[Congressional Record Volume 150, Number 20 (Tuesday, February 24, 2004)]
[Extensions of Remarks]
[Pages E190-E191]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                      ``SWEET AND SOUR SUBSIDIES''

                                 ______
                                 

                           HON. BARNEY FRANK

                            of massachusetts

                    in the house of representatives

                       Tuesday, February 24, 2004

  Mr. FRANK of Massachusetts. Mr. Speaker, trying to decide what is the 
greatest hypocrisy in politics is a hard job, but I believe that by 
sheer dollar volume the support of many who call themselves free market 
conservatives for the leading aspects of America's agricultural policy 
qualifies for the prize.
  Few areas in public policy in this country are as heavily subsidized 
by the taxpayers, rigged against consumers, blatantly unfair to poor 
people in other parts of the world, and contemptuous of the whole 
notion of competition and free enterprise as American agriculture 
policy in various of its aspects.
  I am frequently puzzled to hear many who declaim their staunch 
allegiance to free trade, low taxes, no government intervention in the 
economy, the free market, and unmitigated competition make an implicit 
exception when the subject is corn, cotton, wheat, peanuts, sugar, or 
other commodities. Apparently, there are people who believe that the 
works of Ludwig von Mises and Friedrich Hayek contain an invisible 
footnote that says that none of this applies to agriculture.
  In the February 12 Washington Post, just before we went on our mid-
winter break, George Will documented the blatant inconsistency with 
regard to the sugar program of the U.S., noting correctly that it has 
once again contributed to the demise of jobs in the United States by 
people who had been manufacturing candy. I disagree with much of Mr. 
Will's conservative approach to economic matters, so I do not agree 
therefore with everything he says in this column. But I salute his 
intellectual honesty in urging that the conservative economic 
principles he professes be applied across the board, without the 
exception for agriculture made by so many others who claim to be his 
conservative confreres.

               [From the Washington Post, Feb. 12, 2004]

                        Sweet and Sour Subsidies

                            (By George Will)

       Saturday, Valentine's Day, sweets will be showered on 
     sweethearts--a bonanza for candymakers. But the very next day 
     all 242 Fannie May and Fanny Farmer chocolate candy stores 
     will be closed.
       They and many jobs--625 of them at the firm's 75-year-old 
     Chicago manufacturing plant--are, in part, casualties of that 
     outdated facility, bad business decisions, and high U.S. 
     labor and other costs. But jobs in America's candy industry 
     also are jeopardized by protectionism, which is always 
     advertised as job protection. In this case, the protectionism 
     is an agriculture subsidy--sugar import quotas.
       Chicago is no longer Carl Sandburg's wheat stacker and hog 
     butcher, but it remains America's candy capital, home of 
     Tootsie Rolls and many other treats. In 1970, employment by 
     the city's candy manufacturers was 15,000. Today it is under 
     8,000, and falling.
       Alpine Confections Inc. of Utah has bought Fannie May and 
     Fanny Farmer and may continue some products. This is partly 
     because the price of sugar is less important in soft 
     chocolates than in hard candies.
       But the end of 2003 brought the end of Brach's production 
     of hard candy on the city's West Side. A decade ago, Brach's 
     employed about 2,300 people. Until recently,

[[Page E191]]

     many of the remaining Teamster jobs paid $19 an hour. Many 
     signs in the abandoned Chicago facility were in Spanish, 
     Polish and Greek for the immigrant workforce, most of whose 
     jobs have gone to Mexico. Labor is cheaper there, but so is 
     92 percent of the raw material for hard candy--sugar. By 
     moving outside the United States, Brach's can pay the world 
     market price of sugar, which is one-half to one-third of the 
     U.S. price as propped up by import quotas.
       Life Savers, which for 90 years were made in America, are 
     now made in Canada, where labor costs are comparable but the 
     yearly cost of sugar is $10 million less. Chicago's Ferrara 
     Pan Candy Co., maker of Jawbreakers, Red Hots and Boston 
     Baked Beans, has moved much of its production to Mexico and 
     Canada.
       Dueling economic studies, few of them disinterested, 
     purport to demonstrate that more American jobs are saved or--
     much more plausibly--lost because protectionist quotas raise 
     the price of sugar for 280 million Americans. In the life of 
     this republic, in which rent-seeking--bending public power 
     for private advantage--is pandemic, sugar quotas are 
     symptomatic.
       It was to a North Dakota radio station that Robert Zoelick, 
     the U.S. trade representative, vowed that he would stand like 
     Horatius at the bridge to block Australian sugar. The quotas 
     can be considered among the bearable transaction costs of 
     democracy, keeping North Dakota's, Minnesota's and other 
     states' growers of sugar beets as well as Florida's, 
     Louisiana's and other states' growers of sugar cane from 
     starving.
       Or seceding. Or, heaven forfend, being forced to grow 
     something else. But protectionism is unconservative, unseemly 
     and unhealthy--indeed, lethal.
       Unconservative? Protectionism is a variant of what 
     conservatives disparage as ``industrial policy'' when 
     nonconservatives do it. It is government supplanting the 
     market as the picker of economic winners. Another name for 
     industrial policy is lemon socialism--survival of the unfit.
       Unseemly? America has no better friend than Australia. Yet 
     such is the power of American sugar interests that the Bush 
     administration has forced Australia to acquiesce in 
     continuing quotas on its sugar exports to America. That was a 
     price for achieving the not-exactly ``free trade'' agreement 
     signed last weekend. But look on the bright side: 
     Restrictions on beef imports will be phased out over 18 
     years.
       Is protectionism lethal? Promoted by Democrats hawking 
     their compassion, protectionism could somewhat flatten the 
     trajectory of America's rising prosperity. But protectionism 
     could kill millions in developing nations by slowing world 
     growth, thereby impeding those nations from achieving 
     prosperity sufficient to pay for potable water, inoculations, 
     etc. Developed nations spend $1 billion a day on agriculture 
     subsidies that prevent poor nations' farmers from competing 
     in the world market.
       Sugar quotas, although a bipartisan addiction, are worst 
     when defended by Republicans who actually know better and who 
     lose their ability to make a principled argument against the 
     Democrats' protectionist temptation. Fortunately, splendid 
     trouble may be on the horizon.
       Last September's collapse of the World Trade Organization's 
     ministerial meeting in Cancun, Mexico, meant that the 
     pernicious ``peace clause'' was not renewed. For nine years 
     it has prevented the WTO from treating agricultural subsidies 
     as what they obviously are--market distortions incompatible 
     with free trade. For Americans, a fight over that is worth 
     having, and losing.

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