Global food politics
Monthly Review, July-August, 1998 by Philip McMichael

In the early 1990s, the U.S. Department of Agriculture estimated that Pacific Asia would absorb two-thirds of the over $3 billion increase in global demand for farm exports by the year 2000. Pacific Asian imports would be assisted by $1 billion in U.S. Export Enhancement Program subsidies to American exporters. A portion of this lucrative market (much of which is tinned beef and processed foods sold in South Korea and Taiwan) would involve bulk wheat and corn imports by Indonesia, Malaysia, and the Philippines.

Under the conditions of the 1994 agricultural agreement of the Uruguay Round of the General Agreement on Tariffs Trade (GATT) negotiations, Organization for Economic Cooperation and Development (OECD) projections predicted that U.S. corn exports would undercut Philippine corn prices by 20 percent in the year 2000, depressing domestic corn prices. According to Kevin Watkins, this would threaten half a million peasant households with income declines of 15 percent and result in high social costs such as reduced expenditures on education, increased reliance on child labor, nutritional decline, and the intensification of women’s work outside the home to compensate. Comparatively speaking, the average subsidy to U.S. farmers and grain traders is roughly 100 times the income of a corn farmer in Mindanao. As Watkins remarks, “In the real world, as distinct from the imaginary one inhabited by free traders, survival in agricultural markets depends less on comparative advantage than upon comparative access to subsidies.”

Noting that the government of the Philippines views this agreement as an instrument of economic efficiency, despite its implicit transfer of sovereignty over national food policy to an unaccountable trade body in Geneva, Watkins concludes: “Legal niceties aside, the Uruguay Round agreement bears all the hallmarks of an elaborate act of fraud. It requires developing countries to open their food markets in the name of free market principles, while allowing the U.S. and the EU to protect their farm systems and subsidize exports” FULL ARTICLE

September 16, 2003
Honest Talk About Farm Policy
Stop Calling Them “Farm Subsidies”; It’s Corporate Welfare!

By AL KREBS

Amidst the continuing controversy over the question of agricultural subsidies there remains one simple fact understandably ignored by the media, repeatedly tolerated by farmers and obviously misapprehended by its neoliberal critics.

Grain farmers don’t trade grain, grain traders trade grain !!!

So when it comes to the subsidy question lets stop this silly rhetoric about “farm” subsidies and call them by their true name: corporate welfare.

As the often quoted Monroe City, Missouri farmer Keith Mudd has so succinctly pointed out in relation to organizations like the Environmental Working Group, who would throw out the baby with the bathwater when it comes to such subsidies,”the truth is that all farmers, regardless of size, must use the subsidy just to raise the value received for their commodity above the cost of production. In most instances, the cost of production is covered and something is left over for living expenses. In practically no instance is anything left over that would be considered a return on investment (land and equity).

“Most problems on the farms of rural American,” Mudd has stressed, “can be traced to one fundamental cause. The underlying problem with farm income is concentration. As our input suppliers and the purchasers of our products consolidate, they acquire market power. This market power is leveraged against the farmer when he sells his crop. . . . Look somewhere else for a scapegoat; it is not the American farmer draining the United States Treasury. The real transfer of wealth is accumulating in Cargill and ADM’s bank accounts.”

Elizabeth Becker, reporting in the September 9 New York Times (”Western Farmers Fear Third-World Challenge to Subsidies”), underscores Mudd’s analysis noting, “In the past decade, industrial-scale farmers have tipped their allegiance decisively toward the Republican Party, which supports the current system. Political contributions from agribusiness jumped from $37 million in 1992 to $53 million in 2002, with the Republicans’ share rising from 56% to 72%, according to figures compiled by the Center for Responsive Politics.

“Those commercial companies were not disappointed when President Bush signed into law last year a new farm policy that increases permanent subsidies by $40 billion a year, even though Mr. [Robert] Zoellick [U.S. Trade Representative] had promised the developing world that subsidies would be cut in this new round of trade talks.”

The end result of such economic inefficiency can be mirrored in the plight of Jerman Amente, a Nazareth, Ethiopian farmer. As the Wall Street Journal’s Roger Thurow recently reported Amente has a regular view of a jarring sight in his country as truck after truck passes by his farm carrying bags of grain from the port of Djibouti, marked in red, white and blue, which contain food aid from the U.S . Such shipments have indeed saved countless lives among the more than 12 million people made destitute by the failure of their fields and pastures. FULL ARTICLE

The $4.7 Trillion Pyramid
Why Social Security won’t be enough to save Wall Street
Posted on Wednesday, May 11, 2005. Originally from April 2005. By Michael Hudson.

They wanted something for nothing. I gave them nothing for something.

—J. R. “Yellow Kid” Weil

Social Security, formerly the “third rail” of American politics, has now been trod upon, in rather dramatic fashion, by George W. Bush. Given that the maneuver is both stupid and unnecessary, one must ask why. After all, the program’s alleged deficiencies, if there are any, will not manifest themselves until at least 2018. This is not quite the same as worrying about the sun’s eventual collapse into a black hole, but for most politicians a problem that lies thirteen years in the future is nearly the same thing. Clearly all is not what it seems.

Bush himself offers two reasons for the present boldness. The first—that Social Security is “in crisis”—is easily dismissed. Government actuaries, backed by economists from across the political spectrum, insist there is no funding problem. The Social Security Administration will take in more money than it pays out for the next thirteen years; it has built up a reserve of $1.8 trillion in interest-bearing Treasury bonds for the years after that; and any later shortfall can be covered easily by even a partial rollback of the recent tax cuts for the rich.

Bush’s second argument sounds more promising. If the American people will simply follow his plan, he says, they too will become rich.[1]

The way the system works now, the government withholds 12.4 percent of your paycheck, up to $90,000 in annual income. In return, it promises to provide you a monthly payment—a pension—from the time you turn sixty-two until the time you die. As of this writing, the administration’s alternative remains somewhat nebulous, but what is clear in all of the variations presented thus far is that you will be able to put some of your paycheck into the stock market. Bush calls these stock purchases “personal savings accounts.”

Vice President Dick Cheney described the benefits of these personal savings accounts in January. His example was a young woman who put away $1,000 every year for forty years. The Social Security Administration currently puts her money into Treasury bills, which at present return about 2 percent, so in forty years that investment would have returned about $61,000. Not too bad. “But if she invested the money in the stock market,” Cheney said, “earning even its lowest historical rate of return, she would earn more than double that amount—$160,000. If the individual earned the average historical stock market rate of return, she would have more than $225,000—or nearly four times the amount to be expected from Social Security.”[2]

That’s a lot of math. Cheney’s main point is that an upbeat assessment of the stock market—about 7.5 percent annually over forty years, by his reckoning—would easily exceed the 2 percent offered by Treasury bills.

There is no arguing that $225,000 is more than $61,000. On the other hand, it’s not as if you get a lump sum from the Social Security Administration when you retire. The woman Cheney cited could end up taking in much more than $61,000 if she lives long enough. (The average annual payment to retirees today is about $11,000.) Or she could die on her sixty-second birthday. Like any other investment—or any other form of insurance, for that matter—Social Security is somewhat of a gamble. But then so is the stock market. By Cheney’s estimation, however, today’s stock market is a much better bet. “Over time,” he concluded, “the securities markets are the best, safest way to build substantial personal savings.”

That is the argument, anyway. The stock market is the main chance in America, and Bush wants to let all of us in on the action.

The one sure mark of a con, though, is the promise of free money. In fact, the only way the stock market is going to grow is if we the people put a lot more of our money into it. What Bush seeks to manufacture is a boom—or, more accurately, a bubble—bankrolled by the last safe pile of cash in America today. His plan is a Ponzi scheme, and in that scheme it is Social Security that is being played for the last sucker. FULL ARTICLE