thesis topic?
while reading my book, lords of poverty: the power, prestige and corruption of the international aid business, yesterday on the metro, i was particularly struck by this passage:
"the tendency for those who are not poor to become mere sightseers in the world of those who are is one of the central problems of international development. it is at its most noticeable during famines and other catastophes when the distinction between the haves and the have-nots of this world ceases to be merely a matter of relative wealth and poverty and becomes instead a matter of live and death. whether we are aid workers, journalists, or priests our ability to make excursions to these places, see, smell, touch, interview and possibly feed the dying, and then return to our own comfortable homes and hotels, must surely rank amongst the most bizarre paradoxes of modern times."
how right you are, graham hancock.
that being said, i am inspired to write the following:
bailey (and to those of you reading):
CAFTA-DR is wrong. the USDA keeps pushing the fact that 80% of goods imported by the US from these six countries already enter the country duty-free. while this is true, this is primarily because unlike developing nations, the united states doesn't require tariffs in order to generate revenue. this is not to say that just because it isn't necessary the US shouldn't do it--merely that it doesn't form the primary source of government income like some nations.
yes, trade should be free. but with the influence of the united states as the driving force behind US-Chile, US-Bahrain, US-CAFTA, US-NAFTA, US-Panama, ad nauseum... developing countries are ever-so-gently nudged toward accepting less-than-favorable terms for themselves. quotas (which we learn in international economics are 'voluntary' and can only be implemented upon agreement by the country exporting) are placed on countries signing FTAs with the United States, not because they want them, but because it's required by the US in order to sit together at the negociating table. is the US held to restricting its exports? no. this doesn't mean that the US won't voluntarily agree to quotas on some of its lower-value, less-profitable goods. but these are throw-offs---and everyone knows it. but one of the most contentious issues when dealing with free trade is ... you guessed it... agricultural subsidies.
go ahead, say what you will about how the US subsidises its agricultural products considerably less than, say, the EU. we can pat ourselves on the back for that. however, what is less published is the fact that 8% of US farms/ag organisations receive approximately 80% of the subsidies handed out on a yearly basis (oxfam). so the small farmers that everyone assumes are recipients of the money are actually pushed a little further out of competitiveness. the subsidies received by the large ag producers enable them to sell at or even below market price even in the US. has anyone heard anything about small farmers being forced out of business? forced to sell their family farms to huge farming conglomerates? now guess why. although it's a bit of a sob story, it's more true than you know.
and this is just within the united states. now make this an international playing field. upon examination, it appears as though costa rica is the about in the middle (of the CAFTA-DR nations) when looking at dependency upon agriculture for stable employment and economic growth, with 8.5% of gross domestic product coming from the ag sector (el salvador, guatemala and dominican republic are less dependent--honduras and nicaragua are more dependent). however, a full 20% of costa ricans work in this sector--only 2% behind the employment generated by costa rican industry. with an estimated unemployment rate of 6.7% already (inputs for this figure are not detailed, meaning it is most likely higher than indicated; employment found in the informal sector may be factored into this, which is wholly inaccurate), a per capita income valued at $9,100 (when adjusted for PPP), and a GINI coefficient of over 45, it becomes obvious that without primary agricultural products like coffee and rice, the costa rican economy and job market would collapse.
ok, so one step beyond that: let's look at rice. costa rica and the dominican republic had some success in obtaining a longer phase-in period (20 years) in order to completely eliminate all tariffs on US rice. the four remaining countries each have only 18 years to get rid of tariffs. currently in the CAFTA-DR countries, approximately 1.15 MILLION TONS of raw rice are produced on a yearly basis. with the largest farms in the united states being able to most efficiently grow and produce rice, then receive money from the government in order to sell this rice below market price, then ship it overseas duty-free to sell it in competition with domestically-produced rice... what do you think is going to happen? the united states can produce more than the costa rican competitor, then turn around and place this greater quantity of rice on sale below the costa rican competitor's price. if you only have $9,100 to spend in a year, are you going to buy the more expensive rice in your market?
no. freaking. way.
so by effectively dumping their products into a foreign market without having to pay any sort of significant tariff (because rice is a principal good) or having to adhere to any sort of quota, US agriculture will force the foreign country's ag sector to contract. production falls, which causes prices to go up further, which accelerates the decline of the sector. what does this mean? it means that either foreign ag producers will specialise into a niche market, or the bottom will simply fall out of ag employment.
if we look at NAFTA as an example (which will work in this particular case, since Mexico was formerly a major rice producer), the World Trade Organisation ruled in 2002 that the provisions of NAFTA dealing with rice and the subsequent response by the US government to its farmers (read: subsidies) resulted in US dumping rice into Mexico's market at 74% below the cost of production. mexican production fell by 33%. mexican dependence upon US imported rice rose to 84%. imports of US rice into mexico increased to 800,000 tons per annum.
essentially, the bottom fell out of the market. the jobs that were generated by expansion in the manufacturing sector in mexico (or maquiladoras, whose employment grew by 1.2 percent per annum) weren't enough to compensate for this loss, so unemployment in general rose while per capita income dropped. now, before you decide that just because we're making the the gap between rich and poor larger in other countries, ask yourself:
who benefitted?
the American large-scale farmer. did the US consumer benefit? no. in this sort of situation, market diversification decreases because the products produced by the countries with which we trade can never be as cheap as the ones we produce domestically. so we cut them out of their own market, then we cut them out of ours. although the US department of agriculture estimates that for every $1 billion in exports, 15,000 jobs are created, these jobs are typically on the lower end of pay rates. falling wages and stagnant job growth, anyone? in addition to this, the new jobs created in the US aren't enough to absorb the heavy losses in the manufacturing sector.
the manufacturing jobs that go to these countries in the interest of 'aiding the process of industrialisation' have to come from somewhere. where do you suppose they come from? those of you from ohio--any idea?
hrm.
US economist Robert Scott puts job loss due to THE FTA upon which all current US FTAs are based(NAFTA) in the US manufacturing sector at 766,000. USDA says that for Americans, NAFTA created 140,000 agricultural jobs. anyone want to do the math on that one?
but i digress. i'll try one last tack: opinion. looking at US opinion of NAFTA success (with a similar trend of opinion established for CAFTA-DR already), 37% of Americans think it has had a positive effect on the US. compare that with a massive 34% who think it's been negative. if that's not enough, 55% believe that it has resulted in fewer jobs.
now let's look at CAFTA-DR. 51% of Americans oppose CAFTA. in guatemala, eight thousand protestors rioted to express their disapproval of the FTA. the League of United Latin American Citizens, the Central American immigrant organization, the AFL-CIO and the Bishop's Secretariat of Central America all oppose it. in other words, the citizens of the states we're trading with don't want it. small farmers don't want it. the church doesn't want it. unions don't want it. immigrants feel so strongly about it that they organise to fight it. while public opinion alone doesn't provide enough reasons to opt out of something, it certainly should play a factor in deciding whether or not a huge piece of international policy.
i don't mean in any way to imply that free trade is bad. what i mean to say is that the united states has a responsibility to (at the very least) find a way to trade that doesn't hurt more of its citizens than it helps. trade will always have winners and losers--that's clear. but it's up to you to decide if CAFTA-DR does that. it's up to you, and then it is your responsibility to make known your decision to others--maybe even the people who vote on it.
in speaking with a congressman this past week, he expressed his pro-CAFTA views and then lamented the fact that the projected memorial day vote on the FTA still seems to be 40 votes short of passage. i go to work on a daily basis and work with the people who wrote and negociated the text of this agreement. needless to say, writing this makes me feel a bit like a traitor, but i'll do my job and do what i'm asked. i may not like it, but i'll do it. at the same time, i'm writing a letter to my congressman explaining my opinion, because i can't in good conscience just let this go.
sources are available on request. don't be shy. with any luck, the more you know, the more you can form an opinion and act on it.
"the tendency for those who are not poor to become mere sightseers in the world of those who are is one of the central problems of international development. it is at its most noticeable during famines and other catastophes when the distinction between the haves and the have-nots of this world ceases to be merely a matter of relative wealth and poverty and becomes instead a matter of live and death. whether we are aid workers, journalists, or priests our ability to make excursions to these places, see, smell, touch, interview and possibly feed the dying, and then return to our own comfortable homes and hotels, must surely rank amongst the most bizarre paradoxes of modern times."
how right you are, graham hancock.
that being said, i am inspired to write the following:
bailey (and to those of you reading):
CAFTA-DR is wrong. the USDA keeps pushing the fact that 80% of goods imported by the US from these six countries already enter the country duty-free. while this is true, this is primarily because unlike developing nations, the united states doesn't require tariffs in order to generate revenue. this is not to say that just because it isn't necessary the US shouldn't do it--merely that it doesn't form the primary source of government income like some nations.
yes, trade should be free. but with the influence of the united states as the driving force behind US-Chile, US-Bahrain, US-CAFTA, US-NAFTA, US-Panama, ad nauseum... developing countries are ever-so-gently nudged toward accepting less-than-favorable terms for themselves. quotas (which we learn in international economics are 'voluntary' and can only be implemented upon agreement by the country exporting) are placed on countries signing FTAs with the United States, not because they want them, but because it's required by the US in order to sit together at the negociating table. is the US held to restricting its exports? no. this doesn't mean that the US won't voluntarily agree to quotas on some of its lower-value, less-profitable goods. but these are throw-offs---and everyone knows it. but one of the most contentious issues when dealing with free trade is ... you guessed it... agricultural subsidies.
go ahead, say what you will about how the US subsidises its agricultural products considerably less than, say, the EU. we can pat ourselves on the back for that. however, what is less published is the fact that 8% of US farms/ag organisations receive approximately 80% of the subsidies handed out on a yearly basis (oxfam). so the small farmers that everyone assumes are recipients of the money are actually pushed a little further out of competitiveness. the subsidies received by the large ag producers enable them to sell at or even below market price even in the US. has anyone heard anything about small farmers being forced out of business? forced to sell their family farms to huge farming conglomerates? now guess why. although it's a bit of a sob story, it's more true than you know.
and this is just within the united states. now make this an international playing field. upon examination, it appears as though costa rica is the about in the middle (of the CAFTA-DR nations) when looking at dependency upon agriculture for stable employment and economic growth, with 8.5% of gross domestic product coming from the ag sector (el salvador, guatemala and dominican republic are less dependent--honduras and nicaragua are more dependent). however, a full 20% of costa ricans work in this sector--only 2% behind the employment generated by costa rican industry. with an estimated unemployment rate of 6.7% already (inputs for this figure are not detailed, meaning it is most likely higher than indicated; employment found in the informal sector may be factored into this, which is wholly inaccurate), a per capita income valued at $9,100 (when adjusted for PPP), and a GINI coefficient of over 45, it becomes obvious that without primary agricultural products like coffee and rice, the costa rican economy and job market would collapse.
ok, so one step beyond that: let's look at rice. costa rica and the dominican republic had some success in obtaining a longer phase-in period (20 years) in order to completely eliminate all tariffs on US rice. the four remaining countries each have only 18 years to get rid of tariffs. currently in the CAFTA-DR countries, approximately 1.15 MILLION TONS of raw rice are produced on a yearly basis. with the largest farms in the united states being able to most efficiently grow and produce rice, then receive money from the government in order to sell this rice below market price, then ship it overseas duty-free to sell it in competition with domestically-produced rice... what do you think is going to happen? the united states can produce more than the costa rican competitor, then turn around and place this greater quantity of rice on sale below the costa rican competitor's price. if you only have $9,100 to spend in a year, are you going to buy the more expensive rice in your market?
no. freaking. way.
so by effectively dumping their products into a foreign market without having to pay any sort of significant tariff (because rice is a principal good) or having to adhere to any sort of quota, US agriculture will force the foreign country's ag sector to contract. production falls, which causes prices to go up further, which accelerates the decline of the sector. what does this mean? it means that either foreign ag producers will specialise into a niche market, or the bottom will simply fall out of ag employment.
if we look at NAFTA as an example (which will work in this particular case, since Mexico was formerly a major rice producer), the World Trade Organisation ruled in 2002 that the provisions of NAFTA dealing with rice and the subsequent response by the US government to its farmers (read: subsidies) resulted in US dumping rice into Mexico's market at 74% below the cost of production. mexican production fell by 33%. mexican dependence upon US imported rice rose to 84%. imports of US rice into mexico increased to 800,000 tons per annum.
essentially, the bottom fell out of the market. the jobs that were generated by expansion in the manufacturing sector in mexico (or maquiladoras, whose employment grew by 1.2 percent per annum) weren't enough to compensate for this loss, so unemployment in general rose while per capita income dropped. now, before you decide that just because we're making the the gap between rich and poor larger in other countries, ask yourself:
who benefitted?
the American large-scale farmer. did the US consumer benefit? no. in this sort of situation, market diversification decreases because the products produced by the countries with which we trade can never be as cheap as the ones we produce domestically. so we cut them out of their own market, then we cut them out of ours. although the US department of agriculture estimates that for every $1 billion in exports, 15,000 jobs are created, these jobs are typically on the lower end of pay rates. falling wages and stagnant job growth, anyone? in addition to this, the new jobs created in the US aren't enough to absorb the heavy losses in the manufacturing sector.
the manufacturing jobs that go to these countries in the interest of 'aiding the process of industrialisation' have to come from somewhere. where do you suppose they come from? those of you from ohio--any idea?
hrm.
US economist Robert Scott puts job loss due to THE FTA upon which all current US FTAs are based(NAFTA) in the US manufacturing sector at 766,000. USDA says that for Americans, NAFTA created 140,000 agricultural jobs. anyone want to do the math on that one?
but i digress. i'll try one last tack: opinion. looking at US opinion of NAFTA success (with a similar trend of opinion established for CAFTA-DR already), 37% of Americans think it has had a positive effect on the US. compare that with a massive 34% who think it's been negative. if that's not enough, 55% believe that it has resulted in fewer jobs.
now let's look at CAFTA-DR. 51% of Americans oppose CAFTA. in guatemala, eight thousand protestors rioted to express their disapproval of the FTA. the League of United Latin American Citizens, the Central American immigrant organization, the AFL-CIO and the Bishop's Secretariat of Central America all oppose it. in other words, the citizens of the states we're trading with don't want it. small farmers don't want it. the church doesn't want it. unions don't want it. immigrants feel so strongly about it that they organise to fight it. while public opinion alone doesn't provide enough reasons to opt out of something, it certainly should play a factor in deciding whether or not a huge piece of international policy.
i don't mean in any way to imply that free trade is bad. what i mean to say is that the united states has a responsibility to (at the very least) find a way to trade that doesn't hurt more of its citizens than it helps. trade will always have winners and losers--that's clear. but it's up to you to decide if CAFTA-DR does that. it's up to you, and then it is your responsibility to make known your decision to others--maybe even the people who vote on it.
in speaking with a congressman this past week, he expressed his pro-CAFTA views and then lamented the fact that the projected memorial day vote on the FTA still seems to be 40 votes short of passage. i go to work on a daily basis and work with the people who wrote and negociated the text of this agreement. needless to say, writing this makes me feel a bit like a traitor, but i'll do my job and do what i'm asked. i may not like it, but i'll do it. at the same time, i'm writing a letter to my congressman explaining my opinion, because i can't in good conscience just let this go.
sources are available on request. don't be shy. with any luck, the more you know, the more you can form an opinion and act on it.