What is far and away the most important global trade commodity? Food. People have to eat.
Before the world’s peoples can afford to purchase from us an iPhone, or a Ford pickup truck – they have to buy (hopefully our) food.
And governments are making sustenance so much more expensive.
Governments raise the prices of everything we try to buy. They do so indirectly – via hidden costs of government we can’t clearly see. Just here in the United States:
That $1.8 trillion is added to the cost of everything we make – including everything we try to sell to the rest of the planet.
Much of that government cost-increase is in the food sector. Farm Bill, anyone? Making it harder for peoples around the world – many of them in abject poverty – to afford food.
Governments don’t just sneak up on us – they go after us directly. And tax and tariff what’s left of the daylight out of everything.
The Information Technology and Innovation Foundation (ITIF) just did this:
ICT stands for “information and communications technology”- how the world taxes iPhones, laptops and Internet service. Shocker – many of the governments are exceedingly greedy.
The scholarly economic evidence is clear that higher taxes and tariffs on ICT goods and services reduce adoption.
“Adoption” means: whether or not they buy tech stuff. More government means they buy less stuff.
Including food. More government – regulations and taxes – means higher food prices. And the global food sector is loaded up with way too much government.
For instance, Americans for Limited Government (ALG) just did this:
Which broadly examines the Crony Socialist nightmare mess that is this global market sector.
India is the second largest sugar producer in the world behind only Brazil. In spite of a five year glut on the worldwide sugar market, India’s government increased supports for sugar exports with a goal of increasing them from 1.3 million tons in 2013 to an average of 2 million tons in 2014 and 15….
Brazilian sugar policy matters, because the South American giant dominates the world market with 25 percent of global production and 50 percent of all exports in the world. Brazil’s dominance and influence is so great that Jonathan Kingsman, founder of the eponymous consultancy states in the Financial Times that, “This harvest, the Brazilians will continue to sell at any price and set the world price in the process.”…
Thailand is the second largest exporter of sugar in the world, and their new military government has plans to immediately and dramatically expand production by opening up new state-owned land for sugar production and encouraging some rice producers to change crops….
Twenty percent of the Mexican sugar industry is owned by the Mexican government creating the ultimate government subsidy – immunity from needing to produce a profit. To assist the rest of their domestic sugar industry, the government provides subsidies for them to export sugar and government loans with debt forgiveness features built into them.
And round and round we go. This is a regulatory arms race – governments meeting governments tax for tax, subsidy for subsidy.
Which raises the price of food for everyone.
If you want to put a real dent in global hunger – put governments on a diet.
Editor’s Note: This first appeared in Red State.