Saskatchewan, Canada, November 11, 2003: George
Bush's American government is dedicated to promoting free
markets around the world. At least that's what it would like
you to believe. The truth might be somewhat different. True,
the U.S. is determined to turn Iraq into a bastion of free
enterprise, and has decided to rewrite Iraqi laws to reorganize
its economy to fit that model.
But the U.S. appears content to follow the maxim of bad parents
everywhere: "Do as I say, not as I do". Nowhere
is this more evident than in Bush's handling of the rebuilding
of Iraq. Is this being done in the model of the free market,
where the best price, the lowest bidder, gains the business?
No, it's being done in the best model of pork barrel politics
where the Administration's friends procure multi-billion dollar
contracts in a secret process hidden from any public scrutiny.
Of course this attitude among American governments is not
limited to foreign policy. The American attitude to cotton
is another example. Cotton farmers are "batten"
a thousand when it comes to collecting government subsidies.
In 2001/2002, the 25,000 American cotton farmers pocketed
nearly $3.9 billion in subsidies from American taxpayers.
Without those subsidies, cotton growers in the U.S. simply
wouldn't be able to survive. Or so they will quickly tell
Cotton is also produced in many other countries, especially
some of the poorest African countries where cotton is the
mainstay of some economies. As you might imagine, American
consumers use a lot of cotton to stay up with the latest fashions.
Hence the American market is attractive to cotton producers
but relatively inaccessible since the large subsidies keep
production high in the U.S. and prices relatively low.
Cotton is a textbook case for free trade. Poor countries
have it and produce it cheaply. A rich country is a high cost
producer but produces lots of it anyway because of subsidies
that encourage production. Just the place for a good dose
of free trade/free market economics. Of course, for that to
happen the rich country would have to believe in the free
Looking at this from the vantagepoint of a country, Canada,
that isn't exactly a mecca for cotton production, it all looks
pretty sad. Some of the poorest countries of the world are
suffering because world cotton prices are depressed. American
cotton farmers rake in billions. Now, in fairness, I suspect
those farmers are not all getting rich. The ones who own their
land are likely doing pretty well, while the ones that rent
or are buying land are likely paying small fortunes for the
privilege of farming.
But what really ices the cake in the cotton situation, is
that the subsidies don't end with the farmer. It turns out
that cotton users -- in this case American companies that
turn that cotton into cloth-- have to be bribed to purchase
American cotton. Between 1995 and 2002, the government paid
$1.68 billion to these companies under the "upland cotton
marketing certificate program." Even that bastion of
free markets, Cargill, received more than $87 million to purchase
Cotton was a hot topic at the failed world trade talks in
Cancun, Mexico. Some Third World countries demanded concessions
on cotton from the U.S. What they got instead was the suggestion
that they grow something else. Cotton became a contributing
factor to the failure of the talks.
Hypocrisy, corruption, pork-barrel politics, and the rhetoric
of free trade seem to go together. None of this is new or
surprising to farmers. Cotton farmers, like farmers everywhere,
focus on trying to protect their turf. We all want free trade
for our exports and protection from imports. If our buyers
can be bribed to purchase our products, so much the better.
We've built entire farming systems around these principles.
And it even works occasionally for a few farmers. These are
almost always in rich countries. Farmers in poor countries
are generally the victims. Mostly, this system is increasingly
failing farmers everywhere. The way farmers conduct their
businesses is at the root of their problems. In a free market,
low prices discourage production. Farmers, on the other hand,
respond to low prices by trying to increase production. They
sell their production, as individuals, to a small group of
buyers, purchase inputs from a small number of sellers and
generally have virtually no market power. They compete for
land with any number of investors, hobby farmers and speculators.
This situation is true for most of the world's farmers.
Farmers are gradually becoming aware that they can't solve
their problems by the simple application of free market theory.
Markets are seldom free and the economic powers-that-be seldom
really want them that way. If there are solutions to this
dilemma, they will be solutions that work for farmers everywhere,
not just solutions that appear to work for a few. The global
economy has left us no other choice.
© Paul Beingessner, firstname.lastname@example.org . The author
is a columnist, transportation consultant and third-generation
farmer in Truax, Saskatchewan.