May 31, 2012
In summer, it’s all but impossible to obey Dr. Atkins.
Iced tea, Kool-Aid,
and milkshakes. Fudgsicles
and banana splits. Toasted
Almonds, Hoodsie Cups,
and frozen candy bars.
They’re all so good.
And they all cost more than they should, thanks to protectionism.
The most obscenely hypocritical component of U.S. trade policy is fedpols’ coddling
of sugar. While the blame is usually placed on the politically powerful cane industry
in Florida, the sugar-beet
lobby presses just as hard for D.C.’s favors -- and it’s more
geographically dispersed, with members in Michigan,
Minnesota, North Dakota,
Oregon, and California.
Under the federal government’s sugar program, processors,
refineries, and mills get loans from the Commodity
Credit Corporation to buy from growers at prices well above the global
market rate. Producers operate, in the words of the Coalition for Sugar Reform, “under a
government imposed and legally-binding limit on the amount … [they are] permitted
to sell each year.” Food manufacturers looking for relief abroad lack options,
because a byzantine quota-and-tariff system limits competition. In 2010, 73 percent of
U.S. sugar consumption was met domestically.
The result, noted Sen. Jeanne Shaheen (D-NH) and Sen. Mark Kirk
(R-IL) in a 2011
POLITICO op-ed, “is a U.S. sugar
price that’s almost twice the world average.” A study by Promar International
found that American consumers pay about $1.00 more than necessary for a 5-pound
bag of sugar, which adds up to “more than $4 billion a year.”
The response from Big Sugar: Jobs,
jobs, jobs! We must preserve “American” jobs! Nice sound bite, but it’s not
as simple as that. In 2010, U.S.
sugar farming and processing employed just 16,871 workers,
while businesses that consume sweeteners -- e.g., confectioners, bakeries, and
restaurants -- supplied over
In 2002, The Christian
Science Monitor reported that
due to high-priced sugar, “[candy] manufacturers are closing U.S. plants and slowly moving operations across
the borders -- south to Mexico
and Latin America, and north to Canada.”
later, The Patriot-News, Harrisburg’s
that Hershey’s recent investment in Mexico “was the centerpiece of
a three-year global supply chain transformation … that saw the company shutter
several North American plants and shed 1,500 jobs, including about 800
positions at Hershey’s three plants in Dauphin County.”
Given the political power of farmers, Washington’s five-year
plan for agriculture (no, that’s not a joke), set to expire at the end of September,
will likely be renewed sometime in the next several months. Despite the
destruction sugar policy wreaks, look for it to stick around.
Big Sugar’s confident because it’s survived previous challenges.
Its only close call came in 1996. That February, Rep. Dan Miller, a courageous Republican
nearly secured a full-bore repeal of the sugar scheme. It failed by a handful
of votes, but the congressman fought on, testifying before the Senate in 2000
that the program was “an embarrassment to this Congress and this country … . It
is bad for the consumer. It is bad for jobs in this country. It is bad for
trade. It is bad for the environment. ... We have created a cartel, not much
different from OPEC, to control sugar prices in this country.”
Miller term-limited himself after a decade, and few in the House
assumed his cause. In the Senate, Richard Lugar (R-IN) has commanded an assault
on the Sugar Trust for decades. Last year, he
denounced its “complicated system of marketing allotments, price supports,
purchase guarantees, quotas and tariffs that only a Soviet apparatchik could love.” With
Lugar’s imminent departure from Washington
-- he paid the tea party’s price for backing other manifestations of runaway
government -- perhaps Shaheen and Kirk will take over.
“U.S. sugar policy has a long history,” lamented
economist Mark J. Perry, “going back to 1789 when the First Congress of the
United States imposed a tariff upon
foreign sugar, and is a perfect illustration of trade protection that ignores
the viewpoint of disorganized, dispersed consumers in favor of the
concentrated, well-organized interests of producers.”
socialism has earned the pan-ideological ire of The Wall Street Journal editorial page, Mother Jones, Citizens Against Government Waste, The New York Times editorial page, the
Cato Institute, the Consumer Federation of America, and the American Enterprise
But protectionism is a sweet deal for the farms and factories
that would not exist if not for federal sugar policy. They’re used to getting
what they want -- and quite comfortable with passing the bill on to you.
D. Dowd Muska (www.dowdmuska.com) writes about government, economics, and technology. Follow him on Twitter @dowdmuska.
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