Letters to the Editor
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Flexibility is the answer -- again
The answer to the dilemma of (truly) free trade is flexibility. How can governments enact policies that give farmers as much leeway as possible to adapt to changing demands?
The US has had a much-mocked practice of paying farmers to leave their fields fallow. Coastal urbanites tend to think of that as some kind of sentimental or self-interested sop to rural constituents by Washington politicians, which it certainly may be — but it also meant that farmers were holding onto their land without depleting it, thereby ensuring a reserve of readily-workable capacity in the event of a sudden shift in world food economics.
In other words, what we were achieving was to ensure a degree of flexibility.
Protectionism does not engender flexibility. At best, it's a last-ditch effort to stave off severe socioeconomic calamity, but even then by its nature fails to address the issue fundamentally.
By contrast, cheap credit, population mobility, and good transport infrastructure are all good way to improve a labor market's flexibility. But head and shoulders above all else is knowledge. Farmers who only know how to grow rice, and are surrounded by thousands of other farmers who also only know how to grow rice, are socioeconomically fragile and in a global economy will prove an increasing burden to any system of state policy that attempts to protect them. (The same goes for autoworkers, software code monkeys, and so on.)
However it's worth adding that for all that, there's another, simpler reason for the current rash of agricultural protectionism. For decades after the decline of its manufacturing economy, the US has remained a major exporter of two things — dollars, and food. The recent high crimes and maladministration in the US government have already shaken the world's faith in our currency, and everywhere we're seeing national and large private portfolios divesting themselves of their dollar-enumerated assets.
It only stands to reason that those who depend on US ag exports should start doing the same thing with grain as they did with coin.
Which raises one question: what's happening with cigarettes during all this?
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The reality of free markets and free trade
How can anyone be surprised that the profits of the free market system are more important to its beneficiaries than the lives of its victims? The big lie of "free markets" and "free trade" is that they can only function with their widely-claimed efficiency within the boundaries of the average American county where people can trade directly with each other. Beyond that, it becomes necessary for "traders," i.e. middle men and "financiers," i.e. capitalists to weasel their way into the equation. These folks are always in the position to draw far more of the resources of the trading system from both producers and consumers than their actual value to the system justifies. Both producers and consumers are put in the position of dependence on the traders and financiers.
"Free markets" which operate on anything broader than about 2500 square miles actually serve only to impoverish producers and consumers and enrich traders and financiers. Beneath whatever window dressing may be hung on it, the only purpose of the free market system is the maximization of profits for traders and financiers. Thus, if higher profits can be attained by starving the urban poor, the system will do exactly that.
Those who profit from the system will not be concerned in the least that people are dying as a side effect of their profit margins. The common mythology that runs rampant among free market traders and financiers usually proclaims that those who are the victims of the system are simply not working hard enough or smart enough and thus are responsible for their dismal fate. All of this is further complicated when commodity markets are added, thus driving prices higher to satisfy yet another constituency: market speculators.
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No Evidence That "Free Trade" Will Result In Greater Production
How the World Works has no problem with the theory that in the long run, high prices for food commodities and a completely free trade regime would result in greater production (provided farmers don't run into absolute constraints -- such as a lack of land or water or fertilizer inputs.)
Agricultural production depends more on the weather than it does on "free trade". Global climate change is already having an impact on agriculture, and it's only gonna get worse from here on out.
Beyond that, just because there's demand for a good doesn't mean farmers are gonna produce it. There have to be paying customers, and they have to pay enough to make the good profitable to produce. With the cost of inputs like petrochemicals skyrocketing, it should come as no surprise that food's getting more expensive, and scarce as some customers begin to hoard in order to head off rising prices. Add to that the exploding global population and you have a recipe for disaster.
American consumers are also having to cope with the collapse of the dollar, which is making food far more expensive than it was just a year or two ago. Why sell your grain in the US when you can get more money for it in Europe or Asia?
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here is how I think of it
I agree totally with what you say here Andrew. Another way to say it is that libertarian economists don't understand that people gathering together to give themselves an edge is PART OF THE FREE MARKET. This is true whether it is unions, trusts, or nations. We figured out a long time ago that trusts need to be regulated (although you'd think we hadn't from some of the recent court cases). Those same libertarians bemoan unions and want regulations. (They don't get that combinations in restraint of trade are also in need of regulation.) Nations will do the same thing whether the motive is benefit to the wealfare of its citizens or for political reasons.
Note, in case someone gets the wrong idea, I am not equating unions and monopolists or either and nations. I am just saying that each has an interest and since each will protect its interest, all should be part of the market and not regarded as something oustide it or opposed to its freedom.
Any of these can get out of hand if not regulated. Union leades can rob from pension funds. Monopolies can compete unfairly. Nations can do lots of bad things. It is how the libertarians seem to pick what is part of a free market and should be allowed and then take the reverse view on something else to suit themselves.
With nations, deplomacy in markets cannot be just bilateral or that is just another combination; not a regulation. So we absolutely need somthing like the United Nations and the multilateral diplomacy that acts for regulation in the international trade venue.