers' rights, but farmers in other countries have no such claim.

J.

2

Justin,

  I don't know why you would say that the principles are all wrong. I can't find any fault in the logic that:

(a) U.S. government cotton subsidies help depress world cotton prices, and
(b) This artificial undercutting of cotton prices unfairly hurts cotton farmers in Brazil

  Opponents of government subsidies in this country already tend to be familiar with arguments framed in nationalist terms (i.e. the harm to U.S. taxpayers). I think it's great that this WTO ruling will give libertarians and others a chance to become more acquainted with arguments framed in global terms. The fact that you describe these arguments as "novel" is illustrative of how accustomed to a nationalist frame of reference most Americans are in such matters.

Yours in liberty,
        <<< Starchild >>>

3

The US made trade agreements with those nations and then broke it's promises. So it seems to me that as members of those nations, they, in part, have a claim.

-- Steve

4

That's true, but too limited. The Brazilian cotton farmers are hurt, but the country of Brazil as a whole, gains from having access to cotton that's cheaper than they can grow it themselves.

/Lars

5

Lars,

  That's an interesting point and could be correct, depending on the size of the cotton industry relative to the end use market for cotton in Brazil, but only if the U.S. government is subsidizing cotton so heavily that U.S.-grown cotton is cheaper in Brazil than Brazilian-grown cotton. My guess however is that the subsidies are only strong enough to make U.S.-grown cotton price-competitive in the U.S. market. Of course the Brazilian farmers still have a case either way, since they are still being hurt regardless of whether or not U.S. government cotton subsidies benefit Brazilian consumers.

Yours in liberty,
        <<< Starchild >>>

6

I don't know why you would say that the principles are all wrong. I
can't find any fault in the logic that:

Cool, a controversy. :slight_smile:

(a) U.S. government cotton subsidies help depress world cotton prices,

True enough, though lower prices are certainly not inherently undesirable,
as Lars Petrus suggested.

(b) This artificial undercutting of cotton prices unfairly hurts cotton
farmers in Brazil

This may be worthy of attention and concern and maybe even activism, but
is not in itself a legitimate cause for legal action.

In general, if an individual or group applies significant capital toward
lowering prices in a particular market, it may be "unfair" but it is not
in itself a legitimate cause for legal action (though it is certainly a
*common* cause of legal action).

It is, however, a signal to dig deeper into the root causes of the
perceived unfairness. Social and economic inequalities are terribly often
rooted in more basic violations of rights, and should always lead us to
ask penetrating questions. But if we cannot find such basic rights
violations, we are restricted to addressing the inequalities through
voluntary institutions or not at all.

If the offending entity's capital was acquired illegitimately (such as by
burglary or taxation) or it enjoys a monopoly by force (such as land
titles or patents) then its current position and ability to manipulate the
market are indeed founded on basic rights violations. Hence my focus
directly on the tax-based subsidies as illegitimate themselves.

Opponents of government subsidies in this country already tend to be
familiar with arguments framed in nationalist terms (i.e. the harm to
U.S. taxpayers). I think it's great that this WTO ruling will give
libertarians and others a chance to become more acquainted with
arguments framed in global terms. The fact that you describe these
arguments as "novel" is illustrative of how accustomed to a nationalist
frame of reference most Americans are in such matters.

I called it "novel" simply because I hadn't heard that it was going on.
The argument about U.S. taxpayers isn't "nationalist" -- U.S. taxpayers
are not just U.S. citizens or even just U.S. residents. They are simply
the ones whose assets are being confiscated to fund the subsidies.

Of course, if the U.S. government had made an explicit agreement to
restrict its cotton subsidies and then blatantly defied that agreement, as
Steve Dekorte asserted, that's yet another issue. But the article I was
reacting to said nothing about the U.S. having "agreed" to anything -- it
only made vague mention of "international trade rules". Presumably the
U.S. government has ratified most or all of the WTO's treaties; I admit to
knowing very little about it.

J.