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July 7, 2009

Americans deserve to know how much protectionism and subsidies are costing them

I agree with Sallie James at Cato – this idea is pretty good.  The Atlantic’s James Gibney thinks we could use a little education about why the products we buy cost what they do [emphasis added]:

Before you start spooning up your next bowl of Frosted Flakes, ponder this: driven partly by the demand for ethanol, the price of the corn in your flakes is about 40 percent higher than it was a few years ago; the sugar easily cost you more than double the world price; and your milk is at least 15 percent more expensive than it would be in many other countries.

Americans pay much more than they should for their food. Thanks to a thicket of subsidies and tariffs that support American farmers and tilt the growing field against cheaper foreign producers, we get ripped off twice: first as taxpayers who ante up for roughly $25 billion in agricultural subsidies each year ($4 billion for milk alone in 2006); then as consumers who pay higher prices at the checkout counter because we can't take advantage of low-price imports.


So, how can we get more Americans to look up from their feedbags and demand that Congress restore some sense to the marketplace? I recommend a little truth-in-packaging. Just as food manufacturers now list their products' ingredients and nutritional value, they should also disclose their "free-market" value.

To wit, every product whose ingredients benefit from a subsidy should include the following language on the label:

"This product has been subsidized by the U.S. government at taxpayer expense. For more information, please visit usda.gov."

And every product that benefits from tariff protection should have the following language on the label:

"This product is protected from foreign competition by U.S. import tariffs. Its price is higher as a result. For more information, please visit usitc.gov."

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