With government intervention and handouts at their highest in years, it is no wonder that the American business industry has adopted the belief that they should use big government at the population's expense. As a result, in the name of defending American businesses, the government subsidizes well connected industries through tariffs and import quotas on foreign goods. But while this may seem noble, it is in fact destroying the American economy. Even when we look at smaller industries, such as the sugar cane industry, where there are roughly 10,000 sugar farmers in America, we can see how government intervention has lowered the standard of living in the United States.
In most cases, FDR's New Deal marks the beginning of big government intervention into the free market system. Sugar subsidies, of course, fall into this category and have lasted through even the most "conservative" presidencies. After a brief time of relaxed government intervention in the late seventies, it was Ronald Reagan who reinstated sugar import quotas creating an artificial shortage of sugar. These quotas allow domestic sugar growers to raise their prices due to the lack of competition in the market.
As a result, compared to international sugar prices, Congress has put American sugar prices on a level with the Goodyear blimp floating high above Yankee Stadium, adding $3 billion dollars to consumer's food bills per year.
But while sugar farmers reap the benefits, businesses that use sugar are hemorrhaging money. Some American businesses, such as Coke and Pepsi, abandoned using sugar and replaced it with high fructose corn syrup. The quota program drove sugar prices so high that it wreaked havoc on the market for sugar.
Domestic candy companies now found it almost impossible to compete with foreign prices and as a result began relocating their factories to foreign countries. Also, the high price of sugar has driven up the price of domestic farmland causing difficulty for unsubsidized farmers to find affordable land. In total the high price of sugar has destroyed almost 9,000 U.S. jobs in food manufacturing alone. In total, American jobs lost exceed the number of American sugar farmers.
Not only are these trade reductions hurting the wallets of Americans but they are also hurting the economic prosperity of foreign nations. To help Third World countries, like the Philippines, hurt by these embargoes, President Reagan created a new foreign-aid program to give them free food but in turn making it more difficult for local farmers to replace sugar with other crops. As an example, lets say the U.S. sends them free wheat. By flooding foreign markets with free "wheat," the U.S. inadvertently destroys the local Philippine "wheat" farmers' hope for competing in the market and eventually driving them out of business.
Other more profitable countries retaliated against the United States by reducing their purchase of American goods. Brazil reduced the amount of American grain they purchase and the Dominican Republic, former sugar growers, are now producing their own wheat and corn, providing more competition for American farmers.
These subsidies also have negative environmental effects, encouraging sugar production in fragile areas such as the Everglades. But instead of ending these subsidies, Congress voted to spend millions of tax payer dollars to clean up the Everglades and buy back sugar cane fields from farmers. This, of course, reducing the amount of sugar available to the consumer, which then again raises the price even further.
So, how are sugar farmers able to take such advantage of the American population through government interference? The answer is that the benefits are concentrated while the costs are dispersed. While the small sugar industry collects more than $3 billion dollars a year from these benefits, it only costs each individual American roughly $50 a year. An amount so small that it is not worth the time, money, and energy to battle both the Sugar Cane and Corn Syrup Lobby. (Let us not forget that the High Fructose Corn Syrup industry has benefited substantially from being able to raise their prices due to an increase in demand for HFCS.)
Multiply this modest example by about a million, to account for all of the other countless predatory schemes taking place, and the American citizen is being taken for thousands of dollars a year. Money, which I might add, that could have gone into a countless number of other industries and inventions to improve our standard of living.
It is important that we understand that free trade is extremely important to a healthy economy. Contact your representatives and make sure they understand the adverse effects of government intervention. If we don't act fast the only place unsubsidized farmers will be able to farm is on Farmville!
