EU retaliation in steel war.

[TCO]

my bottom line, Gatekeeper. If you want to pay more for your food, fine. I don't.

[TCO]

Originally posted by Urban Ranger
The ag sector seems to be not working along free market principles due to subsidies. I don't know where the money is going to, but farming in developed countries are killing farming in developing countries that opened their markets and draining their foreign exchange reservers as they now need to import food.

This is not a pretty picture.

Actually subsidies of this sort are a wealth transfer. While the farmers in the 3rd World are hurt, the 3rd World country overall benefits (wealths is transferred from rich country to poor one, when goods are "dumped". Most extreme example would be getting free stuff.)

I would love it if US could get more steel and other stuff like that "dumped" on us.

[Sikander]

Gatekeeper,

I think the line most of the 'hardline' economists on this thread are taking is that farming right now is a bad business to be in. This is due to two factors:

1) Increased productivity of the individual farmer

2) The tendency for farming to be a 'traditional' occupation which tends to stay in families.

Combined, this means that the flight of people from traditional farming families has not kept up with the increased productivity of farmers, which has crushed commodity prices for a long time. Excacerbating this is the political pressure by farmers all over the world for government subsidies, which keep more farmers in business (at a cost to everyone) and ironically commodity prices low. Until there is an impressive increase in demand, or an equally impressive decrease in supply prices are going to remain low.

People should get out of farming if there is a viable alternative for them. By doing so they will have a chance to make money in a sector of the economy that is experiencing a labor shortage, and in the long run they will make farming more profitable for those who remain. This is just the latest chapter in a saga that has gone on for millenia, ie the increases in farm productivity not only allow but force people to move into other occupations.

[Gatekeeper]

Originally posted by GP
Gatekeeper, I'm probably wasting my time...but let's try.

Actually, you are wasting your time. Not because your contributions were ignored or unworthy. No. It's because I simply just decided to stop giving a damn on this particular issue at this junction in time. One thing I'm learning is that it hurts too much to really form attachments with anything in this world. I guess agriculture is another item I can add to that list for the time being.

If farmers want more dependable paychecks, they should sell out and sharecrop or become ag workers for larger corps.

That is indeed what is happening.

2. Americans have a right to try to get ag products as cheap as possible. Same with any other product. The consumer doesn't owe the farmer anything. It is a business transaction.

I guess those black South Africans got lucky in the 1980s then, huh? At least their cause was more visible in that apartheid world they inhabited.

Don't worry some farmers will always remain to meet the demand from the market.

I would imagine so. The corporations need somebody on the ground, you know. Can't farm from those office towers in Chicago and Kansas City. Well, not yet. Robotics might change that in time (seriously).

5. If they collude to raise prices, they will face anti-trust action. Not everybody goes out of business. Concentrate on being better than the next guy, not on fixing prices.

Too bad ADM executives ignored that advice.

6. You may have a point regarding large food processors. I would like more data on this. But even if this problem is fixed, it will do little for farmers. Consumers will reap the reward, not farmers.

I think farmers would benefit from locally-owned value-added ag processes that disrupt the grip the corporations have on foodstuffs. That's where my hope currently resides.

One last point: I've known some very wealthy farmers. Nobody owes them anything...

I think I know about the "farmers" you refer to — the absentee landowners, the celebs and those farmers who are *guaranteed* an income (tobacco comes to mind immediately) — but they are hardly representative of the soybean, corn, wheat and sunflower farmers that mostly populate the area I live in.

Gatekeeper

[TCO]

Gatekeeper,

I can tell that this issue is more than abstract to you. That you care about the people near you.

I was in consulting and we had a 50% contraction. Many of my friends, including me were laid off. But it made sense overall. Too many damn consultants running around anyway. Not enough demand for their services. I am now working as a ski instructor...

[Roland]

Funny game going around....

Anyway:

- Dubya's steel protectionism has little chance to hold up under GATT/WTO law. If anyone want to debate this, please quote the invoked provision.

- It's incredibly dumb economics. Most damage will be to US steel users, as this measure aims to raise prices. To provide a rent to... well, steelmakers ? Steelworkers ? Add on that trade retaliation. Add that the dems are still pushing a steel bailout package (12 billion $ ?) on top of it. Have fun.

- The EU's measures on the steel market seek to keep imports and prices stable vs the effects created by US tariffs. Whether opening up unilaterally would be better would be a nice debating issue.

- The EU tariffs are also targetted on easily substitutable consumer goods, so there should be only limited damage economy wise on our side.

- The US has targetted "constituencies" in the banana war as the banana agenda was mostly pushed by France and Britain. Other way round it's just fair. Especially if your little political games are played on the back of other countries. Keep your "government on sale" system at home, please.

- The EU can hurt the US just as much as the other way round. Both markets are roughly equal size, and this was the reason why we got to the WTO: The standard US trade policy of blackmail (aka "fair trade") just didn't work on the EU.

- Oh and yes, we can slap 4 billion $ worth of sanctions on US exports anytime we want, perfectly legally, as long as you maintain those export tax subsidies.

- Of course it would make more sense to open markets, esp to developping countries. Dubya's idiotic steel policy has essentially killed the Doha round. Congrats and thanks to the Dumbass in Chief.

- And as the "Roland is an EU apologist" whiners will sure come around now: Until recently the EU member states have sunk billions in the steel industry. Our agro markets are a regulation-induced mess. We should still be ahead of you in the agro-subsidy game. I'm not sure the constituencies-targetting is a good idea. Did I mention that I'm still disappointed my plea to drop the entire austrian government on the Taliban has not been heeded ? Fine now ?

[Ecthy]

Oestie?

[Bereta_Eder]

Retaliate baby

Plus, boycott! Everyone read the labels, if it says Made in USA, don't buy Hit'em where it hurts

BUT the ones who are really going to pay for all this Bush started is the countries that are not US or in the EU (which already have enough trouble as it is)

[Saint Marcus]

BUT the ones who are really going to pay for all this Bush started is the countries that are not US or in the EU (which already have enough trouble as it is)

probably sadly.

thank God the EU at least made sure that the world's poorest countries will be excluded from the proposed tariffs.

[Bereta_Eder]

that's something at least

Originally posted by Saint Marcus
thank God the EU at least made sure that the world's poorest countries will be excluded from the proposed tariffs.

[Kropotkin]

The idea is that free trade is the best as long as it doesn't hurt me. Free trade in the history of man has usually been the result of a power strong enough to enforce it in some way. When the US and/or EU feel that free trade are hurting them there's no problem enforcing protectionism under a layer of fine words.

This reminds me of Hitlers speach on 1st september '39 when german forces started to "shoot back" on the "polish aggressors"

[DanS]

" - It's incredibly dumb economics. Most damage will be to US steel users, as this measure aims to raise prices. To provide a rent to... well, steelmakers ? Steelworkers ? Add on that trade retaliation. Add that the dems are still pushing a steel bailout package (12 billion $ ?) on top of it. Have fun."

Well, not incredibly dumb economics. But the economic factor argues against it.

" - The US has targetted "constituencies" in the banana war as the banana agenda was mostly pushed by France and Britain. Other way round it's just fair. Especially if your little political games are played on the back of other countries. Keep your "government on sale" system at home, please."

I still want to know why you think a government doing the will of the people is "government on sale"...

Anyway, targeting constituencies is a little dangerous precedent, but I guess it's OK, if your end-game is the removal of the tariffs. It's really not smart if you believe that the tariffs will stay in place.

" - The EU's measures on the steel market seek to keep imports and prices stable vs the effects created by US tariffs. Whether opening up unilaterally would be better would be a nice debating issue."

Let me translate that for everyone. It's OK if this stuff is dumped in the US, but not OK if it's dumped in Europe.

[Roland]

Oh Dan...

"Well, not incredibly dumb economics"

Yes, that was too mild. Republicanomics ?

" still want to know why you think a government doing the will of the people is "government on sale"..."

The will of the people ? Where did they vote for the steel tax ?

"It's OK if this stuff is dumped in the US, but not OK if it's dumped in Europe."

We aren't even talking about "dumping". Not even in the funny version used in US trade laws. "Safeguard" is against disruptions, even when caused by perfectly "fair" trade.

But the artificial glut of maybe 15 million tons flooding into the EU is a bit much - although there is a case for just letting it happen.

[Colonâ„¢]

GP, I don't know any specific studies, I just haven't seen any part of chain that could boast about fat margins. (Tyson can't either) Both food-processing corps and super-market chains survive on volume AFAIK.

[DanS]

"Yes, that was too mild. Republicanomics ?"

That doesn't even make sense.

"The will of the people ? Where did they vote for the steel tax ?"

It was a Bush campaign promise to steel workers that he would look into the steel issue in a sympathetic light when he got into office. So yes, everybody voted for a steel tax.

Now you can argue that Bush fulfilled his campaign promises too well...

"artificial glut"

Artificial glut? Doesn't that mean Europe is being dumped on because the US was tired of being dumped on? I think you're trying to split hairs.