> twosidedeath wrote:
> the farm subsidies is another interesting situation. knowing that this is a huge import in china it would make sense to let the prices rise in order to help inflation in thier country but perhaps we are trying to force a dependance where later when they are unable to replace us we effectively have a monopoly. this is also what china does for thier manufacturing which is thier major export. it is a funny system
Well, there's a couple reasons why that is probably a terrible idea.
1: It's not a real economic monopoly. Yes, it's a monopoly in the sense that there would only be a single producer in the market. However, the only reason any single business would obtain that market share was because subsidies were offsetting the cost of production, so a significant portion of the industry are producing beyond their cost of production, simply because they don't realize the losses. If I sell shoes at $5.00 a pair, but it costs me $6.00 a pair to produce, I'd normally be producing no net gain for society. But if the government subsidizes my business for $2.00 per pair produced, I can produce despite the fact that I'm not actually adding any sort of wealth to society.
2: What you're describing is clearly illegal under international law. Both the US and EU signed onto the General Agreement on Trade an Tariffs, which among other things banned exactly the behavior you described.
3: Empirically, we know that nations retaliate against US and European subsidies with their own trade barriers. Most recently, the Doha round of international trade talks, meant to advance World Trade Organization tariff reductions, collapsed because a coalition of developing nations, led by Brazil, argued that cutting tariffs without seeing reciprocal cuts in US and European farm subsidies. In addition, the WTO actually found the US liable for damages to Brazillian farmers as a result of US cotton subsidies, allowing Brazil to levy a huge tariff on US pharmaceuticals (the US and Brazil actually settled out of court, with the US paying the equivalent amount in subsidies to Brazillian cotton farmers, rather than allowing the tariff to come into effect).
4: At the point where both US and European governments offer subsidies on sometimes competing products, clearly complaining about the subsidies of the other while ignoring their own... it's clearly not a monopoly because the US and Europe will be competing with one another... the result being increased subsidies to compete with on another (and thus, decreasing product efficiency in production).
5: Seriously... your argument is that the world won't be able to produce agriculture after a while? Now, I understand where this is coming from (that they can't compete with a subsidized US product), but the end goal just committed the US to perpetually keeping subsidies at dumping prices. The moment subsidies go away, whether by domestic pressure (probably because we're spending hundreds of millions subsidizing big business) or by international pressure (the more monopolized the market becomes, the more likely the WTO, Brazil, or other agents that don't like US subsidies will endorse reciprocal barriers against the US), the market becomes competitive again... and the decades of farm subsidy policy are rendered useless. Agriculture's not that difficult a business to get into once you can buy the land. 