False Economy - Alan Beattie [83]
Undeterred, the U.S. catfish farmers changed their strategy. Their lawyers successfully secured import duties on Vietnamese catfish on the grounds that they were being "dumped," or sold at unfairly low prices, in the American catfish market. To do so under U.S. trade law, they needed to prove that Vietnamese catfish were a "like product" to American catfish. Which they did, having previously spent many thousands of dollars in fees to establish that Vietnamese catfish were not, in fact, catfish.
It's not all quite so amusing. Trade lobbies have more serious impacts, such as threatening the future of the planet. Global production of etha-nol and other biofuels has surged in the past few years as the world seeks solutions to oil shortages and the carbon emissions that come from burning fossil fuels. But only some ethanol, such as the sugarcane variety produced in Brazil, is likely to do much good. Ethanol produced from corn, as it is in the United States, is expensive and inefficient. It may in fact even emit more carbon than extracting and burning gasoline. The American corn ethanol industry is kept in business by generous subsidies and high tariffs that keep out cheaper and more environmentally friendly Brazilian imports. Iowa, the center of that industry, punches above its weight when it comes to setting policies by being the first to choose presidential candidates in the state-by-state primaries. Genuflecting before the ethanol subsidy program is a ritual that nearly all presidential candidates take part in as the price of trying to get their campaign off to a flying start. (One exception, to his credit, was John McCain.)
In some ways, the Peru example is a slightly unusual one, as it involves farmers from rich countries losing out. Generally, farming is the most protected of all industries. And cotton is one of the most extreme examples. There are probably no more than ten or twenty thousand cotton farmers in the United States, out of a population of 300 million. But the sector, depending on what happens to cotton prices, gets up to $4 billion a year in federal payouts and has managed to resist almost all attempts by other countries to put limits on its subsidies. Indeed, protecting American cotton farmers has been one of the cornerstones of U.S. trade policy for many years. Their disproportionate influence would be breathtaking, were it not so painfully familiar from repeated episodes throughout history.
In some of these cases the debates have been going on for centuries and continue to distort global markets today. The combatants sometimes change sides, a pro-free trade industry becoming protectionist as its interests shift. But over time, the arguments employed and the ability of small lobbies to punch way above their weight have an eerie similarity.
The basic theory that explains why small lobbies can outmaneuver bigger ones owes a great deal to the theorist Mancur Olson, who developed it more than forty years ago. Broadly speaking, the relevant part of the theory goes like this. When many individuals have a similar interest, it makes sense for them to band together to get what they want. But because there are so many of them, it is hard to get them organized. The temptation for each member is to rely on the next to do the work for her. And if everyone thinks like this, nothing gets done. However, when a group of similarly interested individuals is relatively small in number, it becomes easier and cheaper to motivate them into forming an effective lobby. Such groups have also become adept at joining with others to form coalitions. This explains why lobbies of producers are generally much more powerful than groups of consumers. For the latter, the benefit of lower prices is spread across everyone who cares to make a purchase; for the former, the gains from higher prices are captured only by a few.