Reality and Free Markets vs Brazilian Big Government
We want less government domestically. Sometimes, that requires less government elsewhere in the world. Most of the time, we (rightly) cannot affect that change. Thankfully, when it comes to trade policy, we can.
For instance, We the People now have a sugar tariff regime. Shocker – anti-free market protectionist practices beget results diametrically opposite of their intent. Smoot-Hawley, anyone?
Engaging in a Big Government war with the rest of the planet begets a regulatory arms race that costs average people the world over – and especially American farmers – big time.
Take Brazil’s gi-normous sugar industry. Our sugar tariff regime is in response to ridiculously huge Brazilian subsidies – $2.5 billion worth last year alone.
What has to be one of the most successful lobbyist joints in history – Brazil sugar’s UNICA – feebly attempted to justify and downplay this amazing display of Crony Socialism. What they instead ended up doing was begrudgingly admitting to their embarrassment of Big Government riches.
Has Brazil grown their government-sugar industry with decades worth of these multi-billion dollar subsidies and regulatory mandates? UNICA says “Yes.”
The requirement for blending (sugar) ethanol in gasoline has been in force for well over thirty years….
Does Brazil cut direct checks to sugar farmers? UNICA says “Yes.”
The Brazilian government gives a small level of assistance for sugarcane farmers in the northeast of Brazil….
Their definition of “small” appears to differ wildly from ours.
Does Brazil give sugar farmers loans – and then forgive and forget them? UNICA says “Yes.”
The Brazilian government has been transparent in its disclosures of soft loans as required by the WTO….
Translation: “Soft loans” – we’ll loan you money, and then walk away never expecting you to repay a dime. Remember Joe Pesci in Lethal Weapon?
Does Brazil give sugar preferential treatment in the country’s pension program – essentially giving the farm sector a special break on social security taxes? UNICA says “Yes.”
In order to increase participation of rural and agricultural workers…the Brazilian National Institute of Social Security has assessed constitutionally-sanctioned, differentiated contribution rates for these workers.
So Brazil “increase(s) participation of rural and agricultural workers” by – decreasing their participation paying in, while increasing their participation in taking out.
And the Big Government parade continues unabated. Brazil just announced for 2013 $480 million in new sugarcane ethanol tax breaks and $1.9 billion in Joe Pesci ethanol loans.
All of this Leviathan largesse has led to Brazil controlling 50% of all the world’s sugar exports.
Unfortunately, the U.S. response was to fight fire with fire – with our ridiculous tariffs. What we should instead do now is zero-out our protectionist sugar regime – in exchange for Brazil simultaneously doing the same.
We can – and absolutely should – use all our considerable trade negotiation prowess to effect this regulations-and-subsidies clean slate.
All sorts of things we eat (Michelle Obama and Mayor Michael Bloomberg notwithstanding) and do will thus get very much cheaper.