Sunday, December 09, 2007

This explains the single term, maybe...

Former President Jimmy Carter, whose accomplishments after his presidency dwarf the actual tenure in office (much like Herbert Hoover, whom I also admire), demonstrates why his grasp of economics didn't help him in office.

In an editorial in the WaPo this week, he concludes with this astonishing bit of illogic.
I am still a cotton farmer, and I have been in the fields in Mali, where all the work is done by families with small land holdings. Cotton production costs 73 cents per pound in the United States and only 21 cents per pound in West Africa, so American farmers do need protection in the international marketplace. But Congress has a moral obligation to protect American agriculture with legislation that will serve our national interests, that will feed hungry people and that does not suppress the ability of the poor to work their way out of poverty. [My emphasis]

Mr. President, the fact that your production costs are way above your competitors does not automatically create an entitlement. Otherwise there would be no reason to control costs. What is does mean is you should not be in the cotton business.

I know, I know- "This will mean the end of all cotton farming in the US!!!". I think not. We grow about 16% of the world's cotton and use a quarter of it here, exporting the rest. In fact, the US ships 40% of the world's exports. If we stopped subsidizing cotton today, where would cotton futures open tomorrow? I'm guessing significantly lower than the current US supported price, but high enough to get the acres needed to supply the world.

Oddly, this seems to be the case for other commodities.

2 comments:

milofarmer said...

Isn't that how the cattle market works for the most part? Supply and demand dictates price and herd size. The same thing would work for crops if we had the guts to see half of America's farmers go out of business. (and no one is comfortable with that, so we stay with the status quo)

John Phipps said...

milo:

I'm pretty sure we are headed there (50% fewer farmers) anyway. Markets are hard to subvert, even with massive subsidies.

It's hard for me not see how much more technology allows me to farm in my twilight years, and not suspect other guys haven't figured this out too.

We don't need many farmers to get the job done.