A Call for Economic Reform & Justice in Exports {1:The Bad News}


[“Part 2: The Good News” of this post is also up]

Now, I know that these two posts will probably not get that much traffic, and not many will read all of it; it doesn’t fit the “niche” of this blog nor its usual readership. But I just had to get these thoughts out. For those that mainly read my writings for the “religious” angle, there’s some of that at the end and, ultimately, these issues (and their solutions) really are fundamentally theological. How we look at God and how He deals with us, His world, and where He’s taking both of them really affect how the Church is the Church to a broken world. So I encourage all of you that would normally not read something like this to go ahead and take a stab at it. Leave your thoughts. Push back a little. Help me understand this better.

The Current Plan

On my way to work yesterday, I heard a very interesting interview on NPR with Andrew Liveris, CEO of Dow Chemical and author of the new book Make It in America: the Case for Re-Inventing the Economy (which I’ve just started reading, and I must say, is pretty remarkable). In the interview, he focuses on manufacturing, talking briefly about the role of manufacturing in bringing about President Obama’s recent strong emphasis on exports in job creation.Now, I’ve only dabbled in economics and economics theory, but it fascinates me. I’ve only taken a class, listened to some podcasts regularly, and read some books (and have reviewed one or two of them), so I’m not claiming to be any sort of expert. But here’s the thing: it seems to me that America’s lack of economic justice throughout the world is going to prevent this emphasis on exports from working.

So far, it seems that Obama’s plan is this: lower barriers for small business and corporations to produce more stuff thereby increasing goods supplied (the supply-side), all while getting foreign governments involved to buy this increase in stuff thereby increasing goods desired (the demand-side). My problem with this is the supply-side. Our supply-side of the economy needs a lot more justice-informed reform

Breaking the Bank

Two things came to my mind while listening to the interview. First, was our involvement with the World Bank and the IMF. These organizations have kept so many developing, post-colonial, and African nations in poverty and under the reign of totalitarian regimes. They have ravaged the agricultural integrity of these nations by creating a need for quick money for loan payback. These countries had to rapidly switch from primarily focusing on farming to focusing on manufacturing things for us rich countries just to survive. This ended up creating a rich upper class and a massive poor, malnourished, and dying lower class.

Really, the policies are insane. For example, Nigeria has borrowed five billion dollars from the World Bank to help rebuild its seconomy after Europeans destroyed it. To date, it has paid back sixteen billion dollars and still owes thirty-two billion more dollars! (for more information on this, check out Julie Clawson’s amazing book, Everyday Justice: The Global Impact of Our Everyday Choices.)

Selling the Farm

The second thing that came to my mind is the American Farm subsidy system (I know, random–but stay with me). As has been highlighted by several good, informative documentaries in the past couple of years, Great Depression-era policies are still in effect that, essentially, pay American Farmers to not have to produce crops. It’s been claimed that for every dollar the American Farmer earns, 62 cents of that dollar came from some form of government. And yet, American agricultural profits are higher than they ever have been history.

In the thirties, when a quarter of the population lived on farms, these subsidies may have been necessary for America to remain economically stable, but in the 21st-century, when less than 2% of Americans live on farms, this is certainly not the case. These subsidies are used to stabilize prices and keep farmers afloat whether or not they’ve even produced a good crop or worked their field well!

What This Does

This does a couple of things. It floods the market with crops because more farmers are able to survive off of farming than would be possible without the subsidies. It is also an artificial price control measure with really no bearing on real-world market forces. These two factors meet to establish a strange and ultimately unjust seemingly-contradictory-but-makes-sense-if-you-think-about-it paradox.

First, the market being flooded makes global short-term prices for agriculture stay low. This means that developing countries which often can only compete on a global stage with their agriculture cannot receive enough money for their own crops, and therefore stay poor and developing. Secondly, the artificial distorting of the market causes global long-term prices to go up. I know, I know, it doesn’t seem to make sense. But, because of the American subsidies, poorer countries can neither sell their own crops for enough money, nor can they afford to purchase the crops from richer countries. This leads to wholesale societal poverty and malnutrition.

It also leads to illegal immigration in America. As pointed out by the documentary The Other Side of Immigration, the real reason for illegal immigrants coming here is that economic conditions are so bad over there. Immigrants do similar labor in the States as they would if they were back in Mexico, but with American government subsidies on housing (and therefore construction), farming, and manufacturing, these markets in Mexico are floundering. The biggest example: Corn. You would think Mexico would be a huge corn producer; and it is. But with American corn subsidies, being in place, no one will by the unsubsidized (and therefore more expensive) Mexican corn. This leaves Mexican farmers destitute and so they come to where the money is for their industry–America–and send money back home.

Tomorrow I’ll talk about how the current plan doesn’t address these things and propose some alternatives.

[image credit]

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4 thoughts on “A Call for Economic Reform & Justice in Exports {1:The Bad News}

  1. This was a really refreshing read. I’ve been fascinated by this very subject (inequities in “Agribusiness” for years. It’s true that not many people think about this issue, and understand the real ramifications of decisions made by people in this industry. Flooding the markets of poorer countries is just about as helpful to them as flooding your kitchen floor with 2 feet of water to scrub it. I could say so much more on this.

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  2. Pingback: A Call for Economic Reform & Justice in Exports {2:The Good News} | the long way home

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