In the economy, an act, a habit, an institution, a law, gives birth not only to an effect, but to a series of effects. Of these effects, the first only is immediate; it manifests itself simultaneously with its cause—it is seen. The others unfold in succession—they are not seen… Between a good and a bad economist this constitutes the whole difference—the one takes account of the visible effect; the other takes account both of the effects which are seen and also of those which it is necessary to foresee. Now this difference is enormous, for it almost always happens that when the immediate consequence is favorable, the ultimate consequences are fatal… - Frederic Bastiat, That Which is Seen and That Which is Not Seen
I was reading a story on a liberal web site about how corn subsidies lower the market prices on a variety of junk foods therefore making them more cost effective for poor people to purchase. The result being that the poorest people in the US eat the most unhealthy foods while the more affluent can afford healthy alternatives. Of course the author, being a liberal statist, was only noticing one tiny suction cup of the massive tentacle of US farm subsidies that distort the market and ruin people’s lives around the world. But sadly, as I read the article, I couldn’t help noticing the implied solution was to simply subsidize “good food” while bringing down the hammer of regulation on the “bad food”.
This tendency of willful ignorance and blind support of the expansion of the State is not unique to liberals. For every 1 liberal I have struggled with, trying to show them that their State/god is incapable of fixing the problems it creates, I have wrestled with 10 conservatives trying to show them that brute force and more laws only grow the State and drive taxes and spending ever higher. If I could say it clearer than Bastiat I would, but whether in his words or mine the majority of the time the sound of my voice is lost in the roar of the State’s propaganda, driving the liberal towards more nanny regulations and driving the conservative to “get tough”.
A typical hot button with a conservative is the illegal immigration issue. At the mere mention of the topic the whole of the Right Wing explodes into rhythmic chants demanding tougher laws and brutal crackdowns. Speak of crime, gangs, or the drug problem and the State’s faithful congregation will jump to its feet in open praise of a stronger fist and a heavier boot. Sadly, the logic of cause and effect are swept to the side as the emotions of nationalism take the pulpit. The fact that the State created the problem completely escapes the glare of the limelight as reason slips off the stage and out the side door.
I wonder if the average reader of this article knows that because of US corn subsidies, the price has fallen by 2/3 in the last 20 years. Generally I’m all for lower prices, but when a government involves itself in a market so dramatically as to create such a false price, you can bet there will be huge repercussions in unimaginable places. But corn is just the beginning. The price of sugar is just as false, but manipulated in the opposite direction. And neither corn nor sugar can hold a light for the price manipulation that the rice market suffers.
The reader may be wondering at this point, why I am bouncing from crime, gangs, drugs, and immigration to Right/Left politics and farm subsidies. Well, I’m not bouncing. They are the same thing. Remember those faithful words of Bastiat about the seen and the unseen. The very reason governments should stay out of markets is because they are incapable of connecting the dots and seeing the association between their actions and the consequences of those actions. But I am here for you, my reader, with a big black marker to show you how these dots connect.
You see, the poor farmers of Mexico used to feed their families by growing three money making crops; corn, rice, and sugar cane. Then the intellectuals in their ivy-covered universities decided that the living standard in rural Mexico was too low and the farmers needed to stop farming and move into Mexican cities where they can work in low-end manufacturing. So at the same time the US ratcheted up its price manipulations with farm subsidies, NAFTA opened Mexico to a flood of corn that the farmers couldn’t compete against, and yet restrictions keep Mexican rice and sugar from flowing north.
Imagine yourself a Mexican farmer, just getting by on a living you scratch from the ground, in fields your family has tilled longer than there is memory to tell. Then the weak corrupt government in Mexico City makes a deal with the strong corrupt government in Washington DC, and your only source of livelihood is gone. The way your family has lived for centuries is taken away by people who’s faces you have never seen and names you have never heard.
That farmer has some choices.
To fully understand point 4, let me restate my accusation that the government in Mexico City is corrupt and weak. So corrupt and weak that it can’t even provide security for those living in its cities, much less control the countryside. This is actually one of the great strengths of the Mexican culture. Once you get away from the government’s influence and are submerged in the colorful freedom that rural Mexico affords its much easier to fall in love with the Mexican people and understand the depths of the tragedy that has befallen them. So in the past, a weak government was a good thing for rural Mexico. But since the US “war on drugs” has driven so much wealth into the hands of crime lords, the weak government that used to technically exist in rural Mexico is gone, leaving only the armies and private security of the drug lords. And they don’t care about the price of corn. So the farmer that chooses to stay on his farm is told in terms he cannot misunderstand that his only path to security and prosperity is to grow the crop the drug lords tell him to grow. Then when the harvest is in, the sergeants of the drug lords pick villagers who take the risk and act as human mules, carrying the drugs across the border while knowing that if they refuse or fail, their families will bear the punishment.
Jumping back to point 3 above, you can see that the US farm subsidies created a large segment of the illegal immigration problem. And with a glance at point 2 above, you may notice that the increase in the labor pool in Mexican cities drove the local wages down and attracted US manufactures to move more jobs out of US cities and into Mexico, thus devastating whole neighborhoods in Detroit, Chicago, Pittsburgh, Cleveland, and the list goes on.
Now that I have removed the bandages that have hidden the wound that Washington DC inflicted upon the gentle villagers and farmers of Mexico, bear with me as I reveal yet more injustices. You see, some of those farmers who left their family land had to sell that land right at a time when there was a glut of Mexican farms available on the market. However a buyer appeared. Not a person, but an invention of the State. Multi-national agribusiness swept in and gobbled up the choice farms at pennies on the dollar, driving even more small Mexican farmers out of business. And if all of the above weren’t enough, in the same time frame, 80 to 90% of the water of the Colorado river that used to go into Mexico has been diverted and the river no longer even comes close to reaching the sea, leaving whole towns in the delta abandoned.
Of course, growing cities in the US needed that water for important things like the fountains, magic volcanoes and gondola rides in Las Vegas and the expanses of golf courses in Scottsdale and Palm Springs. But don’t think that water was all wasted on fun things the poor Mexicans can’t even imagine existing. Have a drive into California’s Imperial Valley where old leaky broken canals carry the water from the Colorado River into alfalfa fields, and you’ll see why it was necessary to dry up the river delta and force the Cocopah Indians off of their ancestral lands. Its true that some of that water makes its way to Los Angeles and supports the residents. But those residents pay a 4600% higher price than the agribusiness alfalfa growers. And what happens to all that alfalfa? The vast majority goes to the heavily subsidized US dairy industry where a USDA cartel markets its products with fixed prices and government guaranteed purchases, eliminating its competition at the point of the State’s gun.
Traditional Mexican farmers supported themselves by growing corn, rice and sugar cane.
The State has systematically manipulated the price and controlled the distribution of corn, rice, and sugar, practically eliminating the ability of Mexican farmers to continue their traditional lifestyle and making many of them slaves to the drug lords.
The State’s war on drugs has enriched drug lords, enabling them to become a virtual State in northern Mexico.
NAFTA’s attempt to enrich the lives of Mexican farmers, whether they wanted it or not, by driving them into the cities, resulted in both job losses in US cities and an increase in illegal immigration into the US.
With an increased flow of illegal immigration into ever poorer US cities and richer more powerful drug lords funneling drugs through the gangs into those cities, crime results.
Multi-national agribusiness not only absorbs massive amounts of tax dollars through direct subsidies and State price controls, it also expands itself by scooping up cheap land as family farmers are squished.
Agribusiness along with international gaming corporations and city governments (and their crony golf buddies) steal water from some of the poorest people in the western hemisphere so they can offer such niceties as artificially priced State regulated gelato vodka smoothies to tourists who stare drunkenly at a fake pyramid.
Oh, and we are suppose to believe that this is capitalism.
Having considered all of the above, I have to wonder how long it will be before the wise overlords in Washington DC decide the Mexican government has failed and the US military yet again sweeps into Sonora, and Chihuahua, and Marines once more march into the halls of Montezuma.
Ben Stone
2011
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