Subsidies: The Impact on Our Global Market

Agricultural subsidies is a very complex and controversial economic topic today. It will continue to be a hot topic as government continues it. It is largely debated in the United States as well as in other countries. The reason it is so largely debated is because it literally have an effect on the entire world market. Not to mention that the farm has been booming the last 5 to 10 years. This topic also tends to draw strong opinions in our area in particular due to the large agricultural community in our region. However, even within different states there are many supporters as well as opponents to these government subsidies.

Eligibility for subsidies must first approve of task they must undertake to receive it, and understand the purpose of such funding and not to misuse it. That being said, if extra funding is received, it shall not go directly to the community but to those that are recording the history. It may then, consequently leave the community or circulate within it. As well if surplus funds are given, a boost in quality or quantity of documentation is expected. Values of the subsidies are subjected to change, although not at market particular communities must have value. Secondly, legitimacy of one's

Although farm subsidies all have their roots to one major piece of legislation, there are multiple variations that are common. One of such subsidy programs allows farmers to counter fluctuations in various aspects of their production. If prices for a crop take astounding hikes or fall dramatically, subsidies can provide in time of need. This is the most well-known farm subsidy program, but there are other aspects that get remarkably overlooked. Even insurance coverage, product marketing, research and conservation efforts are subsidized under the current Farm Bill. With the present situation, many Americans believe that the government carries too much control in the agricultural market. For a more detailed breakdown of where the funding in the Farm Bill goes to, see the pie chart below for a reference. These numbers are accurate as of the 2014 Farm Bill, per the National Sustainable Agriculture Coalition.

Farm subsidies have become an somewhat debated topic in recent year, with increasing numbers of critics believing that these are detrimental not only to the economy, but also by implication to the health of Americans. Subsidies are offered by the USDA to farmers of commodity crops such as corn, wheat, rice, and livestock such as cattle. This makes these types of food cheaper than other, potentially healthier choices such as organic products. Farm subsidies were initially implemented after the Great Depression to help farmers cope with the economic effects after the Depression years. In other words, they were to stimulate the economy after the difficult years of the downturn. Although initially intended as a temporary measure, the subsidies remained part of the government assistance program for farmers even today. As a proponent of this system, my viewpoint is that farm subsidies ultimately benefits the United States in terms of protecting domestic product against foreign competition, national security, and American food aid to poorer countries.

The United States is no longer a leader for manufacturing and China is currently in their ‘Industrial Revolution’ economy. Manufacturing jobs have been exported overseas, that has decline in the leverage to unionize labor (Uchitelle, 2018). The auto industry alone has been drastically hit, with the 2009’s “too big to fail” stimulus package to save the industry.

economies of both nations. This problem the United States must face is whether it ought

These subsidies can be used in multiple manners, but often can find its use through the purchasing of new equipment. Technology plays a big role in the ability for production to increase. As farms remain capable of using new technologies to foster better yields, then the production possibility curve will continue to be altered.

What are subsidies? A subsidy is a government payment or tax credit provided to either the producers or consumers of certain goods. Subsidies are a prime example of cronyism. One very popular subsidy controversy is the sugar subsidies. The existent Sugar Program of the U.S. was introduced in 1934, with the goal of lowering sugar production and raising the price. This system only benefits the sugar industry at cost of American consumers and the taxpayers. Unsurprisingly, the Sugar Program has advanced into a cover of government imposed price supports, import quotas, and tariffs that keep domestic prices way too high. These policies are costing taxpayers and consumers billions of dollars while fostering the perfect climate for cronyism. During

In the article “Why Governments Intervene In Market”, the author agreed with governments’ interference because of inequalities of resource ownership. Some companies owned the most resources but others owned less, which could hurt the country’s economy. In order to fight against the problems, the government used regulation, taxation and subsidies. There are four reasons for the government to intervene the economy. First, the government tries to improve social welfares. Such as, (Deepen and strengthen “conditionality’’, Encourage “Diversion”, Introduce better “triage”at the start of the welfare system, Identify people with severe problems earlier, and manage them better, Widen conditionality further, Reform Housing Benefit and Social Housing).Without the government’s restriction, businesses can be combined together to build a strong monopoly. Monoplying market would cause many negative problems such as unlimited rise of price and occupying enormous resources. Second, the government

In 2002, the United States of America passed a policy that granted United States farmers access to subsidies, in order to protect the domestic market in agriculture. In retaliation to this policy being passed the Brazilian government sued the United States in the court under the World Trade Organization for violating free trade agreements. The Brazilian government claimed that the United States was liberalizing its trade, making it unfair in a free market. The World Trade Organization enacted punitive measures against the United States by imposing tariffs and lifting patent protection on various United States goods. The United States had to act in some way because these measures would hurt markets in other areas including agriculture. The U.S. then agreed to subsidize farmers in Brazil by giving them one hundred and fifty million dollars. Many people argue that the other countries do not face the same regulations as in America, and there for are more protected, but other countries say that subsidizing farmers takes away a free market. There are pros and cons to subsidizing farmers in any country. The good side is that it provides job security for farmers and helps them to work around regulations and still acquire profits. The bad side is that these subsidies result in inefficient farmers that just get their compensation at the end of the year without producing a standard amount of product. It is also argued that subsidizing farmers restricts economic growth. I believe that

Another way governments have been trying to implement renewable energy is through feed-in tariffs. Feed-in tariffs usually consist of some type of purchase obligation and also a tariff payment on renewable energy that is fixed for every unit of electricity (Jacobs, 2012, p. 43). The grid operator involved in the purchase obligation must buy the renewable electricity no matter what (Jacobs, 2012, p. 43). The producer has the right to a certain amount of money for every unit of electricity that they produce (Jacobs, 2012, p. 43).

If businesses don’t export jobs overseas, they need to find new ways to remain competitive in the global markets. This can come in the form of pay cuts for employees, which also harms the economy since there is less disposable income (businessweek.com). Again Mourdoukoutas (2011) offers his support by stating globalization can lead communities to escape the unemployment trap by devaluating currency and raising trade barriers. China currently employs the currency devaluating tactic to maintain their edge in American markets. This makes American products more expensive to obtain in China, as opposed to their inferior, cheaper products. This causes American based businesses to seek new creative ways to lower production costs to remain competitive in Chinese markets.

In order to protect less competitive domestic automobile producers, the government offers subsidies to them. It makes the domestic automobile producers feel that cost is reduced and

trade deficit with China cost 2.8 million jobs between 2001 and 2010” by Robert E. Scott, the Director of Trade and Manufacturing Policy Research. His research provides a lot of remarkable data that shows how Chinese imports displace American jobs. For instance, he points out that the dramatic growth of US-China trade deficit has been one of the primary factors contributing to the crisis in U.S. manufacturing employment. The trade deficit over the last decade has replaced 2.8 millions million American jobs, in which 1.9 millions million were in the manufacturing industries. Noticeably, the Chinese currency has been manipulating is valued lower than it should be, in order to increase the competitive advantage of Chinese cheap-price goods. Besides, Chinese government has been issuing some illegal policies or regulations to compete unfairly with American goods, such as labor abuse or environment damage. Some other reasons are counted to point out how illustratehow cheap imports from China harm the American economy, in which China has broken its promises to attend the WTO. Scott concludes that the deficit caused by the trade with China has been replacing millions American jobs, increasing the national depth, decreasing the export capacity, and making more macroeconomic problems. Moreover, I think that moving blue-collar jobs abroad can support

In some situations, countries often provided a loan to specific enterprises or made some advantageous policies in order to achieve public goals. Hence, some people questioned whether the public objectives should be taken into consideration when the ‘benefit analysis’ is operated. This question has raised great controversy. Some people think that the determination of subsidies and the public objectives are two different matters, while others argue that the public objectives should be taken into account. They further declared that the government, which pursues public goals should be tested by ‘public investor’ standard, rather than the ‘private investor’ standard. From the perspective of the author, the public objectives should not be taken into account when the ‘advantage analysis’ in the subsidy law is operated. A typical case which was not officially confirmed could provide us some inspirations.