“Trade, not aid” is something of a cliché in the world of development economics. It sounds like a win-win proposition: If we reduce barriers to poor countries’ exports, we can help them without costing ourselves a dime — while making ourselves better off, even. And that’s true. But putting “trade, not aid” into practice is harder than it sounds. While there are many people who don’t look kindly on foreign aid, no powerful lobbies oppose it. Freeing up trade, on the other hand, arouses the intense opposition of well-organized and well-funded industries.
Take cotton subsidies, which the Senate is considering reforming this week. They’re a drain on American taxpayers. They exacerbate water shortages in parts of the country. But they also hurt other nations. According to a recent Oxfam study, 10 million people in west Africa depend on cotton sales as a major source of income. By encouraging excess production, our cotton subsidies depress prices by 6 to 14 percent. The study estimated that these cotton farmers would be able to capture about half of the higher price if we didn’t have the subsidy. “The added income,” it concluded, “could feed one to two children per household for an entire year.” In recent years, cotton subsidies seem to have affected world prices — and thus distorted markets more — than any of our other commodity support programs.
Senators Dick Lugar and Frank Lautenberg have introduced legislation that would preserve, and in some ways enhance, the safety net for farmers while also ending some of the most damaging components of our farm programs. Most of the money saved in crop subsidies would be redirected to conservation, nutrition programs, and other causes. Taxpayers would, however, save $3 billion over five years.
The bill goes after all of the major commodity support programs, not just corn. Liberals and conservatives — the Club for Growth and Bread for the World — support it. But they’re probably going to lose this week: Such is the power of the farm lobby. The good news is that the stronger the vote for the bill, the better the chance we have of enacting reform in some future year. And perhaps after voting on the bill the senators will take the opportunity to go after cotton subsidies, in particular.