Thursday, February 25, 2010

Things To Make You Mad

So, this relates back to my post on Social Credit. Maybe soon I'll do a post on the economics of the World System in general as it relates to Catholic Social Teaching, but today simply a couple demonstrative examples I just learned. The numbers may not be exact anymore but the point demonstrated is the same either way as it's a question of relative amounts, not absolute.

The first is about cotton:

African cotton growers produce cotton at a cost of 30 cents a lb.

American cotton growers produce cotton at a cost of 63 cents a lb.

The world market price is 45 cents a lb.

So African growers could make a profit, whereas American growers are producing at a loss.

However, the US government subsidizes American cotton with billions of dollars a year, though the biggest 10% of growers, the big agro-conglomerates, get 85% of the subsidies (so there goes your talk of "small farmers").

This is of course inefficient. And leads to an overproduction of cotton in the world, beyond the amount natural supply & demand would warrant, which keeps the market price artificially down 7-10%.

No one can compete with the American cotton sold under-price. But African countries aren't allowed to place tariffs or to give subsidies of their own because of structural adjustment policies enforced on them when they took loans from the World Bank or IMF.

So, rather than buying their own domestic cotton, Africans buy the subsidized American cotton, and so there is a cash/goods drain; it flows out to the US instead of staying in that country. Which incoming wealth it uses to stay rich and allow itself to do things like give the subsidies in the first place, perpetuating the cycle.

And of course, rich countries don't have to borrow from the World Bank (in fact, the US is the one doing the lending, the Bank is just basically our appendage) we are allowed to continue this subsidizing and tariffs, etc. We are the ones overproducing, yet the surplus and its consequences are shifted in this way to the poor African growers.

The second thing involves food "aid" in the form of maize:

It's really the same basic concept. US farmers overproduce corn. Economically, it would be most efficient for some of them to stop producing and switch to some other job.

But there is no incentive. Because of this nostalgic vision we maintain of being some Jeffersonian Agrarian Republic, even though it is no longer our comparative advantage, the government subsidizes the American grain producers, this time in the form of buying the surplus.

Of course, the surplus could simply be burned; the whole reason the government buys it is to keep it off the market to stop it from driving down market prices through over-supply. This demonstrates the ridiculousness of propping-up the sector like that. It also demonstrates the stupidity of the Anglo-Protestant work-ethic; if what they're producing is so admittedly that point why not just give them the money without making them "work for it"?

But everyone agrees that to simply burn it is unseemly (though "surplus destruction" while people starve does go on a lot more than you'd think). So then, they think, we'll kill two birds with one stone and donate the food to starving countries as aid! They wouldn't be able to afford it anyway, so it won't drive down prices. It's good for the farmers, it's good for the starving people, it's good for the politicians...everybody wins!!

Except, that's not true. Since US farmers overproduce, there is actually too much grain in the world. Even when an area has a "famine" or drought in Africa, for example, other places in Africa are usually producing enough grain to provide for the area undergoing a dry spell. The most effective way to aid the poor place and to encourage development...would thus be to simply donate the cash to buy the crops locally. That way, the hungry are fed and the local agriculture is encouraged.

However, food aid bills in the United States always require everything to be bought domestically (even though it takes much longer to ship over there and is much less efficient). So, again, even though the US farmers are overproducing, the power of the US government shifts the consequences of that surplus onto the poor farmers even though they, in reality, have the comparative advantage.

But this subsidized aid food chokes out local farmers. No one can compete with free food that is simply being given away! The net effect is that the "aid" really all stays in the United States, as that's where the government's money goes. And that's all this "donation" really consists of, as we're not really giving away anything else valuable; since the corn would otherwise just be burnt, giving it away is a complete non-act on our side of the ledgers.

Of course, US politicians only answer to US citizens, so people in the rest of the world are of no consequence except inasmuch as people here care, which is never enough to outweigh the desire of the subsidized farmers for money.

This is why Imperialism likes to conquer and subjugate people...but it does not like to make them full-fledged citizens or incorporate the colonies into the central State itself, as the whole point is to exploit them for the sake of the colonizing class, not to enfranchise them. If the US totally conquered, say, Zambia and made it into a full-fledged 51st state and gave its citizens all the rights of US citizens...then it wouldn't be able to undersell them, since their farmers would then have a right to a cut of the subsidies themselves. And, by extension, if the whole world was under the one government, there would be no point to the subsidized inefficient over-production at all, as there would then no longer be any "outsiders" beyond the politicians' concern to shift the consequences of the surplus onto.

Just another example of why democracy domestically doesn't really matter if the International Order is still organized feudally.

The whole thing is really twisted.


Anonymous said...

Oi vey...Like twislers.

But on another subject:



Seriously. Such missions are good, but I hope that in the long run there is some attempt at allowing such people to have their own liturgical expression/rite. One that isn't purely Roman. Some lace can stay, and the ornamentation might resemble those of the Roman rite. But there has to be something unique to that culture that is permitted expression in their liturgy. Don't they have legends that point to Christ? Use that image and baptize!

Anonymous said...