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Rent Seeking Cotton Farmers of the World Unite!

April 17, 2010

It always warms my tender heart to hear about rusticating farmers who care about each other. Take these U.S. cotton farmers. About 20,000 of them. The U.S. government provides these tillers of the American pastoral with a subsidy of about $3 billion a year.

And all was good. But then, the WTO had to get nosy–I know, the nerve!–because as part of a big bad trade agreement, the U.S. promised not to harm farmers elsewhere in the world, like in Brazil. Et in arcadia ego, those Brazilians say. I guess they had trouble competing against a heavily subsidized American way of life. Go figure. So anyway these cotton farmers in Brazil sued the U.S. for breaking its trade agreement. And they won.

What would be the sensible thing to do here? Keep your trade agreement and end the subsidy to U.S. farmers, right? No, instead, the U.S. agreed to subsidize the Brazilian farmers. Yes, you read that correctly. Rent seeking has gone global. Time reporter Michael Grunwald is on the case:

What could be more outrageous than the hefty subsidies the U.S. government lavishes on rich American cotton farmers? How about the hefty subsidies the U.S. government is about to start lavishing on rich Brazilian cotton farmers?

If that sounds implausible or insane, well, welcome to U.S. agricultural policy, where the implausible and the insane are the routine. Our perplexing $147.3 million–a-year handout to Brazilian agribusiness, part of a last-minute deal to head off an arcane trade dispute, barely even qualified as news; on Tuesday, April 6, it was buried in the 11th paragraph of this Reuters story. (The New York Times gave it 10th-paragraph play.) If you’re perplexed, here’s the short explanation: We’re shoveling our taxpayer dollars to Brazilian farmers to make sure we can keep shoveling our taxpayer dollars to American farmers — which is, after all, the overriding purpose of U.S. agricultural policy. Basically, we’re paying off foreigners to let us maintain our ludicrous status quo.

HT: Tim Worstall

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