December 09, 2005

US taxpayers give out t-shirts to the world

From KickAAS:
Burkina Faso in West Africa, the third poorest country in the world, depends on cotton for 70% of export earnings and 30% of its entire GDP. This year, despite a record crop, the country is on its uppers because of a slump in the price of cotton caused largely by US farming subsidies amounting to — wait for it — an astonishing $4.2 billion. This is more than the entire GDP of Burkina Fasso which employs 3.5 million people in cotton compared with only 28,000 in the US.

US subsidies amount to $142,000 per person involved. If the US government decided to withdraw subsidies it could give an annual pension of $42,286 to all the people involved in cotton growing to help them do something more productive and save $100,000 per person for investment elsewhere. Meanwhile Burkina Faso, and other cotton growing countries in Africa would get a huge boost that would enable them to sell more exports and employ millions more people.
US subsidies result in low market prices of cotton. This hurts cotton producers in other countries (and taxpayers in the US), but benefits cotton consumers throughout the world. Africans and everybody else can now afford more t-shirts or save more money for other expenses because cotton is so cheap. This benefit to consumers exceeds the harm to producers. The sad side of the story is that the harm is concentrated in Burkina Faso and a few other places (and in US taxpayers, in case you care about them).

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