Thank Uncle Sam for Looming Sugar Shortage

According to Inside U.S. Trade ($), an alliance of sugar-using industries sent a letter earlier today to Secretary of Agriculture Tom Vilsack asking for an increase in the quotas imposed on imported sugar. The organizations signing the letter complain, quite reasonably, that domestic sugar stocks have fallen to historic lows and that a potential shortage would jeopardize production and jobs in their sectors.

Here’s the letter, dated August 7, 2009:

Dear Mr. Secretary:

The organizations and companies below urge you to increase the sugar import quota immediately. Your experts forecast unprecedented shortages without prompt action. According to USDA’s “World Agricultural Supply and Demand Estimates,” the United States will end the next fiscal year with less than 13 days’ worth of sugar on hand, unless imports are increased. If this forecast is accurate, our nation will virtually run out of sugar.

The shortage does not have to happen. The only reason markets are forecast to be so tight is the restrictive U.S. policy on sugar imports. Imports are subject to restrictive quotas. But you have the authority to increase the sugar import quota, and we urge you to do so immediately, both for the current fiscal year — where high prices already indicate a painfully tight market — and for the upcoming year.

Without a quota increase, consumers will pay higher prices, food manufacturing jobs will be at risk and trading patterns will be distorted. Please act now in the interest of all Americans.

The letter was signed by, among other organizations and companies, the American Bakers Association, the American Beverage Association, General Mills, Gonella Frozen Products, the Grocery Manufacturers Association, the Hershey Company, the Independent Bakers Association, the International Dairy Foods Association, Kraft Foods, Krispy Kreme, Mars, the National Confectioners Association, Nestle USA, and Pepperidge Farm.

Protectionism is not just a consumer issue. As we elaborated in a 2005 Cato study on the high cost of U.S. farm programs (see pp. 4-6), trade barriers against agricultural commodities such as sugar also raise costs for U.S. producers, forcing them to raise prices, and thus reducing sales, output, and employment. Artificially high domestic sugar prices have forced thousands of domestic manufacturing jobs to be “shipped overseas” to countries that allow sugar to be imported at world prices.

If the Obama administration wants to encourage the domestic production of sugar-containing products, it should raise the quotas as far as they can and allow American companies to buy sugar at world prices.

Topics:

Why I Despise Government, Reason 9,358

Leaving work yesterday for some softball games, I wound up caught in terrible traffic on 15th Street, which is a major D.C. artery for commuters going to Viriginia. This is never a good street to be on since it carries people looking to head south on I-395 and those who want to turn right on Constitution Avenue and then go west into Virginia.

After a 30+ minute crawl to travel three blocks, I finally got close to Constitution Avenue, where the road widens to three lanes, one of which is only for right turns. But since a large number of drivers want to turn right, it is very common for drivers also to turn right from the center lane — which normally is very efficient since Constitution Avenue has three lanes and the traffic flows more smoothly with two lanes of traffic making the right turn.

But when I made the right turn, I discovered why traffic was so snarled on 15th Street. There was a cop standing in the middle of Constitution Avenue waiting to snare drivers turning right from the center lane. Along with many other drivers that day, I got caught and lost another 10 minutes waiting for a ticket. But the $25 ticket is not what got me so irritated. It was the fact that thousands of commuters had to deal with horrible traffic (not only because people like me suddenly got stopped and traffic behind us also had to stop, but also because people in the right-turn-only lane also could not move with the cop blocking traffic) because some bureaucrat from the National Park Police found an easy way to fill his ticket quota.

If the private sector operated the roads (permit me to engage in some libertarian fantasizing), this would never happen. Because of a desire to please drivers (customers), the folks in charge of the road would have made right turns an option from the center lane. But when government sees a bottleneck, the reaction of politicians and bureaucrats is to figure out how to fleece people for more money — not to make travel safer and quicker.

Now, perhaps, you will understand why I chose this license plate.

License plate

Another Shot Fired in the Carbon Tariff Debate

I’ve written before about the “carbon tariff” debate, and will continue to do so as the Senate gears up to write a climate change bill. Indeed, I have a paper coming out in early September with a fuller analysis of the effects of slapping tariffs on countries in an effort to force them to sign up to international carbon-limiting agreements. [Spoiler alert: you’ll be shocked to know that I conclude that using trade measures in climate change policy is possibly illegal under world trade rules, definitely costly to the U.S. economy, and more than likely counterproductive in the efforts to forge a climate agreement (for what that’s worth).]

Seemingly unconcerned about the costs of green protectionism, ten Democratic senators crucial to the upcoming Senate vote (long-standing protectionists all, with the exception of newbie Al Franken) sent a letter to the White House yesterday, urging President Obama to rethink his (lukewarm) resistance to carbon tariffs. They argue that a dreaded “unlevel playing field” would result from saddling U.S. industries with higher carbon costs while, say, Chinese ones remain unencumbered.

You’ll have to wait for my paper for a full examination of those arguments, but in the meantime here’s some excellent analysis of the politics of it all by former Catoite, international trade lawyer, and friend of liberty Scott Lincicome. He assesses the scorecard as follows:

Pro carbon tariffs - Ten protectionist Senators, the US House of Representatives (in Waxman-Markey), France [link added], and Paul Krugman.

Anti carbon tariffs - the rest of the world.

Flood Insurance: Mend It or End It, But Don’t Just Extend It

Before leaving for the August recess, the House of Representatives passed a bill (HR3139) to extend the authority for the National Flood Insurance Program (NFIP) until March 2010.  The program was set to expire on Oct. 1, 2009.   The bill now goes to the Senate.  Instead of taking up HR3139, the Senate should insist on real reforms to the NFIP, rather then a blanket extension.

Since Hurricane Katrina, the NFIP has operated under a deficit of close to $17 billion, which had to be borrowed from the Treasury in order to pay claims.  Under the NFIP’s current structure, it cannot even make the interest payments on its borrowing; these losses will ultimately hit the taxpayer. 

The Senate last Congress passed a strong reform bill that would have eliminated almost half of the subsidies in the NFIP.  The House decided to instead seek an expansion of the broken program, adding wind coverage and raising the coverage levels (despite the availability of private flood insurance).

Many of the homes receiving subsidies under the NFIP are either vacation/second homes or properties where the government has paid repeated claims.  In one instance, a house in Houston this is valued at around $100,000 received over $800,000 in flood insurance claims over a 20-year period, before it was finally destroyed. 

Not only does the NFIP subsidize at taxpayer expense beach-front vacation homes, but there is growing evidence that the program causes substantial harm to the environment and local fisheries.  Just last year, the National Marine Fisheries Service issued a finding that the NFIP is pushing orcas and some runs of salmon to extinction.  Before the federal government forces significant costs on the private sector to protect the environment, perhaps it should take a close look at the damage its own activities inflict.

Senator Harkin Laments Lack of Poverty

An AP story today contains a quote that caught my eye, an indication that apparently jet-gate hasn’t jaded me as much as I thought it had. In the context of rising enrollment in the federal food stamp program (now known as the Supplemental Nutrition Assistance Program, or SNAP) and private charity efforts to feed poorer Americans, Senate Agriculture Committee chairman Tom Harkin (D, IA) says this:

Ensuring that our kids have enough to eat during summer months is critically important, especially during these tough economic times… Unfortunately, despite repeated efforts, the number of children participating in federally reimbursed summer nutrition programs in 2008 was the same as it was 15 years ago. (emphasis added)

At first I thought maybe he was saying how unfortunate it was that there had not been progress in reducing the number of kids receiving nutrition assistance, which would be fair enough. But the context of the quote suggests that Senator Harkin would prefer that more kids receive federal food assistance.

Sometimes I get the impression that politicians want increased power over our lives.

G. A. Cohen

I was contacted by several people about the death of G. A. Cohen, to whose ideas I devoted a chapter of my book Realizing Freedom. (The chapter, originally published in Critical Review, is also available in a PDF form here.)

I’ll just make two points about Cohen here, as I believe it generally best (there are exceptions) not to speak ill of the dead. In a meeting in his office when he reviewed an early draft of the essay above, he admitted that I had found a serious flaw, but demanded to know (and “demanded” is the right word) what my point was: “Are you attacking the argument, or the conclusion?!” I said I did not understand the question. He answered, “Well, the conclusion does not follow from the argument, so which are you attacking?” I was rather flabbergasted, and replied that the conclusion of an argument is a part of the argument, not some separate thing. But that was not how he saw things, and it showed in his entire career.

There are arguments, and there are conclusions. You attach yourself to a conclusion, and then you look for arguments that lead to it. That’s why he was an “analytical Marxist,” i.e., someone who agreed with what he took to be Marx’s conclusions, but who thought that the arguments by which Marx reached them were erroneous or fallacious, so his job was to come up with new arguments. If those didn’t work, you kept the conclusion and looked for other arguments. (In this case, however, despite acknowledging to me that his argument failed to reach the conclusion, he never acknowledged it publicly, but took some pains to lobby journals not to publish my critique, as was confided to me by editors of those journals.)

To get a sense of what kind of man he was, think a bit on this defense of the Soviet Union:

The Soviet Union needed to be there as a defective model so that, with one eye on it, we could construct a better one. It created a non-capitalist mental space in which to think about socialism.*

Millions had to die so that Cohen and his rich friends could enjoy “a non-capitalist mental space in which to think about socialism.” Words almost fail me. But not entirely. He should have spent his life begging forgiveness from all of the people who suffered from his pro-Soviet (he spent a good bit of his youth as a Soviet propagandist, which was essentially a family enterprise) and pro-Communist activities. He was no different than any old National Socialist who might have regretted that National Socialism wasn’t nationally socialist enough, but who enjoyed the “mental space” it created to construct fantasies of an ideal life.

I will merely point out that his attacks on charity and assistance to others is consistent, not only with his political philosophy, but with his personality and life.

*From p. 250 of his 1995 book Self-Ownership, Freedom, and Equality (Cambridge: Cambridge University Press), in which he strings together the “argument” that does not lead to the “conclusion” that property rights are unjustified.

Summer — or Back to School — Reading

The Cato Institute has published thousands of books, studies, articles, and op-eds, and most of them are on our website. But there’s lots of good reading material published elsewhere, and now our analysts are offering handy guides to the best reading in such fields as Principles of Liberty, Constitutional Studies, Health Care, Foreign Policy, and more.

I know that reading lists can sometimes be intimidating — where to start? — and too much of just a list. So these lists are annotated; each recommendation is briefly described. And at my insistence, (almost) all the analysts have started their lists with “Read This First” to suggest a foundational or introductory book or essay. Check them out here.