A view from an economist: U.S. policies and practices on poor countries
This column will address the economics of current policy issues. Writer Dr. Jackie Brux is an emeritus professor of economics and founder/director of the Center for International Development at UW-River Falls; and author of the college textbook, “Economic Issues and Policy.”
As a development economist, I've worked/researched in poor countries throughout Africa, Latin America, and parts of Asia. Let's consider the impact of our policies and practices on the poor of these countries. (These issues stand off to the side from recent conversations about trade.)
Cotton: The U.S. protects large agribusinesses with subsidies that allow them to export at cheap prices. I am referring to large companies like Monsanto and Cargill. Cotton can be produced far more cheaply in India. (Economists argue that we should only produce goods in which we have a competitive advantage, the basis for free trade.) Our artificially cheap cotton exports drive poor Indian cotton farmers out of business. They often drink their fertilizer, referred to as "cotton suicides."
Sugar: Our subsidies for sugar agribusinesses enable us to export sugar at artificially low prices. Sugar cane companies in Mexico can only compete by inflicting cost-saving behavior on Mexican sugar cane production, creating unsafe working conditions for their workers. I've witnessed the horrible injuries that result.
Cocoa: In Cote d'Ivoire, virtual slaves are used to produce cocoa. They respond to advertisements of jobs, not realizing that they will be charged high prices for room and board. These workers thus incur debt upon arrival, and never escape from it. Slavery situations like this occur throughout poor countries. You and I purchase our products from them.
Coffee: Coffee beans produced in Ethiopia are among the best in the world. However, farmers often have only one way to sell the beans, which is to single regional buyers that pay low prices. The rural poor suffer. On the other hand, intermediaries and agribusinesses (such as Nestle and Star Bucks) very profitably sell us our coffee.
Clothing: Poor countries have a competitive advantage in the production of clothing, as they have relatively cheap and abundant labor. But — as we know from Bangladesh, the textile factories are frequently unsafe, with fires regularly causing horrific deaths for hundreds of workers. Yet, we as consumers benefit when we buy their clothing at low prices.
Rugs: Beautiful rugs are woven in Pakistan, often using children (with small nimble fingers) virtually chained to their looms. Pakistan's competitive advantage in producing rugs is partly due to this exploitation of children. U.S. consumers buy their products.
Foreign Aid: We spend one-fifth of 1 percent of our nation's income on foreign aid to poor countries. This is near the bottom among the Western industrialized countries. The harm done by U.S. policies just described by far outweighs any aid that we provide. Plus, we use restrictions that reduce the benefit of our food aid to the world's hungry. For example, Zimbabwe regularly suffers corn shortages. Our regulations require that our food aid be bought from U.S. agribusiness and sent on U.S. ships. We could purchase corn from neighboring Zambia instead and greatly reduce transportation expenses. These purchases would also support poor Zambian farmers.
Trump's proposals would slash foreign aid and send it only to countries that we deem of strategic importance. This does not include the countries just described. And, despite all my travels in Africa and elsewhere, and I can tell you that I've never experienced a "s__t hole" country. Needless to say, I am outraged by the suggestion.
Action: These are just a few examples, and there are many things we can do. We can urge our legislators to eliminate restrictions that hamper our food aid programs, and we can ask them to reduce our subsidies to large U.S. agribusiness. (I'm not suggesting reduced subsidies to small- to medium-sized farms; in fact, reduced subsidies to big agribusiness should flow to smaller farmers instead.) And, we can speak to store managers, asking them if their products are produced under exploitative conditions. We can also purchase fair trade products, such as coffee, cocoa, crafts, and clothing; thereby supporting producers in poor countries by paying them fair prices. Many are currently sold (not for profit) by River Falls outlets such as Freeman Drug Store, Global M.A.D.E., the Whole Earth Grocery, and various churches.
Unless we citizens seek to change our policies and our buying habits, and demand fair and safe working conditions for the products we buy from U.S. retailers, these practices will continue.