[cperciva]

A similar, and perhaps more amusing, situation happened in Canada a few years ago. We have a 245.5% import tariff on cheese (why? Because dairy farmers are more important than poor people, apparently) but there was a much lower tax on "food preparations", including packaged pizza toppings.

So companies would package up "pizza topping kits" in the USA, import them to Canada as "food preparations"... and then remove the cheese, which could be sold separately for far more than the cost of the complete kit.

After a couple years, the classification rules were amended to exclude anything containing cheese from the "food preparations" tariff class.

[tesseract]

This kind of waste seems common and from an outside perspective very frustrating.

There is a famous example where Ford imported cargo vans from Europe to the US with disposable seats in them so they would be taxed (more cheaply) as passenger vans. I think the tax in question was referred to as the "chicken tax".

The situation is a bit different but China's value-added tax scheme combined with the prevalence of factories in bonded export zones leads to a lot of useless shipping of goods (or components of goods) from China to Hong Kong (or another nearby foreign jurisdiction) and back for no good reason other than to avoid tax. I'm sure this works out great for the local freight industry...

[witty_username]

I just can't wrap my head around protectionism. We lose, and they lose, and such crazy inefficiencies occur.

[tmoertel]

But somebody wins, and that's who's usually behind the protectionism in question.

[flyinghamster]

That was the Ford Transit Connect. One of the big ironies of that whole situation was that back in the 1960s, Ford was a beneficiary of the tax (which was mostly aimed at Volkswagen). After the tax was enacted, the Type 2 pickup and cargo van disappeared from VW's US product lineup.

The loophole has been closed, and Ford no longer sells the Transit Connect in the US.

[yuhong]

This also reminds that Hynix had to be bailed out in 2001 and in 2003, US and EU imposed high tariffs as a a consequence. I wonder what would happen if Hynix actually failed and had to be bought by Micron.

[Kenji]

I loathe farmer subsidies. I have no idea why our government gives farmers so much money and so many advantages - nobody in our society really benefits from those incredible spendings and it's a significant fraction of our state budget.

[colechristensen]

If you don't subsidize farming in rich countries, all your food will come from poor countries. Poor countries without standards for food safety, scruples about burning down rainforest for a few years of fertility, or worker rights or fair wages. You starve poor countries by selling off all of their food to rich countries and making what's left very expensive. What farming is left in rich countries can only possibly be made economical doing so at the largest most industrial scales. When shit hits the fan external sources get much leverage on rich countries because they don't own their own food supply and don't have the economy in place to make their own when the suppliers get disagreeable.

And folks at the grocery store aren't going to like the prices if they want their unsubsidized groceries to be grown by their own countrymen earning middle-class wages.

Subsidies right now are certainly not where they need to be. The whole thing needs to be reformed but there are basically two classes of people: rich powerful special interests that profit from the status quo, and ignorant citizens that don't understand the very basics of why anything is being done.

Ignorance and greed underly most of our problems. Which one are you guilty of?

[slyall]

Lovely argument, if only it were true. Your whole argument is all over the place, not least because a lot of food eaten in rich countries is has minimal subsidies already. Why don't you examine the world as it is today rather than how you think it is.

> "You starve poor countries by selling off all of their food to rich countries and making what's left very expensive"

The food produced in the poor country will sell for "the world price", pretty much the same everywhere. Not "cheap" in the rich countries and "expensive" in the poor ones.

I'll assume you are talking about US production. The vast majority of US crops don't need subsidies. They are heavily mechanized on cheap land (middle of Iowa etc) fairly close to markets and with good infrastructure.

[colechristensen]

It's all over the place because there's a tree of possibilities that's difficult to cover succinctly.

>The food produced in the poor country will sell for "the world price", pretty much the same everywhere. Not "cheap" in the rich countries and "expensive" in the poor ones.

Spending power around the world varies by several orders of magnitude. If there's one "world price" for a crop, that price will be incredibly cheap for rich countries and incredibly expensive for poor ones. Agricultural poor countries will not be able to afford the food they grow.

>a lot of food eaten in rich countries is has minimal subsidies already

In the US, SNAP (food stamps) costs about $75 billion per year and is about 80% of the spending on the farm bill. It's hard to think of that as anything but a subsidy, and it covers more or less all food.

There's a lot more as well...

[slyall]

> Spending power around the world varies by several orders of magnitude. If there's one "world price" for a crop, that price will be incredibly cheap for rich countries and incredibly expensive for poor ones. Agricultural poor countries will not be able to afford the food they grow.

Significant numbers of both poor and rich countries do not subsidize food today. Many agricultural products are commodities and traded at the "world price" already. This is the world you live in right now. Have a look at what is actually happening rather than speculating...

>In the US, SNAP (food stamps) costs about $75 billion per year and is about 80% of the spending on the farm bill

Food Stamps are not a subsidy to farmers, they are a welfare program for poor people. They just are part of the "farm bill" for political reasons.

[colechristensen]

>Food Stamps are not a subsidy to farmers, they are a welfare program for poor people. They just are part of the "farm bill" for political reasons.

Food stamps shape the food choices people are able to (and do) make. Giving people money to buy food and giving farmers money to produce food are two sides of the same coin.

For example:

"SNAP increases the likelihood that participants will consume whole fruit by 23 percentage points"[1]

1: https://en.wikipedia.org/wiki/Supplemental_Nutrition_Assista...

[witty_username]

> Spending power around the world varies by several orders of magnitude. If there's one "world price" for a crop, that price will be incredibly cheap for rich countries and incredibly expensive for poor ones. Agricultural poor countries will not be able to afford the food they grow.

This is just bad economics. If food is "incredibly cheap" for rich countries, and agricultural poor countries are unable to afford the food they grow, then the prices will rise. Humans can't survive without food.

[colechristensen]

>Humans can't survive without food.

When I'm saying "cheap" and "expensive" those are relative terms to the spending power of the population.

If I make $200 a day and some guy in Africa makes $2 a day and we both pay the same price for food. Either I get an incredible deal and pay basically nothing (compared to my income) for all of my food... or he starves to death because he can't afford it.

It has certainly happened. During the Irish Potato Famine, despite the potato disease going around, there was plenty of food to feed the population, they just sold it at a higher price elsewhere.

https://en.wikipedia.org/wiki/Great_Famine_(Ireland)#Irish_f...

[jfoutz]

There are also some echoes of the world wars. If your country can't feed itself, you can't support an industrial base to fight. Kinda like the highway system.

[lostlogin]

This argument doesn't hold up. By that reasoning (safety, workers rights, environmental concerns) every industry is special and deserves subsidy. Can mine be better subsidised please?

[colechristensen]

To be fair, I don't believe in free trade outside equal partners.

That is, I think trade should be completely unrestricted to foreign markets that are within some economic margin (let's say US, Japan, Canada, and Germany to come up with a very incomplete list) and in any other cases should be subject to significant restrictions.

I don't like the fact that it's nearly impossible to pay someone in America an honest wage to put together t-shirts or running shoes. I don't like the fact that I'd be hard-pressed to buy a t-shirt or a running shoe that wasn't assembled by a person who is more like a slave than not.

But also,

Food is something fundamental, something important, more important than almost anything else and really easy to export the production. We might be ok letting some industries be entirely foreign, because maybe they're less essential... basic sustenance though is in a different class of importance. It's not a fad, it'll never go away unlike many industries that seek protections when they should just be allowed to die.

[lostlogin]

Your last point is very good. It applies to other sectors too, but I'm not going to die if a few days/weeks without those other things.

[mikeash]

Your industry doesn't starve the country to death if it gets outsourced and then blocked as a weapon of war.

[thaumasiotes]

You might like to know more about Australia's experience with unsubsidizing farmers.

Or, heck, you might not like it. But I think you should know more about it anyway.

[kleiba]

Why, what experience is it?

[thaumasiotes]

From memory:

Food production (amount of food) rises, while falling as a share of GDP. Agricultural productivity (food output production per unit input) shoots up. A lot of land is repurposed from sheep to other products.

And of course, subsidy spending goes way down.

[witty_username]

I eat food from the poor country India (I live in India). Sure, food standards aren't as good, but I'm fine.

> Poor countries without standards for food safety, scruples about burning down rainforest for a few years of fertility, or worker rights or fair wages.

The wages are bad but if you don't buy from poor countries their wages will be even worse.

[icantdrive55]

Walk through the produce section at Whole Foods, or Safeway.

Play a little game. Try to find the fruit, or vegatables that arn't produced in the rich country, fair wage country, safety conscious country of Mexico.

[colechristensen]

If even a simple majority of the calories you consume come from the produce aisle, you are in a tiny elite minority.

Even then, where it was produced doesn't matter much, if it wasn't grown in Mexico or shipped in from somewhere more exotic, much of the human labor was likely done by migrant workers from Mexico anyway.

Let's not pretend that the working conditions for the unmechanized portions of most produce-related jobs are anything but appalling.

To put a fine point on it, I don't want any part of my quality of life to be put on the backs of a workforce outside the middle class (or a foreign equivalent through trade)

----

The question is – is your goal replacing all food production with foreign wage-slaves? Are you holding up the current American market for "unsubsidized" produce as a shining beacon to be emulated? If you look into it, you realize far too much of it exploits the desperate and poor and creates shitty situations everywhere it goes. Proper subsidies and market regulations could mean that you could be proud to be a part of the food economy instead of feeling like a 21st century colonialist.

[meanduck]

Everyone is egocentric. For countries, egocentric-ness is maximum.

UBI/FB like threads are filled with comments that seemed to forgot this so obvious fact of life. Its the worst thing about HN.

[colechristensen]

What point are you trying to make?

[meanduck]

No country subsidize for other countries. Certainly not for moral reasons.

Subsidizes get introduced either to score political points and/or bribes. Thats it.

[ArkyBeagle]

It's a way of bandlimiting (lowpass filtering?) price change through mild overproduction.

It works because overproducing food costs less than the risk of market shortage transients. It's one of those Catch-22 moments where you feel in awe of the genius of it.

I am very sorry it is a significant fraction of your state budget. Given the nature of the risk profile your state should not be underwriting this risk.

[kyllo]

In manufacturing terms it is a way of encouraging the use of inventory to buffer against demand volatility and reduce the probability of shortage events.

[oxryly1]

Some (likely outdated) idea to do with treating farming capacity as a strategic reserve.

[hkmurakami]

There's some rogue political wing in Japan that wants to have 100% capacity for domestic food production to meet domestic consumption needs. They've been pushing for subsidies for years to achieve "food independence", whatever that means.

I imagine their true goal is to just pad their pockets.

[ArkyBeagle]

It really seems to more of a sacrifice to some god of the Apocalypse to me. Although given the history of Japan since the Meiji period, nothing should surprise me.

Medieval Japanese culture is just so achingly beautiful it does not surprise me that people have such love fr it.

[Kenji]

Look, in war times, we can plant potatoes in all our gardens and take our spare meadows. We don't need these farmers in peace time; we really don't. They are leeches.

[rtkwe]

Tiny little farms like that wouldn't be a huge amount of food. It's vastly inefficient compared to a huge factory farm and you can just summon up the tractors and watering infrastructure to properly run a farm.

[sverige]

Tell that to those who lived under the Soviet collective laws. They were allowed something like 1/2 acre to grow food for their families. Those little patches produced a significant amount of the food that wasn't grown on the collective farms.

Of course, a lot of that had to do with incentives....

[colechristensen]

Oh you can totally feed your family with a half acre. If you're good at it you can feed several families.

If you only grow and eat potatoes, you can feed 7 people 2000 Calorie/day diets all year. That's the figure if you grow potatoes like big potato farmers. If you nurture the land and integrate other species taking advantage of differing growing seasons and do all you can to make perfect soil conditions, you can get a lot more out of it than potatoes every day for 7.

[ittekimasu]

Great idea! Maybe this could help Venezuala. Oh wait...

[vidarh]

Some places can - if you have huge gardens and areas you're free to make use of. Many can't.

Norwegian farming policy is focused on maintaining near-independence in the food supply because the British embargo during the Napoleonic wars in the early 1800's is still seared in the collective consciousness. E.g. every Norwegian primary school child will go through the very long, very tedious poem "Terje Vigen" about a man who tried to evade the British embargo by taking a small boat to Denmark to get food to feed his starving family.

Starvation happened despite farming most of the available land.

The concern of local food production rose to prominence again during World War II, when German occupation meant strict rationing, which led to "fun" food innovation such as flour substitute made from bark, as growing vegetables etc. in your back garden simply doesn't produce enough for most people to sustain a family.

[kwhitefoot]

That's not the only reason for Norwegian farming policy. Another is to ensure that non-industrial areas and areas where it is simply difficult to live do not become entirely depopulated. I live and work and pay tax in Norway and I am quite happy with the basic principle that the country should produce most of its own food; it helps to reduce the tendency to race to the bottom of the market and, if done well, promotes pride in quality. Of course it is not easy to export the Norwegian experience to a much larger country like the US with a different political system and much higher concentration of ownership of the farms and also difficult to export it to a smaller much more densely populated country like the UK. But that doesn't mean it wouldn't be worth trying to learn from it.

Don't mistake me, I'm not claiming that Norwegian farming policy is perfect, merely that it does seem to work at the moment.

[trapperkeeper79]

Terje Vigen is a fascinating tale .. thanks for pointing it out. Does it end in a cliff hanger or does he exact revenge on his captor???

[vidarh]

There's a full English translation here [1] with details on Ibsens likely sources of inspiration, if you want to read it. It feels a lot longer when you're 9-10 years old...

But here's a summary of the end:

He is released from prison at the end of the Napoleonic wars, and comes home to find his wife and child died while he was in prison, and were buried in a paupers grave.

Years later he comes across a ship in distress and it is the captain of the British ship that caught him, with his family. He threatens revenge, but on picking up the child changes his mind and saves all of them.

[1] http://www.oftebro.com/Terje_Vigen_english.pdf

[cheez]

Why would it be outdated?

[oxryly1]

The days of sieges and naval blockades are behind us now. Probably.

[ArkyBeagle]

Then there are those "aircraft carriers made of sand" in the South China Seas.

[icantdrive55]

I wouldn't mind subsidizing smaller farmers. Larger farmers shouldn't be subsidized.

The government would need to prevent large companies from splitting up, and suddenly overnight you have 20 different small companies. They could beef up legal penalties for any blatant, repeated shinagigans. (Will never happen? The money their lobbyists sending congress is staggering?)

It's a shame how taxpayer money is wasted by administrators/politicians.

In the Bay Area, we have a lot of civil engineering jobs. (Those street repair/pipe jobs that never end, and tie up traffic for years). For years, it seemed like one company got all the work-- Billotti Brothers. (Didn't use their real name, out of fear.)

Even though every project required three bids, by three different companies, it seemed like Billotti got all the work. I used to wonder why. They must be one efficent company?

The Internet arrived, and people had some honest questions, basically, the main one was, "Is this the only company?"

I then noticed news papers started to list the construction companies that lost out on the bids. I looked into these companies. They all seemingly were founded by a Billotti? It looks like they sent their kids to Sacramento to get their contractors licenses? (Very easy to get).

These companies then all bid on projects. The lowest bid won! "Hold up a glass of red wine!"

And of course, they didn't plan this wacky coincidence, commingle assets("I don't need that grader brother."), share workers, work on eachother's projects--never.

And I actually don't have a clue to what they did, but it just doesn't look right. And it all could be legal--I just don't know? Or maybe, all the kids/grandkids just followed in dad's footsteps, and got into construction aspect of civil engineering?

(Edit: If I recall, the whole save the American farmer thing was started when I was a child. It sounded great, but farmers bought up all the small farmers, and the subsidies never stopped. Sorry about going off topic with the Billotti Brothers. I've become so dissalusioned with our society.)

[sfifs]

In general, the reason to have farm subsidies is to maintain sufficient farming capability to provide food to the population in case a major disruption (blockade, war etc) that makes it difficult to import food. If not present, this dependency on outside for food can be used as leverage by others and not providing population with food is recipe for civil unrest at the weakest moment.

If you don't provide farming subsidies, farming will move to countries with cheap labor and people with knowledge and capability for farming will become too few to ramp up quickly in case of emergency.

[valvar]

Farmers do! And farmers also vote. And that's the reason for why they are subsidised. Farmers have a special interest in receiving subsidies, and politicians gain far more by pandering to them than by saving a little bit of money for everyone else.

[kwhitefoot]

I presume you are thinking mostly of the west here. Farmers voting has little or no impact on policy. In most developed countries total employment in farming is less than 5% of the population.

[valvar]

You'd be surprised how much a vocal minority (which is a lot more than 5% in agricultural states) can push senators around. Still, even 5% of the population constitutes a very powerful special interest.

[gdwatson]

Isn't the whole point of free trade agreements to prevent those sorts of tariffs? Does NAFTA not cover cheese?

[QuarterReptile]

The host of one of my favorite podcasts once asked Milton Friedman (huge free market guy, in case someone doesn't know) what he thought of NAFTA, and Friedman said he didn't like it. Friedman said that a real free trade agreement would've been one page, rather than the pile of exemptions it turned into. Everyone with the political clout to make it to the table was able to keep their protectionism somewhat intact.

[cperciva]

Yes, that is the point. No, NAFTA does not cover importing dairy products into Canada; similarly the USA kept tariffs on some dairy products as well as sugar and peanuts.

Unfortunately pretty much all "free trade" deals turn out to be "free trade except for a small number of politically well-connected industries". :-(

[makomk]

Or (for example) "free trade, except that Canadian companies can no longer sell Canadian cheese to Canadians at parmesan-style to help the Italian cheese industry".

[nyolfen]

Kvetching by free trade acolytes about 'real' free market capitalism reminds me strongly of leftists bickering about the USSR not actually being communist.

[colechristensen]

'real' free market capitalism can't exist because without proper regulation, power/wealth tends to concentrate to a level where the strong ruin the 'free' bit.

'real' communism can't exist (outside small rare communities) because the industrial revolution failed to bring about a post-scarcity economy which was marx's failure of prediction.

A post-scarcity economy which eliminates the importance of capital is probably very possible in the future. Complete hands off capitalism probably is never going to be possible.

[cmarschner]

Communism failed because of human nature. It is incentives gone wrong. If there is no pressure to become more efficient, or even remain efficient, things will become less efficient and everybody suffers (to the point of starvation). Central planning failed due to complexity of the task.

Free market / small government doesn't work because a) it is inherently unstable due to power laws (rich get richer), b) lots of externalities (e.g. environmental damage) not being priced in, c) lower overall wellfare without government spending on infrastructure etc. In the end, it won't work because of human nature (incentives gone wrong).

So the challenge is to design the system for a society such that incentives are set right, such that a) there is efficient production such that the society can survive in the short run b) it is sustainable such that it and the whole ecosystem can survive in the long run. The past 50-100 years made a lot if progress on a), and the next 50-100 years need to solve b).

[vidarh]

> Central planning failed due to complexity of the task.

Central planning is not a requirement in Marxism or even Marxism-Leninism. Lenin tried it during the civil war, and promptly reversed it in 1921 with the introduction of New Economic Policy, which he indicated he believed needed to be in place for decades (NEP involved re-introducing limited market economy). Stalin then reversed Lenins reforms and went much further shortly after Lenin died.

There are many left wing ideologies including anarchist and communist ideologies that explicitly promote the use of market mechanisms for resource allocation, and many more that take a "whatever works" approach.

The idea of a planned economy is attractive to some because it seems "tidy", while for others it's strongly unappealing because it involves a central authority, which is anathema to a lot of communist ideologies.

[colechristensen]

Communism or something like it can easily work post-scarcity.

You can't trust human nature to toil away in factories and hard jobs and do so efficiently for 1/2 of waking life.

Make that fraction a lot smaller... say the only people that needed to work on whatever were the ones that actually wanted to... and suddenly communism works. Open source software works and so much of it is done because people just want to do it. Some day automation and efficiency will get to a point where nerds who have interests will end up doing all of the work because it's what they want to do. Imagine a 3d printer capable of making complex metal/plastic/ceramic/electronic/whatever objects. You'd get hordes of people designing and sharing things just because they wanted to. Design a 3d-printer that can print copies of itself (as well as most of the things a person could want) and suddenly a huge chunk of capitalism is just unnecessary.

50 years after the creation of Star Trek, we should be able to at least imagine the Star Trek economy being technically feasible in the not too distant future.

[CPLX]

Communism failed? Someone should call the Chinese Communist Party and tell them, they're still acting like they run the place.