THE BIG HANDOUT
How U.S. subsidies and corporate
welfare corrupt the world we live in and wreak havoc on our food bills
by Thomas
Kostigen, Scribe, 288pp.
Reviewed: 21 July 2012
In the West we have been led to believe that "Free Trade" is an essential expression of the economic principles of free market economics. We have also been told that electoral democracy is the political equivalent of the free market - it aggregates free choice of individuals into the political decisions of national-scale societies.
When I worked on international trade negotiations for some years, I learned that political democracy can often be the enemy of free trade. The ability to compete against the cheapest producers in the world is not the only value that governments must consider when they are deciding how to regulate imports and exports. Free trade forces structural adjustment, and structural adjustment means disruptions to local industry. You may argue about the long-term national interest, but in a democracy you can be sure than economic pain will cost votes and can change governments.
Nobody spruiks the principles of Free Trade
more strenuously than the United States, but Thomas Kostigen's book tells us that the home of free
market economics does not practice what it preaches. Kostigen describes an economy characterized
by production subsidies and discriminatory tax breaks that make nonsense of
free market principles, and that make US arguments for global Free Trade seem
hypocritical.
He asserts that American
exports of subsidized wheat, cotton and rice are destroying the domestic
economies of developing countries, thus contributing to anti-American sentiment
and even terrorism.
With congressional elections every two years,
the USA
is never out of election mode. The few
politicians who dare to resist the loud, ruthless and well-funded industry lobbyists are
outvoted by those who dare not resist them.
Free markets, national or international, do not offer easy solutions to the "creative destruction" that economists see as a necessary outcome of unregulated competition.
Should the cost pressures of ruthless competition be allowed to force agricultural communities to destroy their own soils and ecologies, as humans have done repeatedly through history?
Can a democratic electorate ever be sufficiently far-sighted to support long-term protection of common resources, and to accept the short-term pain of economic adjustment?
Kostigen can't address these issues, but he shines an uncomfortably bright light on the failures of the American system to deliver the results its people deserve and the world needs.
Richard
Thwaites has participated in Australia ’s
international trade liberalization negotiations.