Term Paper on "Protecting the Farm Industry"

/>The Navigation Acts ruled trade in Great Britain and had requirements that all trade in the colonies take place aboard British ships manned by British sailors." In a move to raise revenue Congress adopted the very first tariff in 1789 and rates jumped from 5% to 15%, averaging at 8.5%. During the year of 1816 an explicitly protectionist tariff was adopted that had an interest rate of 25% on primarily textiles and upward to 30% on manufactured goods of varied natures. Bartlett (2004)

Tariff Timeline

1888 - Republicans called for tariff for proportion of manufacturing in America.

1980 - Debate over the tariff

1909-16th Amendment passed by President William Howard Taft creating a federal income tax

1913 - the Underwood tariff

1922 - the Forney-McCumber tariff which generally increased tariff rates across the board and gave the President power to raise or lower existing tariffs by 50%.

1930 - Rates on dutiable imports rose to highest rates in over 100 years with increases of up to 50% and even as high as 100%. The free-trade movement has weakened in recent years and the protectionist rhetoric is not common or generally heard today.

Protectionism: The Facts

In the article entitled "The Threat of Protectionism" stated is that the farm bill received after congress approved the support will "boost agricultural subsidies by $83 billion over the next 10 years" and would primarily provide aid to the farmers and agricultural companies that are the largest in the business. Furthermore, the competition from other countries that are developing countries are not projected to have any impact due to the lucrative subsidies in this aid bill.

An article published in March 2004 by Free Republic News, the Global Policy Forum entitled "Nations Talk Free Trade, but Protectionism Rises" states in its' report that the United States and other big countries still are promoting the values of free trade but they are moving to protect vulnerable industries at a pace that undermines their rhetoric." It was further observed by the author of this report that economists are offended by the huge subsidies that Congress is in preparation to "bestow on U.S. farmers." From all appearances the price supports tend to "promote overproduction, driving down world commodity prices and preventing many developing countries from expanding their agricultural exports." (Vieth, 2004) Further stated in relation to the big farm bill that was stated to be "nearing final passage in Congress" apparently is in conflict with commitments that the U.S. made in reducing subsidies and opening its markets in the round of trade liberalization talks launched last year at Doha, Quytar.

Advantages of Protectionism

There appear to be no inherent or guaranteed advantages in Protectionism to any of the smaller entities however; the larger wealthy corporations and agricultural businesses do realize much profit from this so-called protective regulation.

Disadvantages of Protectionism

Disadvantages of Protectionist laws are that they cause taxes to be raised on imported goods and cause limits or quotas to be imposed on the volume of goods which governments allow to enter into a country. No only do these laws restrict the choice in consumer goods but they contribute greatly to the costs of both goods and the cost of doing business resulting in less money for purchasing other things. Furthermore, theses laws reduce consumer spending power and in the end result in jobs being destroyed. In the United States, according to the U.S. Department of Labor statistics, "protectionism destroys eights jobs for every one saved in a protected industry. Another factor resulting from protectionist laws are higher taxes charged on not only imported goods but on general taxes also. This is due to the fact that governments expansion of their Customs Department bureaucracies for the forcing of compliance with new rounds of trade restrictions or such as in NAFTA's trade regulations.

The biggest disadvantage of Protectionism is the danger to world peace.. During the period between the late 1940s and 1970 there were practically no wars and there was very little in the way of trade barriers. According to Ludwig von Mises, "The protectionism is a philosophy of war."

Who Gains from Protectionism

Those gaining from protectionist laws are "special interest groups" such as big corporations, unions, farmer's groups and others who have political clout and money to back their interests in seeing laws favorable for them passed. These groups intend to get away with charging higher prices and getting higher wages than could normally be expected in a free market. According to Walter Black, Senior Economist, Fraser Institute, Canada, "Protectionism is a misnomer. The only people protected by tariffs, quotas and trade restriction are those engaged in uneconomic and wasteful activity. Free trade is the only philosophy compatible with international peace and prosperity."

Failing Farms - Hungry People

According to one report, "Michigan gained 1,000 small farms in 2001 and the overall total number of farms and farmland acres remain virtually unchanged from the previous year according to Dan Wyatt Director of the Michigan Department of Agriculture." (MDA) the report further states that, "while other states are losing farms and farmland, Michigan is holding steady. These statistics are important and telling indicators that Michigan is on the right track with its agricultural policy efforts that have been initiated, developed, implemented and enhanced over the past decade." A few of these key efforts are:

Enactment of Proposal a for the reduction of overall property tax burdens and enhancement of the state' Farmland and Open Space Preservation Program to help ensure the continued enrollment and renewal of farmland preservation contracts.

Helping add value to the agricultural commodities grown and procured in Michigan and expanding domestic and export markets for these commodities, including new and niche markets.

Enhancing the Right to Farm Act and creating proactive environmental programs that protect a farmer's right to farm while simultaneously ensuring sound environmental stewardship.

Nationally there have been 2.16 million decreases which equals nearly 1% representing the "second largest decline since 1991 and was down from 1.9 million acres the previous year.

Listed as Myth 2 in the report entitled "Eight Myths of Economic Globalization" reprinted from the World Trade Observer is the statement saying that,

The globalization of corporate industrial-style agriculture has failed to address the world's hunger crisis; in fact, it makes it worse. During the past two decades, the total amount of food in the world has increased, but hunger rates have also increased, far faster even than population growth.

The primary problem appears to be that food production on a globalized basis actually forces small farmers who are self-reliant and are stated to, " account for 40% of global food production -- off their lands and replacing them with large chemical and machine intensive corporate farms." These 'evicted [and] landless farmers find themselves without jobs or money to buy food."

Reported as well is the fact that in a study report in 1993 findings were that an "alarming percentages of rural families who now have insufficient land to support themselves or their communities. In Peru, the number of landless or land-poor was 75%, in Ecuador 75%, 66% in Columbia, 32% in Kenya, and 95% in Egypt, among many others. Even in the U.S., we are losing a record number of family farms every year. It is clear that the model in globalized industrial agriculture does not place its' emphasis on the hungry individuals in local towns and communities but instead, "encourages export economies resulting in monocultures -- a single crop grown over thousands of… READ MORE