Free Trade Decimates Agriculture


The free traders think they hold the moral high ground. They denounce any opponent as a protectionist, as if this epithet would be sufficient to silence the most salient advocate of tariffs. NAFTA, GATT and the WTO favor international trade, yet the opposite should be the case. John Maynard Keynes, the great British economist, stated that "I sympathize with those who would minimize, rather than those who would maximize economic entanglements between nations. Ideas, art, knowledge, hospitality and travel should be international. But let goods be homespun whenever it is reasonable and conveniently possible, and above all let finance be primarily national."

Here in a brief passage Mr. Keynes advocates a restraint on free trade and especially on the international flow of capital while favoring local industry and production. The free trade crowd seeks to maximize profits without regard to considerations that represent the hidden

social and environmental costs. They preach efficiency but their cost equation does not include social, welfare, lower wages, lower benefits to workers, and environmental destruction.

A more accurate name for free trade is deregulation. Deregulation, however, does not always have a happy ending as the American experience with the savings and loan scandal will testify.

David Ricardo, a British economist of the 19th century, originally advocated free trade. His argument was that if one country could produce a product cheaper than another than that is where the product should be produced. Ricardo's logic was sound, but his argument is irrelevant in today's economic world. His argument assumed that the factors of production, particularly capital, would be internationally immobile. In today's world capital is extremely mobile. This fact alone invalidates Ricardo's argument that international trade will benefit all its partners. If capital flows largely to one country, or even to a few countries, then the countries with a major exodus of capital will suffer economic stagnation. Also, for a country to gain from free trade the benefits must not be offset by higher liabilities. However, after a country specializes it can no longer be free not to trade and this loss of freedom can be a liability. Free trade turns into bondage to the international system.

Another liability of free trade is the cost of transportation. The gains from free trade must more than pay for the transportation costs. Transportation costs do not always appear on the balance sheet of an export or import company because the government at taxpayer expense subsidizes them. Energy costs are a big part of transportation costs and these are underwritten by investment tax credits, federally subsidized research, and military expenditures that insure access to petroleum. The environmental cost of fossil fuel burning is also not factored into the price of gasoline. Therefore, to the extent that energy is subsidized so too, is free trade. If the exporters and importers had to pay the true cost of energy and transportation, then their free trade profits would be greatly reduced.

The people through the efforts of their governments built the main transportation systems in this country, and in all other countries. The harbors, the internal waterways, the railroads, the highways, and the airports were not build by the giant multinational corporations that are now making big profits from free trade, but rather by the power of the government.

American agriculture exports its wheat, soybeans, corn, cotton, beef, pork, chicken and other products to other nations. This export activity is subsidized by the cheap energy policy of the federal government. Our agricultural production, especially that west of the Missouri River Valley, is heavily subsidized by the federal and state governments' building of water and hydro-electric power dams, water aqueducts and irrigation systems.

Our agriculture is also subsidized by the steady depletion of our topsoil and the water aquifers, neither of which can ever be replaced. Agricultural producers all over the nation have been subsidized for decades by the federal government with billions of dollars in commodity support grants and loans, with the lion's share of these going to the very largest farmers. Is it any wonder our corn is cheap when it arrives in Mexico?

The social costs of our agricultural free trade policy have never been tallied but they are truly massive in proportion to any free trade benefit that might be gained by the corporations that import and export agricultural products. Consider the loss of the family farm system and the elimination of the land-based middle class in America. What price tag would one place on this loss? Consider the growth of rural poverty since 1980. Consider the crime, ignorance, and welfare costs of the rural population who used to gain their livelihood from farming, but who now can now longer do so. Consider the wrecking of the rural school system. Every year 100 rural schools close in America. Consider the cost of this wreckage and the fact that rural youth can no longer obtain an education from these schools. These are the costs that are not counted on the balance sheets of the agri-business companies as they rack up handsome profits from their free trade activities.

A few large corporations that import and export agricultural products do benefit from free trade, but the American citizenry is the big loser as it subsidizes the energy and transportation costs, the agricultural subsidies, the western water and electric systems, and then receive less wages and benefits, fewer social welfare programs, and less health care for their pains. The agricultural environment is also the loser as the topsoil and the aquifers are depleted and the rural areas sink into poverty and ignorance.

Linn Hamilton is a rural advocate in Washington, Penn. Email

Home Page

News | Current Issue | Back Issues | Essays | Links


Copyright © 1999 The Progressive Populist